In China, Luigi's get-up is a faux pas: no Chinese man would want to wear a green hat.
Green hats don't mean much in Japan. In China, however, the expression "wearing a green hat" (戴绿帽子) is used to refer to a woman who cheats on her lover. One explanation is that the phrase apparently sounds similar to the word for cuckold. Another story goes that during the Yuan Dynasty, the families of prostitutes were forced to wear green hats. And yet another says that male brothel workers in the Tang Dynasty wore green hats. (There's even another story in which a hard-working man accidentally left the house wearing a green hat that his wife's lover had left by mistake.)
So yeah, the origins of "wearing a green hat" varies from story to story, but pretty much everyone in China knows what wearing one means. (Heck, even green hoodies might raise eyebrows and lead to jokes!)
However, when Chinese gamers look at Luigi's green outfit, they probably think, oh hey, it's Luigi. That doesn't necessarily mean they'd wear a green hat like the iconic plumber.
Suddenly, the Mushroom Kingdom seems like a very different place...
Cultural Quirks [Chinese Language Blog]
Green Hat a No No [Random Wire]