Luxury Goods Trade in China: Market Shifts and Openings for Traders

You may have heard that Chinese shoppers drive global luxury sales, and then read that the market has shrunk. Both are true, and the gap between them is where a trader either loses money or finds an opening. This guide explains what happened to luxury goods trade in China in 2024, which categories held up, why spending moved abroad, and what a Gulf brand or importer should do about it.

What happened to China's luxury market in 2024

In 2024 the luxury goods market in mainland China fell by an estimated 18% to 20%, taking it back to roughly 2020 levels. The market failed to keep its earlier growth path and faced an unexpected, severe slowdown that worsened as the year went on.

Two forces drove the fall. First, consumer confidence was low, weighed down by the property downturn, slower income growth and uncertainty about jobs. Second, Chinese shoppers resumed travelling and spent more of their luxury budget overseas, where prices were lower.

The drop in mainland sales does not mean Chinese consumers stopped buying luxury. A large share of the spending simply moved to other markets and to unofficial channels. For anyone selling to Chinese customers, including in Dubai, Riyadh or Doha, where the purchase happens matters as much as how much is spent.

How each luxury category performed

Every luxury category underperformed in 2024, but the damage varied widely. Beauty did best; watches and jewellery did worst.

Beauty: the most resilient category

Fragrances, colour cosmetics and ultra-premium skincare held up better than any other segment. Consumers who cut back on handbags still bought smaller items that offered an emotional or sensory experience at a lower price point. Fragrance in particular has been growing from a low base, as Chinese buyers move beyond skincare into scent.

Fashion versus leather goods

Fashion fell less than leather goods. Seasonal collections give shoppers a reason to buy again, and brands rely heavily on their Very Important Customers (VICs), the small group of top spenders who keep buying through downturns. Leather goods, which depend more on aspirational first-time buyers, felt the confidence drop more sharply.

Watches and jewellery

Watches and jewellery performed worst. These are high-ticket, often deferrable purchases, and they are easy to buy abroad at a lower price. Gold jewellery bought as a store of value followed its own pattern, driven by the gold price rather than fashion demand.

Overseas shopping and the grey market

In 2024 overseas luxury shopping recovered strongly, with Japan the standout destination. A weak yen made the same bag or watch noticeably less expensive in Tokyo or Osaka than in Shanghai. That price differential drew Chinese travellers abroad and pulled sales away from mainland stores.

The same price gap fuelled a sharp rise in the grey market. Individual resellers, known as daigou, and small trading firms buy genuine goods abroad and resell them in China through social media and second-hand platforms, undercutting official boutiques.

• For brands: grey-market stock erodes price control and makes official stores look overpriced. Many brands respond by narrowing price gaps between markets.
• For traders: reselling genuine goods can be legal in some forms, but customs declarations, duties and consumer-protection rules still apply. Under-declaring value at the border is smuggling, and penalties are severe.
• For Gulf retailers: Chinese tourists compare prices across markets on their phones. Clear pricing, tax-free refund options and Chinese-language service help you win that comparison.

The outlook for luxury in China

Forecasts made at the start of 2025 expected the mainland market to be broadly flat for the year, with a difficult first half and a gradual improvement in the second half. The key factors named were stronger government stimulus to lift household spending (see our analysis of Chinese monetary policy), and the effect on trade and sentiment of the new US administration that took office in January 2025. For the wider outlook, see our summary of the Annual Meeting of the New Champions in Tianjin.

Forecasts change, and this article cannot tell you how the latest quarter turned out. Before you commit stock or marketing budget, check the most recent annual luxury market studies from major consultancies, listed brands' quarterly results for their Greater China segment, and official retail sales data from the National Bureau of Statistics. Trade tension is part of the picture too; our guide to assessing geopolitical risks and their impact shows how to plan around it.

Where a Gulf brand or trader fits in

The category that held up best, fragrance and beauty, happens to be one where Arab brands have real strength. Oud, bakhoor and Arabian perfume houses offer a distinct scent profile that Chinese buyers do not find in Western brands. Trade links between the two regions are also deepening, as covered in bilateral trade between China and Arab countries.

Choosing an entry route

• Cross-border e-commerce (CBEC): you sell to Chinese consumers through platforms such as Tmall Global or JD Worldwide, shipping from a bonded warehouse or from abroad. Products on the approved list can be sold without full Chinese cosmetics registration. Individual buyers face a limit of 5000 CNY per order and 26000 CNY per year.
• General trade: you import in bulk through a Chinese importer or your own company and sell in stores and all online channels. Cosmetics then need filing or registration with the National Medical Products Administration (NMPA), Chinese labelling and a responsible person in China.
• Hainan offshore duty-free: Hainan island runs duty-free shopping for domestic travellers with an annual allowance of 100000 CNY per person, and it has become a major luxury channel. Access is through licensed duty-free operators, not directly.

Payment matters when you sell across borders. Our guide to the role of digital currencies in cross-border trade explains the options for settling with Chinese partners.

Steps to test a premium fragrance in China

1. Register your brand name as a trademark in China, in both Latin letters and a chosen Chinese name, before any public launch.
2. Pick 3 to 5 hero products and confirm with a cross-border platform or agent that each ingredient is permitted in China.
3. Open a store through a cross-border e-commerce operator and ship a first batch to a bonded warehouse.
4. Build content on Xiaohongshu (RED) and Douyin, where Chinese buyers research fragrance before they buy.
5. Track reorder rates for 3 to 6 months; move to general trade only if demand justifies NMPA filing and a local partner.

Checklist before entering luxury trade in China

• Current category trend, checked against the latest quarterly data rather than 2024 figures alone.
• Trademark registered in China in the correct classes, including your Chinese brand name.
• Entry route chosen: cross-border e-commerce, general trade or a duty-free operator.
• Price compared with the same product in Japan, Korea, Hong Kong and the Gulf, so you are not undercut by your own grey market.
• Ingredient and labelling compliance confirmed for cosmetics and fragrances.
• Budget for 6 to 12 months of marketing before judging results.

Common mistakes in luxury trade with China

• Dealing in replicas. Counterfeit luxury goods are illegal in China and in every Gulf state. Customs seize them and the trader faces fines or prosecution. There is no safe version of this business.
• Reading 2024 as permanent. A falling market can recover quickly in one category while another keeps sliding. Decide by category, not by headline.
• Ignoring price gaps between markets. If your product costs far less in Dubai than in Shanghai, resellers will arbitrage it and damage your official channel.
• Skipping the Chinese brand name. If you do not choose one, the market will, and someone may register it before you.
• Under-declaring at customs. Carrying goods for resale as personal luggage or declaring lower values is treated as smuggling.

What to do next this week

Look up the latest quarterly Greater China results from two or three listed luxury or beauty groups to see which way the market is moving now. Compare your product's price in the Gulf, Japan and China. If you own a fragrance or beauty brand, search the Chinese trademark register for your name and decide on a Chinese brand name this week. When you are ready to test demand, HiGreenPanda can support your e-commerce launch through cross-border channels.