China Is Back — But Not the Same.

After two years of contraction, China's luxury market is showing genuine signs of recovery. Bain forecasts modest growth in 2026. Consumer confidence is returning. But the Chinese luxury consumer of 2026 is different from the one brands built their strategies around in 2021 — and the brands that treat recovery as a return to the old playbook will find themselves outmanoeuvred by the ones that understand what has actually changed.

For most of the past decade, the story of global luxury growth was, in significant part, the story of China. The mainland Chinese personal luxury market tripled in size between 2017 and 2021. Chinese consumers accounted for an estimated 35–40% of global luxury purchases — on the mainland and through overseas shopping. Every major luxury house built strategies, store networks, and product assortments around the assumption that Chinese demand would continue to expand.

Then it stopped. The mainland Chinese personal luxury market contracted 17–19% in 2024 — one of the sharpest declines in the history of the modern luxury industry. The causes were multiple and reinforcing: a property market crisis that eroded household wealth, economic uncertainty, a shift in government messaging around conspicuous consumption, and a consumer who had been travelling and shopping during the post-COVID reopening but had now recalibrated their priorities.

In 2025, the picture began to change. Bain's analysis shows the mainland market contracted just 3–5% — a sharp improvement from the prior year's severity. Q3 and Q4 2025 showed low single-digit growth. Bain expects modest expansion in 2026. The trough, provisionally, appears to have passed. But what comes next is not a return to 2021. It is something new.

01 The numbers: what recovered and what didn't.

−3/5%

Mainland China luxury 2025 — vs. −17/19% in 2024

+4/7%

Beauty rebound 2025 — strongest category

−8/11%

Leather goods decline 2025 — hurt by price increases

+15/20%

Secondhand luxury growth in China 2025

Performance across categories was sharply divergent. Beauty rebounded to growth of 4–7%, showing sustained demand for what Bain calls "ultra-premium self-care." Jewelry and watches maintained relative resilience, supported by their perceived store-of-value qualities. Fashion declined 5–8%. Leather goods suffered most — down 8–11%, hurt by cumulative price increases that had outpaced the consumer's willingness to pay and, critically, the economic conditions in which they were now operating.

The secondhand luxury market in China grew 15–20% in 2025 — a figure that tells its own story. When primary luxury spending falls while resale grows, the consumer has not abandoned luxury desire. They have recalibrated how they engage with it: seeking the same brands, the same objects, but at prices that reflect a more cautious approach to discretionary spending.

02 The new consumer the old playbook misses.

Bain's 2025 Chinese Luxury Report describes 2025 as a "recalibration" year. The word is precise. The Chinese luxury consumer is not gone — they are recalibrated: more selective, more value-conscious, more knowledgeable, and more cautious. The consumer who was buying luxury as a social signal, as a status performance, as a way of participating in a narrative of aspiration and growth, has become more hesitant. The consumer who buys because they genuinely value the craftsmanship, the heritage, and the object itself has remained.

Consumers are consolidating their spending toward a smaller number of preferred brands that deliver perceived 'true value.' The gap between winners and laggards is widening — and growing category- and brand-dependent.

Several structural shifts underneath this recalibration will shape the market for years:

Was

→

Overseas shopping dominance

→

Goods over experiences

In 2025, travel and wellness experiences retained priority over material luxury purchases — consistent with the global shift away from conspicuous consumption that Bain describes as the new normal for aspirational consumers.

Was

→

Western brands by default

Local Chinese luxury and premium brands are gaining share — rising from niche competitors to "major market shapers" in Bain's framing. Younger consumers in particular are choosing domestic brands that blend innovation and cultural relevance.

Was

→

New purchase first

Resale growth of 15–20% signals normalisation of secondhand luxury as an entry point. Younger consumers — especially Gen Z — are engaging with luxury through circular channels in ways that will shape their primary purchase behaviour over time.

03 Who is winning in China right now.

The divergence between brands in China mirrors the K-shaped dynamic visible globally. The brands performing well share a consistent profile: genuine scarcity, perceived store-of-value, and positioning that does not depend on aspirational consumers with uncertain financial confidence.

Hermès

Outperformed in China throughout the downturn. Scarcity-based distribution, heritage depth, and price positioning that signals permanence rather than aspiration. Chinese HNWI consumers continued to engage because the brand does not depend on consumer confidence to communicate value.

Cartier / Van Cleef & Arpels

Jewelry categories outperformed fashion and leather goods. Gold demand in China rose throughout 2024–2025 as consumers redirected spending toward value-preserving luxury purchases. Richemont's jewelry maisons benefited directly.

Burberry

Q3 2025 results showed better-than-expected performance in China, driven by Gen Z engagement. Daniel Lee's reactivation of Burberry's heritage codes resonated with younger Chinese consumers seeking cultural authenticity over logo-forward branding.

04 What the new playbook requires.

The brands that will capture China's 2026 recovery are not necessarily those that were dominant in 2021. The conditions for success have changed in four specific ways that any brand's China strategy must now address.

First, price recalibration. The cumulative price increases of 2020–2023 have left many brands above the threshold that the recalibrated Chinese consumer is willing to pay without extraordinary justification. Brands that reduced the pace of price increases in 2024–2025 — as Chanel did — will find the recovery path smoother than those that maintained aggressive pricing discipline regardless of volume impact.

Second, younger consumer engagement. The steepest decline in consumer confidence in 2025 was among affluent Gen Z in Tier 1 cities — but this is also the cohort that will define the market for the next twenty years. Brands that engage authentically with Chinese Gen Z, through domestic cultural references, local creative partnerships, and genuine presence on Chinese platforms (WeChat, Douyin, Xiaohongshu), are building long-term equity. Brands that treat Chinese Gen Z as a version of Western Gen Z will continue to miss them.

Third, domestic channel investment. With 65% of Chinese luxury consumption now occurring on the mainland, the quality of the in-China brand experience — retail environment, service standards, digital ecosystem — matters more than ever. The era of Chinese consumers discovering brands during European travel and then purchasing at home is not over, but its dominance has passed.

Fourth, local brand awareness. The rise of Chinese domestic luxury and premium brands is not a temporary phenomenon. Oliver Wyman's 2025 Chinese Traveler Survey found that consumer confidence among high-income households fell to 69 from 81 in 2022 — with the steepest drop among affluent Gen Z in Tier 1 cities. These are exactly the consumers being most actively targeted by domestic Chinese brands that blend local cultural fluency with international quality standards.

China is back — but the luxury market it is returning to is not the one that existed in 2021. The brands that will benefit most from the recovery are those that spent the contraction years understanding what had changed, rather than waiting for conditions to restore what had been. The window for that understanding is not unlimited.