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How the evolving consumer psychology is reshaping the luxury industry.
Sectors & Markets
29 April, 2026
Table of contents
As of April 2026, China’s luxury market is no longer in a temporary post-pandemic slowdown. It is now undergoing a recalibration that is redefining how global luxury labels operate, domesticate, price, and create value.
After the 18-20% decline of the personal luxury market in mainland China in 2024, the sector showed a gradual stabilisation throughout 2025 with a softer 3-5% contraction, according to Bain & Company. Despite this improving situation and recovery signals, most luxury groups entered 2026 with a continuous uneven growth, intensified competition from local Chinese brands, and weaker aspirational demand.
The market correction has already reshaped the major luxury conglomerates’ financial performance. The 2025 rankings of Interbrand showcased a combined valuation of major luxury brands declining 5%, while investment firms, including Berenberg, declared the “luxury supercycle is over.”
So, the question we have now is not whether China remains important to luxury but what kind of luxury market China is becoming.
Between 2010 and 2021, China became the single most important growth market for luxury fashion, beauty, watches, jewelry, and leather goods. Real estate-driven wealth accumulation, rapid urbanisation, digitally connected consumers, and rising disposable incomes led to the expansion of global luxury brands.
Luxury conglomerates such as LVMH, Kering Group, Richemont, and Prada SPA expanded retail footprints in Tier 1 and Tier 2 cities. And the pandemic period accelerated this further.
Travel restrictions between 2020 and early 2023 forced Chinese luxury spending to remain local, creating the phenomenon that analysts described as an “artificial supercycle.” Mainland China briefly became the centre of global luxury consumption as purchases that would traditionally occur in Paris, Milan, Tokyo, Seoul, or London shifted to domestic places.
Brands interpreted these growth rates as structural demand expansion. But, in reality, the growth was a temporary concentration. Many luxury groups misunderstood this repatriation effect and built long-term strategies around abnormal pandemic-era consumption behaviour.
The slowdown was visible in 2024 and 2025, reflecting a combination of macroeconomic, behavioural and demographic shifts.
The prolonged real estate downsizing in China altered the household wealth psychology significantly. Property, which was viewed as a value for middle- and upper-class consumers, lost its momentum. This reduced discretionary spending confidence.
At the same time, the slower economic growth, youth unemployment, and declining optimism in wages further weakened the aspirational luxury consumption among younger consumers. Luxury demand became increasingly dependent on ultra-high-net-worth consumers while middle-tier aspirational buyers began retreating globally.
Chinese consumers have become substantially more value-conscious following the aggressive luxury price increases. Brands like Chanel, Louis Vuitton, and Dior implemented repeated global price hikes after 2020, particularly in handbags and leather goods. However, many consumers no longer saw sufficient increases in exclusivity, craftsmanship, or innovation to justify those higher prices. This created what analysts increasingly describe as a “value deficit.” The impact was particularly severe for aspirational luxury brands relying heavily on middle-class Chinese consumers.
The impact has been particularly severe for aspirational luxury brands relying heavily on middle-class Chinese consumers. Brands like Gucci experienced slowdowns across the sector with weakening desirability and creative transition challenges.
Chinese consumers are increasingly prioritising travel, wellness, dining, and experience-led consumption over material purchases. The 2025 China luxury report of Bain noted continued strength in emotional and sensory categories such as fragrances and ultra-premium skincare, while watches and leather goods underperformed.
This shift explains why categories tied to emotional utility, like beauty, hospitality, jewellery, and experiential retail, are proving to be more resilient than logo-driven fashion consumption.
China’s luxury consumer in 2026 is significantly more sophisticated, investment-oriented, and digitally informed, compared to the situation a decade ago. Consumers increasingly evaluate luxury purchases through resale retention value, long-term wearability, craftsmanship credibility, exclusivity, cultural relevance and emotional meaning.
This behavioural transition has directly benefitted brands including Hermes, which continues to outperform the wider industry through craftsmanship heritage, scarcity-based distribution, and strong value retention in the secondary market.
Jewelry maisons like Cartier and Van Cleef & Arpels also remained comparatively good as affluent Chinese consumers increasingly shifted spending toward value-preserving luxury items. The trend has additionally contributed to stronger gold demand in China. As economic uncertainty increased, consumers redirected portions of their spending toward gold jewellery and investment-connected luxury purchases, supporting the global gold price hike throughout 2024 and 2025.
Meanwhile, the secondhand luxury market of China expanded rapidly, growing an estimated 15-20% in 2025 according to Bain & Company. Livestream purchases, circular luxury platforms, and resale ecosystems have become increasingly normalised among Gen Z and younger consumers.
One of the most important changes in this whole structure is the rise of culturally confident local brands. The “Guochao” movement, which blends national identity with premium positioning, continues to reshape consumer preferences in China. Younger consumers increasingly support domestic brands that offer stronger cultural relevance, localised storytelling, and digitally native engagement.
Brands such as Songmont and sportswear giant Anta have gained momentum by combining premium aesthetics with stronger alignment to Chinese identity and consumption behaviour.
Founded in 2013, Songmont has emerged as one of China’s most closely watched accessible luxury brands, recognised for its minimalist leather goods, artisanal positioning, and culturally rooted storytelling. Its rise gained further international attention after LVMH chairman Bernard Arnault publicly visited the brand’s Shanghai boutique in late 2025, signalling growing interest from global luxury players toward China’s emerging premium labels.
This transition extends beyond fashion into hard luxury and jewelry. Domestic jewelry label Laopu Gold, often described as the “Hermès of gold,” has experienced explosive growth by combining traditional Chinese craftsmanship with investment-oriented gold jewellery demand.
With these, global luxury groups are now in a position where they cannot rely solely on Western heritage as a competitive advantage in China.
China’s luxury market in 2026 is more like a market in structural maturation. The hypergrowth era, sustained by a combination of pandemic-based spending concentration, rising affluence and uncritical aspirational consumption, is over. Now, it is a luxury economy defined by selectivity, cultural sophistication, investment logic, and emotional precision.
The country still remains the world’s most strategically important luxury market, but the rules of growth have changed. The next phase of luxury growth in China will likely support brands capable of delivering stronger product innovation, elevated VIC (Very Important Client) experiences, globally united pricing, localised storytelling, stronger craftsmanship credibility and investment-oriented value perception.
Cover image: Red Star News.