Consultancy Bain & Company said on Thursday that China’s market for personal luxury goods should return to modest growth in 2026, though the recovery is likely to be fragile and vary widely by brand and category.
In its latest China luxury report, Bain estimated the mainland market contracted by 3% to 5% in 2025, an improvement from an estimated 17% to 19% decline in 2024. The consultancy underlined that China remains a central engine of luxury demand globally, accounting for roughly a quarter of worldwide luxury spending.
According to Bain, brands positioned in the affordable luxury and ultra-premium segments stood out in 2025, delivering what consumers perceived as "true value". That consumer shift came amid weakened confidence driven by a prolonged property market crisis and heightened job concerns, which forced luxury houses to reassess their strategies in the world’s second-largest economy.
Despite cautious sentiment through much of 2025, Bain reported signs of stabilisation beginning in the third quarter, attributing that improvement in part to a stronger stock market and a nascent rebound in consumer confidence - coming off of the very weak comparative base of 2024. The consultancy expects a return to modest expansion in 2026, supported by a growing middle class, rising buyer confidence and policy measures aimed at stimulating domestic consumption. However, it warned that recovery will remain "segment specific", a caution voiced by Bruno Lannes, a Bain senior partner cited in the report.
Bain characterised 2025 as a year of recalibration in which shoppers became more selective and increasingly focused on purchases that offer tangible value. Travel and wellness experiences continued to take priority over material goods for many consumers, the report said, while a notable development last year was the rise of local brands. These emerging Chinese players, Bain noted, are winning consumer attention by combining innovation with cultural relevance, positioning them as credible competitors to established international names.
Performance across product categories was uneven. Beauty led the recovery, bouncing back to growth in the range of 4% to 7%. Fashion demand declined by an estimated 5% to 8%, while leather goods fell more sharply by about 8% to 11%, a slide Bain attributed in part to price increases. Watches experienced the steepest contraction, with demand down an estimated 14% to 17% as some consumers shifted toward investments or secondhand options. The deterioration in the jewellery sector narrowed, with declines limited to as much as 5%.
Bain emphasised that brands able to sustain desirability while delivering clear value through innovation and targeted pricing strategies proved more resilient during the recalibration. The consultancy’s observations align with recent corporate earnings: LVMH posted stronger-than-expected fourth-quarter sales in part thanks to improved demand from China, although its chief executive expressed caution about prospects for the year ahead. Burberry also exceeded holiday-quarter sales expectations, a performance the company attributed to greater traction with Chinese Gen Z consumers. This month, Richemont, owner of Cartier, reported sales that came in ahead of market expectations, citing a continued recovery in greater China as a contributing factor.
Bain said domestic spending made up 65% of Chinese luxury purchases in 2025, reversing the prior two-year trend of growth in overseas spending. A weaker yuan and narrowing global price differences encouraged more buyers to make purchases at home, even as outbound travel began to recover. The consultancy also highlighted the rapid expansion of the secondhand luxury segment, which grew by an estimated 15% to 20% in 2025.
At the same time, daigou activity - purchases made on behalf of others and historically a pillar of Chinese luxury spending abroad - showed signs of restraint as brands increased efforts to tighten control over unofficial channels. That tightening is consistent with an overall reorientation toward domestic retail and direct brand relationships.
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Looking ahead, Bain’s forecast points to a modest, uneven rebound in 2026 anchored by a recovering consumer base, supportive policy action and continued gains for homegrown brands and the secondhand market. The consultancy’s framing of 2025 as a recalibration year implies that brand positioning, pricing clarity and relevance to shifting consumer priorities will be decisive factors shaping winners and losers as the market moves into the next phase.
Summary
Bain & Company projects China’s personal luxury goods market will achieve modest growth in 2026 after a smaller contraction in 2025. The consultancy described 2025 as a recalibration year marked by greater selectivity among shoppers, growth for affordable luxury and ultra-premium products, a surge in domestic and secondhand spending, and stronger performance for local brands. Recovery is expected to be uneven across segments and brands.