China Luxury Market: Is There Still Space for Newcomers?

Short answer: yes, there is still space for newcomers in China luxury. But the rules of 2019 are dead. The market just went through two hard years, and the brands winning now are not the ones with the biggest ad budgets. They are the ones who understood what changed. I run China projects for smaller and mid-size brands, so let me give you the honest version, not the press-release version.

Here is the headline that matters. In 2025 the mainland China personal luxury market shrank by 3% to 5%, according to Bain. That sounds bad until you remember 2024, when it dropped 17% to 19%. So the bleeding slowed a lot, and Bain saw real signs of recovery starting in the third quarter of 2025. The market is not booming. It is recalibrating. That gap between panic and reality is exactly where a smart newcomer gets in.

China Luxury Market 2025/2026: The Numbers That Actually Matter

Forget the old “$118 billion in 2018” figures you still see floating around. The story in 2026 is different and far more useful for planning. Here is what Bain reported for 2025:

• Market size: mainland personal luxury down 3% to 5% in 2025, after a 17% to 19% fall in 2024.
• Spend came home: 65% of Chinese luxury buying now happens inside mainland China, only 35% abroad. A few years ago much more of it happened in Paris, Tokyo and Hong Kong.
• Beauty won: the beauty category grew 4% to 7%, the strongest of all. Skincare and fragrance held up because they feel like small affordable rewards.
• Fashion and leather struggled: fashion fell 5% to 8%, leather goods 8% to 11%, watches 14% to 17%.
• Secondhand jumped: the resale market grew 15% to 20%, still under 10% of the primary market but rising fast.

You can read the full Bain breakdown here: Bain & Company, China personal luxury market 2025. For the global picture, McKinsey covers it in their State of Luxury report.

The Chinese-Insider Angle: Why Spend Came Home

This is the part most foreign brands miss. For years Chinese buyers flew to Europe to buy luxury because it was 30% cheaper there. That price gap is mostly gone. A weaker yuan and tighter pricing closed it. So a buyer in Chengdu now just buys in Chengdu. That is huge for a newcomer. You no longer need a flagship on Avenue Montaigne to reach a Chinese client. You need to be findable and trusted inside China, on Chinese platforms, in Chinese.

Second insider point: the grey market is shrinking. Daigou (personal shoppers buying abroad to resell at home) used to move billions. Bain says daigou sales across the top 45 brands grew just 3% in 2025, down from 5% in 2024, as brands tightened overseas supply. Less daigou means more demand flowing through official channels. Again, good news for a brand that sets up properly inside China instead of relying on grey resellers.

Consumer Behavior And Preferences

Chinese luxury buyers still treat high-end goods as a way to signal status and stand apart. That has not changed. What changed is the mood. In 2025 buyers got picky. Bain calls it a year of recalibration: people now want items that balance quality, exclusivity and real usefulness. The reflex “buy the logo” purchase is weaker. The “is this actually worth it” purchase is stronger.

For a newcomer this is good. When buyers slow down and compare, a younger brand with a clear story can win against a tired heritage name. You are not fighting a spending frenzy anymore. You are fighting for a considered choice, and that is a fight a sharp brand can win.

Millennials still hold the wallet

Millennials remain the core of luxury spending in China, roughly people now in their thirties with steady income and clear taste. They drive fashion and jewelry, and they pull other categories along, including premium baby and kids products. If you have to pick one group to build for first, this is it. They have the money and they buy with intent.

For young Chinese shoppers, brand identity and craftsmanship still rank above everything. They want a reason to care, not just a price tag. Brands that explain how a thing is made, and why, get the attention.

Gen Z: high potential, but they are waiting

Gen Z is still the most promising long-term group, trend-driven and quality-driven, caring more about experience than logos. But here is the honest 2025 update: Bain found younger aspiring buyers delayed their first luxury purchase. The economy made them cautious. They are not gone, they are on pause. So treat Gen Z as a brand-building audience now and a buying audience next. Win their attention on Douyin and Xiaohongshu today, and you will own the relationship when they start spending.

