For most of the 21st century, Chinese consumers were the single most important force in luxury. They bought in Shanghai and Beijing, in Hong Kong and Macau, and on trips to Paris, Milan and Tokyo, and their spending powered the industry’s growth for decades. Then, from 2023, that engine stalled. In 2024, luxury sales in mainland China fell by about a fifth. Brands that had built their strategies around Chinese demand watched sales drop, and industry analysts began to ask whether the boom years would ever return.
This report explains how China became so important to luxury, why spending slowed, which products and brands were hit hardest, who is still buying, and what forecasters expect next. It draws on research from Bain & Company, Bernstein, McKinsey, company results and official data.
The key numbers
- 35% to 40%: the estimated share of global luxury spending made by Chinese consumers at the post-Covid peak.
- About 18% a year: the growth rate of China’s domestic luxury market between 2019 and 2023, according to McKinsey.
- 18% to 20%: Bain’s estimate of the fall in mainland China’s personal luxury market in 2024.
- 3% to 5%: the further decline in 2025, with a small rebound in the fourth quarter.
- 29.3%: the fall in Hainan’s duty-free sales in 2024.
- Up to 30%: how much cheaper some luxury goods were in Japan than in mainland China in late 2024.
- Mid-teens: the percentage fall in spending by Chinese customers at LVMH in the third quarter of 2026.
Part 1: How China became luxury’s engine
China’s importance to luxury built up over three decades. According to Bernstein analysis reported in October 2026 by PGurus, the luxury industry grew about 8% a year for roughly 30 years up to 2019, and some estimates attribute between half and two-thirds of that growth to Chinese consumers.
Rapid economic growth created a large new class of wealthy and middle-income households. Many expressed their new prosperity through international brands, and for much of the 2010s Chinese tourists were among the biggest spenders in luxury stores in Europe and elsewhere in Asia.
China’s domestic luxury market roughly tripled between 2017 and 2021, according to China Briefing, and Chinese consumers accounted for an estimated 35% to 40% of global luxury spending at the post-Covid peak. McKinsey found that the domestic market grew about 18% a year between 2019 and 2023, roughly doubling in size, and contributed about 40% of global luxury goods growth over that period. For some of the luxury companies Bernstein covers, Chinese shoppers account for between about 15% and the high 30s percent of sales.
Part 2: The pandemic years
The Covid-19 pandemic changed where Chinese consumers shopped. With international travel largely shut down, Chinese luxury buyers spent their entire luxury budget at home. According to Luxury Society, total spending still fell to about two-thirds of pre-pandemic levels, but domestic stores and online channels captured all of it. Brands opened more stores in mainland China, and the tropical island of Hainan, which offers offshore duty-free shopping to domestic travellers, became a major luxury destination.
The domestic boom made mainland sales figures look exceptionally strong. When borders reopened in early 2023, part of that spending moved back overseas, which made the mainland decline look sharper than the fall in overall Chinese demand.
Part 3: “Common prosperity” and “luxury shame”
Political signals also changed the mood. In August 2021, President Xi Jinping renewed his emphasis on “common prosperity,” a long-standing Communist Party goal of reducing inequality. Luxury company shares fell sharply as investors worried about pressure on high earners and conspicuous consumption.
Analysts said the campaign had a psychological effect, discouraging visible displays of wealth. In May 2024, Chinese authorities began cracking down on displays of wealth online and removed several influencers known for lavish lifestyles from social media, according to a CNBC report republished by Hellenic Shipping News. The result became known as “luxury shame”: wealthy consumers who could still afford luxury chose not to be seen spending on it. Bain compared the trend to the US during the 2008–2009 financial crisis.
Consumers shifted toward subtler, less visible products, durable “investment” pieces and so-called quiet luxury, and became more focused on value and quality rather than paying a premium for a foreign brand name.
Part 4: The economic squeeze
The deeper cause was China’s economy. Several pressures combined to reduce household confidence and spending power.
The property slump
Property has long been the main store of wealth for Chinese households. A prolonged downturn in the real estate sector, with falling home prices, reduced household wealth, particularly for the middle class. Bain identified falling real estate values as one of the main reasons for weak consumer confidence in 2024, and Bernstein cited falling home prices and slower wealth creation through property and finance as key drags on luxury demand.
Jobs and young consumers
High youth unemployment and pressure on white-collar jobs hit younger consumers, who had been a growing part of the luxury market. Bain found that growth among Generation Z and younger buyers slowed because of lower purchasing power and high unemployment. Bernstein noted that automation and artificial intelligence could add further pressure on white-collar employment.
Confidence and saving
Weak consumer confidence led households to save rather than spend. Bernstein reported concerns that households were drawing on savings without increasing spending. It also noted that strong exports reduced pressure on the government to shift the economy towards consumption, and said it expected only small or temporary stimulus unless conditions worsened.
