Here’s a bold statement: the luxury market in China is far from doomed, and industry leaders are betting on a comeback. But here’s where it gets controversial—while some see a full recovery on the horizon, others argue it’s too early to celebrate. Let’s dive in.
On a bustling January day in 2025, shoppers stroll past a Prada storefront in Chongqing, China, a scene that seems to defy the recent gloom surrounding the country’s luxury sector. Top executives from Prada, Coach, EssilorLuxottica, and Value Retail recently told CNBC that demand in China is stabilizing after months of decline. This shift comes even as broader reports suggest Chinese consumers are still spending less on luxury, both at home and abroad.
During the coronavirus pandemic, China was poised to become the world’s largest luxury market by 2025. However, the sector hit a wall due to high youth unemployment, a struggling property market, and waning consumer confidence. These factors disproportionately affected middle-income shoppers, who typically drive discretionary spending. And this is the part most people miss—despite these challenges, luxury brands are now seeing early signs of resilience.
At the JPMorgan Global Luxury and Brands Conference in Paris, executives shared cautious optimism. Andrea Bonini, CFO of Prada Group, noted that while stabilization is evident, a full return to normalcy might not occur until 2026. Coach, meanwhile, reported a 20% growth in its China business, attributing this success to its strategic positioning that appeals to more cautious consumers. The brand’s deep roots in China, including co-design studios and regional expansions, have also played a key role.
Recent earnings reports support this cautious optimism. Burberry’s Greater China sales rose 3% last quarter, surpassing expectations, while Richemont saw a significant improvement from earlier double-digit declines. LVMH reported its first quarterly growth of the year, with mainland China turning positive in Q3. But here’s the catch—analysts warn against assuming a full rebound, pointing out that some of the growth reflects spending repatriated to mainland China rather than a broad-based acceleration.
As global brands compete with rising Chinese labels, localization has become a priority. Companies are investing heavily in China-focused marketing, speeding up product cycles, and leveraging local consumer data. The rise of platforms like Xiaohongshu and Douyin has forced brands to rethink their content and product strategies. Is this enough to secure long-term growth? That’s the million-dollar question.
Retailers like Value Retail and eyewear giant EssilorLuxottica are also seeing modest growth. Value Retail’s chairman, Scott Malkin, highlighted the success of their China properties, noting that outlets continue to attract aspirational buyers. EssilorLuxottica’s CFO, Stefano Grassi, emphasized that consumers remain drawn to product innovation rather than trading down.
While luxury bosses agree that China is stabilizing, a full rebound remains elusive. Brands are reshaping their strategies, and analysts urge caution. As Prada’s Bonini aptly put it, the structural trends driving Chinese luxury demand haven’t disappeared—they’re just taking longer to re-emerge.
What do you think? Is China’s luxury market on the brink of a comeback, or is it too early to tell? Share your thoughts in the comments—we’d love to hear your perspective!
