China luxury market sinks 5% as demand evaporates

Luxury beauty products bucked the greater trend.

The personal luxury goods market in China contracted by 3% to 5% in 2025, a significant moderation compared to a sharp decline seen in 2024, as consumers became more selective and prioritised value-driven luxury items that balance quality, exclusivity and practicality, according to Bain & Company’s China Personal Luxury Report.

By segment, beauty grew by 4% to 7% in 2025, driven by steady demand for ultra-premium skincare and fragrances as consumers continued to seek emotional and sensory experiences even amid economic uncertainty.

Fashion declined by 5%to 8%, outperforming leather goods, which declined 8% to 11%. The report said this reflects past and ongoing price increases and limited innovation, which made it difficult for consumers to justify purchases.

Watches remained under severe pressure, with an estimated decline of 14% to 17%, as consumers became more rational in their purchases and increasingly turned to other investment assets, secondhand alternatives and sporty or smart-device options.

Jewellery showed improvement compared with 2024, with its decline narrowing to 0%–5%, supported by value-preservation considerations and rising gold prices.

Meanwhile, the share of overseas luxury spending declined sharply in 2025. Bain estimates that 65% of Chinese luxury consumption occurred within mainland China, whilst 35% took place outside, reflecting a renewed degree of consumption repatriation.

This shift was driven in part by low currency and narrowed price gaps between mainland China and key luxury markets, largely resulting from exchange-rate movements, which reduced the incentive for overseas shopping.

Domestic tourism growth and ongoing shopping mall promotions further supported mainland consumption, despite the continued recovery of outbound travel.

Daigou activity remained elevated in 2025 but showed signs of structural restraint, reflecting brands’ increased efforts to regulate grey-market sales, protect brand equity and maintain pricing integrity in mainland China.

Sales amongst the top 45 brands tracked on daigou platforms by luxury brands analytics platform Re-Hub rose by 3% in 2025, compared with 5% in 2024, as more brands tightened control over overseas supply chains and unofficial channels.

At the same time, China’s secondhand luxury market continued to expand, growing by 15% to 20% in 2025, whilst remaining underpenetrated at less than 10% of the primary luxury market.

Growth was supported by an increased supply of pre-owned goods, rising consumer acceptance – particularly amongst younger and more price-sensitive buyers – and the widespread adoption of livestreaming as a trusted channel for product verification and engagement.

Local Chinese luxury players are also becoming increasingly popular, particularly in beauty and select personal luxury categories. These brands are gaining share through culturally relevant product aesthetics, digital-first and engagement-oriented go-to-consumer strategies, as well as competitive price positioning enabled by local access to inputs and supply chains.

Looking ahead, Bain expects China’s personal luxury goods market to see modest growth in 2026, albeit with continued volatility and uncertainty.  

A growing middle class, improving consumer confidence and favorable policies are expected to help direct more luxury consumption back to the mainland, while growth will remain highly category- and brand-dependent.