Beauty Outpaces Fashion as China Luxury Spending Shifts Domestic
Beauty grew 4-7% while fashion fell 8% as China's luxury market stabilized. Domestic spending now 65% of total—key insights for brands navigating the shift.
China's personal luxury goods market contracted three to five percent in 2025, marking a significant improvement from the 18% to 20% decline recorded in 2024, according to Bain & Company's latest report. The data signals an early stabilization after nearly two years of steep declines in Asia's largest luxury market.
The rebound gained momentum in the third quarter of 2025, supported by favorable year-over-year comparisons, a stronger stock market, and gradually improving consumer confidence. Domestic luxury spending now accounts for 65% of total Chinese luxury consumption, up from previous years, as a stronger yuan and narrowed price gaps between domestic and overseas markets encouraged shoppers to buy locally.
Beauty Surges While Watches Plummet
Performance varied dramatically across luxury categories in 2025. Beauty led all segments with four to seven percent growth, driven primarily by premium skincare and fragrance demand. Jewelry performed relatively better with zero to five percent declines, supported by rising gold prices and value-conscious buyers seeking tangible assets.
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Traditional luxury categories struggled significantly. Fashion declined five to eight percent, while leather goods fell eight to 11% as consumers pushed back against rising prices and perceived limited innovation. Watches suffered the steepest drop at 14% to 17% as Chinese consumers shifted toward alternative investments, secondhand options, and technology-driven timepieces.
"Category dynamics and brand fundamentals are becoming increasingly decisive," said Priscilla Dell'Orto, partner at Bain & Company. "Brands that maintain strong desirability and deliver clear value through innovation and targeted pricing strategies are proving more resilient."
Secondhand Market Expands Rapidly
China's secondhand luxury market surged 15% to 20% in 2025, reflecting changing consumer attitudes toward pre-owned luxury goods and increased market maturity. The segment remains below 10% of the primary luxury market but represents a growing alternative channel for price-sensitive buyers.
"The secondhand market is becoming a more established and complementary pillar," said Elle Yang, partner at Bain & Company. Livestreaming verification services and younger buyers drove much of the expansion, with Gen Z consumers showing particular openness to authenticated pre-owned luxury items.
Daigou sales, the informal channel where shoppers purchase luxury goods overseas for Chinese buyers, grew only three percent compared to five percent in 2024 as brands strengthened oversight and enforcement measures. The slowdown reflects both tighter brand controls and reduced incentives for overseas purchasing as domestic price gaps narrowed.
Experience Spending Outpaces Material Goods
Chinese luxury consumers continued prioritizing experience-based spending on travel and wellness over material goods purchases throughout 2025. The shift represents a fundamental change in how affluent Chinese consumers allocate discretionary spending, with 56% of millennials and Gen Z prioritizing wellness and travel experiences over physical luxury products.
Local Chinese brands gained market share during the year by using cultural relevance and digital-first strategies. In beauty specifically, domestic brands achieved growth through Tmall livestreams and traditional Chinese medicine-inspired skincare lines, pressuring international competitors to justify premium pricing and demonstrate clear differentiation.
Bain projects modest growth for China's luxury market in 2026, though volatility remains. Expansion will likely vary significantly by category and brand, with ultra-premium and affordable luxury segments expected to outperform mid-tier offerings as consumers remain highly selective in their purchasing decisions.
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