Part 5: 2024, the year of the slump
The combined effect was clearest in 2024. Bain estimates that mainland China’s personal luxury market fell 18% to 20% that year, returning to roughly 2020 levels, according to its report 2024 China Luxury Goods Market: Navigating Turbulent Waters. The decline worsened through the year, with the third quarter the weakest, before a slight improvement in the fourth quarter on expectations of government stimulus. Only a handful of brands grew in China.
Total spending by Chinese consumers, including purchases made abroad, fell by a smaller amount, about 7%. Part of the mainland decline reflected a shift in where people shopped rather than a fall in demand.
Shopping abroad, especially in Japan
With borders reopened and the Japanese yen weak, Chinese shoppers increasingly bought luxury goods abroad. Bain found that at the most favourable exchange rate, prices in Japan were about 30% lower than on the mainland. In 2024, about 60% of Chinese luxury spending took place in mainland China and about 40% overseas. Chinese spending in the Asia-Pacific region outside the mainland reached about 120% of 2019 levels, while spending in Europe recovered to only about half of pre-pandemic levels.
Japan’s Tourism Agency reported that Chinese visitors were the biggest-spending foreign tourists in late 2023, spending more than ¥380 billion in total, with luxury goods making up about 43% of average spending per visit, according to Luxury Society. Bain noted that price gaps between China and Japan or Europe pushed price-sensitive shoppers to buy abroad and weakened their loyalty to stores at home.
Hainan’s fall
Hainan, the duty-free island that had boomed during the pandemic, was hit hard. Offshore duty-free sales fell 29.3% in 2024 to about 30.9 billion yuan, from 43.8 billion yuan in 2023, according to Haikou Customs data reported by The Moodie Davitt Report. The number of shoppers fell 15.9% to about 5.7 million, even as visits to the island rose 8%. Bain attributed the decline to travellers choosing destinations such as Japan and Southeast Asia, wealthy shoppers travelling further abroad, and competition from domestic e-commerce, especially in beauty.
The grey market
The grey market also grew. “Daigou” resellers, who buy goods abroad or through unofficial channels and sell them in China at a discount, increased their activity by about 5% in 2024, and discounts on top products on daigou platforms deepened by about 8 percentage points, according to Bain. For brands with loose control over wholesale distribution, sales through these platforms were equivalent to 60% to 70% or more of their mainland sales.
Part 6: Which products suffered most
The slowdown hit some categories much harder than others. Bain’s research for 2024 and 2025 shows a consistent pattern.
- Watches were the hardest hit, falling 14% to 17% in 2025 after a steep fall in 2024. Buyers shifted to other investments, experiences, secondhand watches and sports or smart devices, while resale prices for high-end Swiss watches kept falling.
- Leather goods fell 8% to 11% in 2025. Bain linked their weakness to past and continuing price increases, limited innovation, heavy reliance on iconic products and high unit prices.
- Fashion fell 5% to 8%, a smaller decline than leather goods, helped by its seasonal newness and steady demand from top clients.
- Jewellery fell 0% to 5%, supported by its perceived ability to hold value and by rising gold prices.
- Beauty was the only category to grow, rising 4% to 7%, driven by ultra-premium skincare and fragrance.
The pattern reflects the wider pushback against luxury pricing. Categories with the steepest price increases and least newness suffered most. Read our report on why luxury got so expensive.
Part 7: The impact on brands
Brands felt the slowdown to different degrees.
LVMH, the world’s largest luxury group, has continued to report weakness. In the third quarter of 2026, spending by Chinese customers fell by a mid-teens percentage, with declines in mainland China in double digits, and Chinese travellers abroad cut spending by a mid-single-digit percentage, according to Inside Retail Asia. Asia excluding Japan, about 27% of LVMH’s revenue, was its only shrinking region, and Dior’s revenue was flat because of the China slowdown. Management described the slowdown as cyclical rather than a crisis.
Hermès has proved more resilient but not immune. Its sales in Asia outside Japan were flat in the third quarter of 2026, with weakness in Greater China. Read our report on how Hermès stayed the strongest luxury house.
Kering has been among the hardest hit, with Gucci’s revenue down about 22% in 2025, according to Reuters. Read our explainer on Kering’s reset.
Not every brand struggled. Tapestry reported that Coach’s revenue in Greater China rose 43% in its most recent quarter, suggesting that more accessibly priced brands were picking up shoppers who had cut back on higher-priced luxury. Read our report on Tapestry’s results.