Latest Trends In The Chinese Luxury Market (2025/2026)

• Value-driven luxury: buyers want quality and use, not just a name. Items that justify the price sell.
• Beauty as entry point: skincare and fragrance are the cheapest way into a brand and the fastest growing category. Many newcomers start here.
• Resale is normal now: secondhand grew 15% to 20%. Young buyers see a strong resale value as a sign the brand is worth buying new.
• Domestic-first: with spend back home, your China store and China content matter more than your overseas boutique.
• Local collaboration: limited editions with Chinese artists or designers still cut through, when they feel real and not forced.

The thread through all of it: adapt to a more careful, more local buyer. The brands that keep marketing like it is 2019 are the ones losing share.

Major Players In The Chinese Luxury Market

The big international names still dominate. But “dominate” no longer means “untouchable.” When the giants slow down, room opens up underneath them. Here is the lay of the land by category:

Category	Major Players
Fashion and Apparel	Chanel, Hermès, Gucci, Dior, and Louis Vuitton
Beauty and Personal Care	Estée Lauder, L’Oréal, SK-II, and La Mer
Watches and Jewelry	Rolex, Cartier, Tiffany & Co., and Bulgari
Automobiles and Transportation	Rolls-Royce, Ferrari, Lamborghini, and Bentley
Food and Beverages	Hennessy, Remy Martin, Moët & Chandon, and Dom Pérignon
Hospitality and Travel	The Ritz-Carlton, Four Seasons Hotels and Resorts, Aman Resorts, and Rosewood Hotels & Resorts

These names hold their place through strong brand images and steady quality. But notice the soft spots: watches fell hard in 2025, fashion and leather slid too. A newcomer who picks a category where the giants are weak, and a price point they ignore, has a real opening.

Douyin: the best entry channel for newcomers

Douyin, China’s version of TikTok, is where most new brands get their first real traction. It is fast, visual and cheap to test. Here is why it works for a newcomer with a tight budget:

1. Huge, attentive audience. Over 600 million daily users, with people spending close to an hour a day in the app. You can reach a lot of the right people fast.
2. Content can go viral. Short videos, music, effects, challenges. One good clip can do more for awareness than a month of paid ads.
3. Sharp targeting. ByteDance’s algorithm puts your content in front of the right buyers, which keeps test budgets small.
4. Built-in shopping. Users buy inside the app through shopping tags, so the path from “I saw it” to “I bought it” is short.
5. Creators for hire. A deep bench of influencers and KOCs who can give a young brand instant credibility.
6. Local relevance. The platform rewards content that fits Chinese culture and trends, so you learn fast what lands and what flops.

Different Sectors Of The Chinese Luxury Market

The market splits into fashion and apparel, beauty and personal care, watches and jewelry, automobiles, food and drink, and hospitality and travel. Each moved differently in 2025, so pick your sector with the latest numbers in mind, not the 2019 hype.

Fashion And Luxury Accessories

Fashion and apparel is still one of the biggest sectors, though it dipped 5% to 8% in 2025. It grew for a decade on rising incomes, celebrity pull and changing taste, and the base is still large. Young buyers are heavily swayed by KOLs and celebrities such as Angelababy, Yang Mi and Tiffany Tang.

Louis Vuitton has stayed a top aspirational choice since it arrived in 1992. Gucci pulled younger buyers with restyled collections, while Chanel and Dior keep ranking near the top on timeless appeal. For a newcomer, the move is not to copy them. It is to find the gap they leave: a clearer niche, a sharper story, a fairer price.

Beauty And Personal Care

If you only read one section, read this one. Beauty was the single best category in 2025, growing 4% to 7% while most others fell. Reason: a high-end serum or perfume is an affordable luxury. When people feel careful with money, they still buy the small treat. Buyers in their early thirties spend the most here.

For a newcomer with a limited budget, beauty is the smart entry door. Lower price points, faster repeat purchase, and an audience already primed to discover new brands on Xiaohongshu. Many brands use beauty to build a Chinese following first, then expand into pricier lines later.

