China’s luxury market declined by 18 per cent to 20 per cent in 2024, marking the end of a period of “exponential growth”, with sales expected to remain flat this year, consultancy Bain and Company said at the launch of its latest ‘China Luxury Report’ on Tuesday.
Discretionary items, including personal luxury goods, have been hard hit in China, which accounts for around a third of global luxury goods sales. Consumer confidence in the world’s second-largest economy remains stubbornly low following a prolonged property crisis and concerns over employment security.
“[Last year] was, of course, a big setback compared to expectations,” said Bruno Lannes, partner in Bain & Company’s Shanghai office and head of the firm’s Consumer Products, Retail and Luxury practice for Greater China.
“However, we believe that 2025 should be better. Even if the first half is expected to still be negative, the second half will do better for a flat year,” he added.
In reporting earnings for its December quarter last week, Cartier-owner Richemont beat expectations with 10 per cent revenue growth but warned of a still “challenging” situation in China, where third-quarter sales fell 18%.
Bain and Company’s report found that a fall in China sales last year was partly offset by sales overseas, especially in Japan where currency differentials favoured Chinese luxury shoppers, though global sales to Chinese shoppers still fell 7 per cent overall.
Sales in China’s duty-free paradise of Hainan were particularly hard hit, falling 29 per cent as shoppers chose other tax-free and currency-friendly destinations.
Hainan sales were also hindered by competitive prices on major e-commerce platforms such as Alibaba’s Tmall and ByteDance’s Douyin eroding the island’s price advantages, the report said.
Stimulus measures announced by Chinese authorities in the latter part of 2024 helped improve sales somewhat in the final quarter of the year, and longer-term positives could be found in the low penetration of luxury goods purchases throughout much of the country’s population, Lannes said.
According to Bain analysts, top-level luxury consumers in China will remain a vitally important demographic for brands, accounting for 45 per cent of sales last year with that proportion expected to increase in the year ahead.
