Quick Overview:
- In 2024, the luxury goods market in mainland China saw a significant decline of 18%-20%, returning to 2020 levels due to low consumer confidence and increased overseas spending.
- In this context, all luxury goods categories underperformed, with beauty performing best and watches and jewelry performing worst.
- 2025 is expected to be flat in the mainland market, with a difficult first half and improved second half.
Challenges Across All Categories
All luxury goods categories faced challenges, though their impact varied by category. The beauty sector – especially fragrances, color cosmetics, and ultra-premium skincare – showed stronger resilience as consumers seek emotional and sensory experiences.
The fashion sector saw smaller declines compared to leather goods, largely due to its seasonal nature and the importance of the Very Important Customer (VIC) category.
Overseas Shopping and Gray Market
In 2024, there was a notable recovery in overseas shopping, especially in Japan, accompanied by significant growth in the gray market due to increased price differentials.
Price differentials between luxury goods in mainland China and other markets, especially Japan, affected the mainland market and played a crucial role in reviving overseas luxury shopping.
Future Outlook
In 2024, China’s luxury goods market failed to maintain its previous growth trajectory, facing unexpected and severe slowdown that worsened throughout the year.
The market is expected to continue its downward trend during the first half of 2025, with cautiously optimistic expectations appearing in the second half of the year.
Key factors affecting the outlook include stronger government stimulus policies and the impact of the new US administration taking office in January.