Watches And Jewelry

Watches and jewelry are prized as a way to display wealth and status. Here the 2025 update is mixed. Watches fell hard, down 14% to 17%, the weakest category of all, as buyers pulled back on big-ticket items. Jewelry held up better, roughly flat to down 5%.

Jewelry carries real cultural weight in China. It stands for family ties, good luck and status, and many buyers treat a fine piece as an investment, not just a purchase. That investment mindset is why jewelry survived the slowdown far better than watches.

Food And Beverages

A larger middle class with more spending money keeps demand alive for high-end dining and fine food. Gourmet culture is growing, and premium wine and spirits still sell, though buyers got more selective on price in 2025.

Luxury food events and gourmet festivals still pull affluent crowds looking for something new. These events bring top chefs together, pair signature dishes with fine wine, and double as a place to network. For a premium food or drink brand, a strong event plus the right KOC coverage can do more than a billboard.

Automobiles And Transportation

China is the world’s largest car market, and the premium segment matured fast in cities. The big shift is electric. China now leads on EVs, with strong domestic brands and rising buyer interest year after year. For foreign premium carmakers, the lesson is blunt: the local EV makers set the pace now, and you compete on their terms.

Hospitality And Travel

Travel and shopping go together for Chinese luxury buyers. But with spend now staying home, the high-end experience inside China matters more than ever. Some luxury houses moved into hospitality to deepen the bond. Louis Vuitton, for example, entered the hotel business with a flagship property in Shanghai. The pattern is clear: bring the premium experience to the buyer at home, do not wait for them to fly out.

Effective Marketing And Sales Tactics For The Chinese Luxury Market

Here are the tactics that actually move the needle for a newcomer: brand positioning, Baidu SEO, social media, influencer work and real localization. None of it is magic. It is steady work done in the right order.

Brand Positioning And Messaging

Good positioning is the whole game. You need to understand how Chinese buyers think and then adapt your branding to fit. The strongest lever is targeted promotion through key opinion leaders (KOLs) and key opinion customers (KOCs), who carry real trust with their followers.

One warning: each sector needs its own message. What works for beauty will not work for watches. Stand apart from rivals, but stay inside cultural lines. If you want help shaping the influencer side, our PR and KOL agency service is built for exactly this.

Chinese Website And Baidu SEO Optimization

Google barely matters in China. Baidu holds around 70% of search. So you need a Chinese website hosted inside China, or Chinese buyers will not find you on Baidu. With spend now staying domestic, being findable inside China is more important than it was even two years ago.

To rank on Baidu SEO, do real keyword research in Mandarin, host in China, and build the site for a Chinese reader in both content and design. Cartier is a clean example: tight keyword targeting and fast load times gave it strong visibility on jewelry searches.

Using Chinese Social Media Platforms

A Chinese website gives you credibility and search. Social media is where you build the brand and earn a good reputation. Here is the short list:

1. WeChat: over a billion users. Messaging, brand accounts, e-commerce and WeChat Pay all in one place. Read our WeChat guide.

2. Sina Weibo: a strong paid-reach platform for luxury, good for broad awareness through Weibo campaigns.

3. Douyin: 600 million daily users and the best place to test content and work with creators. See Douyin e-commerce.

4. Xiaohongshu (Little Red Book): the discovery engine for beauty, fashion and lifestyle. This is where buyers research before they buy. Our Xiaohongshu agency page explains how to use it.

5. Live-streaming: still one of the strongest sales tactics, great for working with influencers and driving direct sales. See our live streaming guide.

Together these platforms let you reach buyers at every step, from first discovery to final purchase, with data guiding each move.

Influencer Marketing

KOL marketing is one of the best tools a luxury brand has in China. Buyers trust the opinion of influencers they follow, especially on WeChat, Weibo and Xiaohongshu. Partner with the right ones and you reach a large, warm audience fast.

One tip from the field: in 2025, smaller KOCs often beat big-name KOLs on return. Buyers got skeptical of polished celebrity ads and trusted real-looking reviews more. For a newcomer with a tight budget, a cluster of credible KOCs usually beats one expensive megastar. During the lockdowns, Louis Vuitton ran a “me-time” series with cultural influencers that kept people engaged at home, a good example of using creators to build a feeling, not just push product.

