China’s personal luxury goods market is anticipated to experience moderate growth in 2026, according to global management consulting firm, Bain & Company. However, they also caution that this recovery may be unstable and variegated across various brands and product categories.
In 2025, China’s luxury market contracted by 3-5%, showing some recuperation after a decline of 17-19% in 2024. Bain & Company forecasts that China, as the world’s second-largest economy, will persist as a crucial contributor to the growth of the luxury market.
Brands that cater to the affordable luxury and ultra-premium segments have thrived, providing what the consultancy perceives as ‘true value’.
China’s consumer confidence, which comprises approximately 25% of luxury expenditure, has been impacted by an extended property crisis and employment concerns. These factors have compelled luxury brands to reassess their strategies within the world’s second-largest economy.
Despite consumer sentiment appearing cautious for much of 2025, the luxury sector indicated signs of stability from the third quarter onwards. Bain & Company cites a stronger stock market and improved consumer confidence, recovering from the weak economic base of 2024, as catalysts for this stabilisation.
The firm anticipates a ‘modest’ expansion in 2026, facilitated by a burgeoning middle class, escalating consumer confidence, and policy measures intended to boost domestic consumption. However, Bruno Lannes, a senior partner, stated that this growth will remain ‘segment-specific’.
2025 was viewed as a year of ‘recalibration’ for the world’s second-largest luxury market, with consumers becoming more discerning and gravitating towards items offering ‘true value’.
The study also reveals a preference for travel and wellness experiences over material purchases. The consultancy further highlighted the rise of local players as a significant trend in 2025. Emerging Chinese brands are attracting the attention of consumers with innovative and culturally relevant offerings, positioning them as robust competitors.
Performance varied across different categories, with beauty being the most resilient, rebounding to growth of 4-7%. Conversely, demand for fashion declined by 5-8%, while the demand for leather goods dropped by 8-11%, partly due to price increases.
Demand for watches plummeted by an estimated 14-17% as consumers shifted towards investments or second-hand alternatives. The jewellery sector’s decline narrowed to up to 5%.
Brands that preserve strong desirability and provide clear value through innovation and targeted pricing strategies have proven to be more resilient, according to the report.
Domestic spending made up 65% of Chinese luxury consumption in 2025, which signifies a reversal of the recovery in overseas demand observed over the previous two years.
A weaker currency and narrowing global price differences have driven more purchases back to the domestic market, despite a recovery in outbound travel.
The secondhand luxury sector witnessed growth of 15-20%. Meanwhile, ‘daigou’ sales, a term referring to purchases made on behalf of others and a long-standing pillar of Chinese luxury spending abroad, showed signs of slowing as brands tightened control over unofficial channels.
How did China’s luxury market perform in 2025?
In 2025, China’s luxury market experienced a contraction of 3-5%, showing signs of recovery from a more significant decline of 17-19% in 2024.
What factors are expected to support the growth of China’s luxury market in 2026?
The expected growth in 2026 is predicted to be supported by an expanding middle class, increasing consumer confidence, and policy measures aimed at stimulating domestic consumption.
What trends were observed in China’s luxury market in 2025?
In 2025, a significant trend was the rise of local players, with emerging Chinese brands capturing consumer attention through innovative and culturally relevant offerings. Additionally, consumers showed a preference for travel and wellness experiences over material purchases.
