LONDON/PARIS/AMSTERDAM: For decades, global brands dominated China's fast-growing consumer market. Now, they're fighting to stay relevant. As local competitors surge and consumer sentiment weakens, international companies from BMW to Nike and Nestlé are being forced to rethink how they do business in the world's second-largest economy.

Executives once viewed China as a guaranteed growth engine. Today, many see a "new normal" defined by fragile demand, price wars, and rising nationalism. Several foreign firms have withdrawn earnings guidance or slashed forecasts, signaling a long-term reset in a market that once powered global profits.

"We need to find smarter ways of producing so the prices become even more competitive, and we need to learn to be even more relevant for the Chinese market," said Jon Abrahamsson Ring, CEO of IKEA franchisor Inter IKEA, adding that consumer confidence in China remained a challenge.

Carmakers are among the hardest hit. BMW, Mercedes-Benz, and Porsche have all reported sliding sales in China, where intense price competition and new U.S. tariffs have compounded pressure.

The shift is being felt across sectors. Nestlé, the world's biggest packaged food company, said it must now focus on rebuilding demand, while ASML, the leading supplier of chipmaking tools, warned that Chinese demand could drop "significantly" next year, calling it a "normalization."

Retailers are also adjusting to a more frugal consumer base. Fast Retailing, owner of Uniqlo, said sales and profit in China — its largest market with 900 stores — have declined, even as North American revenue grew 24 percent. Nike reported a fifth straight quarterly sales drop in Greater China, squeezed by home-grown sportswear brands Anta and Li Ning. The company recently sent basketball stars LeBron James and Ja Morant to China to boost visibility.

In the drinks sector, Australia's Treasury Wine Estates withdrew its 2026 earnings guidance due to weak sales of Penfolds wines. The company cited changing drinking habits and fewer large-scale banquets. Pernod Ricard said sales in China plunged 27 percent.

Yet luxury goods remain a rare bright spot. LVMH beat expectations in the third quarter, saying new retail experiences such as its ship-shaped Louis Vuitton boutique in Shanghai drew a strong local response. "Whenever we bring an initiative or innovation, consumers respond very quickly," said CFO Cécile Cabanis.

At the same time, Chinese brands are dominating like never before. Domestic automakers accounted for 69 percent of car sales this year, up from 38 percent in 2020. Budget coffee chain Luckin is outselling Starbucks with lattes priced at just 9.9 yuan (US$1.4), while Mixue, Proya, and Chando are stealing market share from global food and beauty giants.

The market share of Chinese cosmetics brands is expected to exceed foreign rivals for the first time in 2025, according to Frost & Sullivan.

Even Nestlé's CFO Anna Manz admits the company must shift focus: "What you see in China is us correcting that... consolidating distribution while we build consumer demand."