Part 8: 2025, stabilisation
In 2025, the decline slowed. Bain estimates that mainland China’s personal luxury market fell 3% to 5% for the year, a much smaller drop than in 2024, according to its January 2026 report. Sales fell 7% to 10% in the first half, levelled off in the third quarter and grew 1% to 3% in the fourth quarter, according to Caixin. Bain linked early signs of recovery to easier comparisons with the weak second half of 2024, a stronger stock market and gradually improving sentiment, but stressed that consumer confidence remained fragile.
Spending comes home
Chinese shoppers also began buying more at home again. Bain estimates that 65% of Chinese luxury spending took place in mainland China in 2025 and 35% overseas, down from 40% overseas in 2024. It described this as a repatriation of spending, driven mainly by currency movements that narrowed price gaps, as well as by domestic tourism and mall promotions.
Brands also tightened control of the grey market. Sales of the top 45 brands on daigou platforms grew 3% in 2025, down from 5% in 2024, according to Bain.
The rise of secondhand
China’s secondhand luxury market grew 15% to 20% in 2025, driven by younger and more price-sensitive buyers, although it remains less than 10% of the size of the market for new luxury goods. Our forthcoming report on the resale boom covers this trend globally.
Part 9: Who is still buying
The Chinese luxury market has become more concentrated among its wealthiest customers.
- Very important clients (VICs): the top spenders have stayed resilient but become more conservative. Bain found they were diversifying their wealth and favouring understated products, education and travel. According to China Briefing, about 780,000 millionaires in China account for an estimated 42% of domestic luxury purchases.
- The middle class: squeezed by falling property values, middle-income households have cut back.
- Young consumers: Bain found younger, aspirational buyers have delayed their entry into luxury.
- Lower-tier cities: Bain found growth in China’s tier 2 and tier 3 cities, supported by migration, which raised both sales volumes and average prices.
Bain found that Chinese consumers are concentrating their spending on fewer brands that they see as offering real value, and that experiences such as travel and wellness remain popular over material goods.
Part 10: Local challengers
As enthusiasm for foreign brands cooled, Chinese brands gained ground. Bain found that local luxury brands were winning market share, especially in beauty, through culturally relevant design, digital engagement and competitive pricing.
The most prominent example is Laopu Gold, a Hong Kong-listed brand that sells handcrafted gold jewellery inspired by traditional Chinese craftsmanship. Its rapid growth has led commentators to call it the “Hermès of gold,” and Campaign Asia has argued that its success shows how premium is being redefined in China around heritage and scarcity.
Part 11: What comes next
Forecasts for China’s luxury market differ, and recent results have sent mixed signals.
The cautious optimists. Bain expects modest growth in 2026, supported by a growing middle class, improving confidence and supportive policies that should bring more spending back to the mainland, although it expects continued volatility and large differences between categories and brands. China Briefing’s baseline scenario is growth of around 5% in 2026, with high single-digit to low double-digit growth possible if stimulus, progress in the property sector or easing geopolitical tensions lift confidence. McKinsey and The Business of Fashion estimate China’s high-end luxury market at about $60 billion and expect it to grow 4% to 6% a year, faster than other regions.
The sceptics. In October 2026, Bernstein analyst Luca Solca said Chinese demand now looked more likely to follow an L-shaped path, a long flat period, than the U-shaped rebound he had previously expected. He advised luxury companies to lower their growth expectations, and suggested that without a revival in Chinese demand, the industry should plan for growth of about 4% to 5% a year rather than 7% to 8%. Bernstein noted that Chinese buyers have not abandoned luxury but are trading down, and said brands may need more accessible products and a stronger value proposition.
LVMH’s results for the third quarter of 2026, which showed spending by Chinese customers falling by a mid-teens percentage, suggest that the recovery seen at the end of 2025 has not yet become a sustained rebound, although LVMH said trading in September was better than the quarterly average.
Summary
- Chinese consumers drove between half and two-thirds of luxury’s growth for decades, and accounted for 35% to 40% of global spending at their peak.
- The property slump, youth unemployment, weak confidence and political pressure on displays of wealth combined to cut spending.
- Mainland luxury sales fell 18% to 20% in 2024, partly because shoppers bought abroad, especially in Japan, where prices were up to 30% lower.
- Watches and leather goods suffered most. Beauty and jewellery held up best.
- The decline slowed to 3% to 5% in 2025, with spending returning to the mainland and a small fourth-quarter rebound.
- The market is concentrating among wealthy clients, while local brands and secondhand are gaining ground.
- Forecasters expect modest growth at best, and some warn of a long, flat recovery.
Sources: Bain & Company, 2024 China Luxury Goods Market; Bain & Company, 2025 China luxury market press release; Caixin; Bernstein via PGurus; China Briefing; Luxury Society; The Moodie Davitt Report; CNBC via Hellenic Shipping News; Inside Retail Asia; McKinsey & BoF, The State of Fashion: Luxury; McKinsey & BoF, Face to Face With Luxury Clients; Campaign Asia.
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