China Luxury Market Sees Fragile Recovery Ahead

China's personal luxury goods market is poised for a modest but fragile recovery in 2026, according to Bain & Company. The market experienced significant contractions in 2024 and 2025, with a projected 17% to 19% drop in 2024 and a further 3% to 5% decline in 2025, before an expected rebound.

Consumer confidence, a key driver for China's luxury spending, has been impacted by a property crisis and job concerns. Despite cautious sentiment in 2025, the market showed signs of stabilization from the third quarter onwards, supported by a stronger stock market and improved consumer sentiment coming off a weak base.

Bain forecasts modest expansion in 2026, driven by a growing middle class and policy support. However, growth will be segment-specific. The beauty sector is expected to grow by 4% to 7%, contrasting with declines in fashion (5% to 8%), leather goods (8% to 11%), and watches (14% to 17%).

Domestic spending accounted for 65% of Chinese luxury purchases in 2025. A weaker currency and narrowing global price gaps encouraged more consumers to buy within China, despite recovering outbound travel. The secondhand luxury market saw robust growth of 15% to 20%.