China's luxury market recovery turns slower and more selective

China's luxury sector, which tripled in size over five years to 2021 before shrinking amid pandemic lockdowns and again after a property market downturn hit consumer confidence in 2024, is now settling into a slower, steadier growth trajectory, according to CPP-Luxury. The shift marks the end of an era in which double-digit annual expansion was treated as the baseline expectation for the world's most closely watched luxury market.

The more measured pace reflects a Chinese consumer who has become more discerning about where and how they spend, favouring quality, provenance and brand meaning over conspicuous volume purchasing. This mirrors a broader global trend among affluent shoppers who are increasingly resistant to price increases that outpace perceived value, a dynamic that has weighed on results across several major luxury houses over the past two years.

For international brands, the implication is strategic rather than merely cyclical. Growth in China can no longer be assumed as a given, and executives must now compete more directly on product quality, cultural relevance and experiential retail rather than relying on rising middle-class demand to lift all boats. Watch for how houses recalibrate China-specific product strategies, store footprints and travel retail exposure as the market's growth rate normalises to levels closer to mature Western markets, and for whether domestic Chinese luxury and beauty brands continue to gain share at the expense of European incumbents.

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