Chinaâs luxury market declined by 18 to 20 percent in 2024, marking the end of a period of âexponential growthâ, with sales expected to remain flat this year, consultancy Bain and Company said at the launch of its latest âChina Luxury Reportâ 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 worldâs second-largest economy remains stubbornly low following a prolonged property crisis and concerns over employment security.
â[Last year] was, of course, a big setback compared to expectations,â said Bruno Lannes, partner in Bain & Companyâs Shanghai office and head of the firmâs Consumer Products, Retail and Luxury practice for Greater China.
âHowever, 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,â he added.
In reporting earnings for its December quarter last week, Cartier-owner Richemont beat expectations with 10 percent revenue growth but warned of a still âchallengingâ situation in China, where third-quarter sales fell 18 percent.
Bain and Companyâs 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 percent overall.
Sales in Chinaâs duty-free paradise of Hainan were particularly hard hit, falling 29 percent 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 Alibabaâs Tmall and ByteDanceâs Douyin eroding the islandâs 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 countryâs population, Lannes said.
According to Bain analysts, top-level luxury consumers in China will remain a vitally important demographic for brands, accounting for 45% of sales last year with that proportion expected to increase in the year ahead.
By Casey Hall
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