Editor’s Note
This analysis of China’s luxury market reveals a pivotal shift. While a path to recovery is emerging, growth has stalled and per capita spending has dipped, signaling a new era of consumer rationality and strategic brand adaptation.
A survey of 3,000 Chinese luxury consumers conducted by Kearney in August 2025 indicates that China’s luxury market is on a path to cautious recovery. Consumers are exhibiting a cautiously optimistic and rational attitude, with significant changes observed across market structure, consumer segments, and purchasing channels.
Overall market growth has stalled, with a slight decline in per capita spending. While 80% of respondents hold a positive view of the macroeconomy, 79% on the employment situation, and 82% on policy support, the average per capita luxury expenditure over the next 12 months is expected to drop from 146,800 yuan to 141,500 yuan, a decrease of 4%. Among specific categories, large leather goods (-7%) and watches (-6%) face the most significant pressure, while fashion and small accessories (-1%) and jewelry (-2%) show slight declines. Fragrance and beauty products remain largely stable.
Consumer segmentation is becoming more pronounced, with a clear profile of the main drivers of recovery. Middle-aged, high-income consumers in first-tier cities exhibit stronger spending willingness and capacity, forming the core of the market’s recovery. Younger demographics and lower-income groups are becoming more cautious in their consumption. In terms of age, Millennials show the highest willingness to purchase overseas (43%), with their overseas spending accounting for 28% of total luxury expenditure. Regarding income, households with disposable income exceeding 2 million yuan show the most prominent expectations for spending growth.
The share of consumption dedicated to Chinese domestic luxury brands has increased from 39% to 44%, with the jewelry category being the primary driver. Brands like Chow Tai Fook and Lao Pu Huang Jin are among the popular choices. Only in the fragrance and beauty category do consumers still prefer international brands. The impact of US-China tariffs is significant.
Consumers prioritize official channels, with official offline stores accounting for 56% and official online channels for 44%. Mainland airport duty-free (44%) and Hainan offshore duty-free (39%) channels far surpass non-official channels. While 36% of respondents plan to purchase overseas, most intend to keep their overseas spending share below 30%. Large leather goods and watches are more likely to be purchased outside Asia, with authenticity guarantee being the primary driving factor.
48% of consumers plan to reduce luxury spending due to increased savings, and 38% due to a shift towards experiential consumption (this proportion reaches 41%-44% among Gen Z and Millennials). For brands to break through, they need to convert consumer “cautious attitudes” into actual expenditure by enhancing brand appeal and trust, strengthening quality and durability, optimizing in-store service and after-sales, innovating designs around Chinese consumer preferences, and launching exclusive products and experiences.
China’s luxury market is undergoing structural adjustment. Brands need to grasp trends such as the rise of local players, channel transformation, and consumer segmentation. By adapting to consumers’ rational demands through localization, high quality, and superior service, brands can seize opportunities in this cautiously recovering market.