Event Marketing, Metaverse, And O2O Strategies

Events still work: fashion shows, product launches, tie-ups with cultural institutions. Virtual worlds add a layer where buyers use digital avatars to engage with a brand in new ways. And O2O (online to offline) bridges the gap with services like buy-online-pick-up-in-store and interactive pop-up shops that mix a physical space with digital touches.

Used together, these tactics keep a brand present across channels, hold a community engaged, and turn social attention into real sales. If you sell physical products, pair this with a solid China e-commerce setup so the buying step is easy once interest is there.

Localization And Cultural Sensitivity

Understanding what makes China different helps you dodge cultural mistakes and build campaigns that connect. Smart players like Louis Vuitton grew here by working with local celebrities and KOLs and by localizing collaborations to Chinese taste.

Respect the calendar too. Lunar New Year and National Day matter for awareness and sales, and a clumsy seasonal campaign can hurt you. Localize your website content with the right keywords, sell on local platforms, and show that you take Chinese buyers seriously. That is how you earn trust.

So, Is There Still Space For Newcomers?

Yes, but only for the prepared. The 2024 crash scared off lazy money, the giants are slower, and buyers compare more. That mix favors a focused newcomer over a complacent heritage brand. Pick a category where the giants are weak (beauty is the obvious one), build a real Chinese presence (website, Baidu, social), and use KOCs more than expensive megastars. Then be patient. Bain expects modest growth in 2026, brand by brand. The window is open. It just rewards the brands that do the work.

China still accounts for a large slice of global luxury spending, and its weight on the industry is not going away. Brands that read the new rules and act on them stand to win real share while others wait on the sidelines.

We are a China-based digital marketing team with over 10 years of work behind us. Our Chinese and foreign specialists have helped more than 600 brands grow in China. Browse our full range of services or read more case studies and guides on the blog.

What we propose always depends on your brand, your sector, your goals and your budget. Leave a comment below or contact us for a free consultation, and we will give you an honest read on your chances in China luxury.

Frequently asked questions

Is the China luxury market growing or shrinking in 2026?

It is stabilizing. The mainland market shrank 3% to 5% in 2025, a big improvement on the 17% to 19% drop in 2024. Bain saw recovery signs from the third quarter of 2025 and expects modest growth in 2026, though it varies a lot by brand and category. The free fall is over, but it is not a boom.

Can a new or small luxury brand still enter China?

Yes. The slowdown actually helps focused newcomers because buyers now compare more and the giants are slower. The realistic path: start in beauty or a niche the big names ignore, build a Chinese website and Baidu presence, and use KOCs and Xiaohongshu instead of huge ad spends. You do not need a flagship store abroad anymore, since most spend now happens inside China.

Why are Chinese consumers buying luxury at home instead of abroad?

The price gap closed. A weaker yuan and tighter brand pricing removed the old discount on buying in Europe or Japan. Bain estimates 65% of Chinese luxury buying now happens inside mainland China and only 35% abroad. That means your in-China presence matters far more than your overseas boutiques.

Which luxury category is performing best in China?

Beauty. It grew 4% to 7% in 2025 while most categories fell. High-end skincare and fragrance act as affordable rewards, so buyers keep purchasing even when cautious. That makes beauty the easiest entry point for a newcomer. Watches were the weakest, down 14% to 17%.

Is daigou still important for selling luxury in China?

Less than before. Daigou sales across the top 45 brands grew only 3% in 2025, down from 5% in 2024, as brands tightened overseas supply and the price gap closed. The grey channel is shrinking, which pushes more demand through official routes. For a new brand, that is a reason to set up properly inside China rather than rely on resellers.

Jon Wang is a pragmatic, China-focused consultant with hands-on experience in Chinese e-commerce, distribution and digital marketing, always focused on practical solutions for smaller brands and tighter budgets. Connect with Jon on LinkedIn.