Economic uncertainty, shifting values, and rising nationalism reshape China’s consumer behaviour, challenging global brands to adapt. Here’s how
The Chinese consumer has been the darling of the global luxury market for several years now, but in 2024, the golden goose seems to have taken a break from its dizzying rise. According to recent reports from financial publications such as Il Sole 24 Ore, “in an economy accustomed to decades of double-digit growth, a 2024 forecast of “just” +4.5% growth (and +3.5% in retail consumption) feels like a deep recession.”
Several factors have contributed to the current economic uncertainty, including a looming demographic winter, which has triggered a real estate crisis impacting rental income, which once served as a major source of discretionary spending for Chinese households. Additionally, mass layoffs affecting Gen Z have further complicated the situation, fundamentally reshaping consumer behaviour.
The rise of the “lying flat” counterculture, where young people reject the relentless work ethic in favour of rest and personal wellbeing, was once unthinkable in China’s work-centric society. Now, it reflects a broader shift in values among the younger generation, which is moving away from traditional luxury norms.
While these changes have led to a concerning slowdown, they also signal a return to more enduring priorities. For luxury brands, this is not just a crisis; it is an invitation to be creative.
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What’s Behind China’s Luxury Slowdown?
The Chinese economy is facing a series of challenges that are causing significant shifts in consumer behaviour. Financial analysts identify three key factors reshaping spending habits: the government’s stance against excessive consumption, the growing maturity of urban consumers who are moving from accumulating material goods to prioritising experiences, and the “Guochao” phenomenon, which encourages shoppers to choose local brands over international ones.
As a result, even wealthy shoppers are becoming more selective in their purchases. For instance, the prices of luxury items, such as Dior bags, have risen by 76% since 2019, yet this increase no longer generates the same level of desire among consumers. Does this suggest that Chinese consumers are losing interest in luxury goods? Not entirely.
Segments like resale, off-price, and “dupes” (products that closely resemble trending items from famous brands, created by lesser-known labels, and targeted at those who want to embrace a certain aesthetic without owning the original product) are on the rise. As noted by NSS, there has been a shift from counterfeits to the search for local brands that offer similar designs with better value for money. This trend has driven a sales boom for brands like Songmont, Oleada, and Cafunè, which are the Chinese equivalents of recently emerged European handbag brands such as Polène, Euterpe, and Demellier. A manager confirmed this in an interview with an online publication: “With the rise of Chinese consumer patriotism, there is a growing preference for supporting local brands of excellence, along with a particular appreciation for Western brands that embrace Chinese culture, such as through collaborations between the East and West.”
Additionally, Chinese consumers are increasingly seeking products that feel relevant, thoughtful, and connected to their lives—meaningful objects that are truly worth spending money on. This trend is also associated with a desire for luxury products that do not depreciate over time and maintain their resale value, especially in the handbag category. As a result, brands like Hermès continue to perform strongly in the country.
While there is still a noticeable interest in luxury among Chinese consumers, a recent survey by McKinsey and The Business of Fashion revealed that Chinese consumer confidence is now the top concern for 70% of executives in the consumer and luxury sectors, surpassing even geopolitical instability (67%), economic volatility (32%), and inflation (just 28%).
China Is Catching Its Breath, While Japan, Korea, and India Lift Their Heads
As China takes a step back to reassess, other Asian countries are offering interesting opportunities to the most renowned fashion houses.
Japan is on the up. With the return of international tourists, Tokyo’s Ginza district is once again buzzing. South Korea also continues to shine: from Chanel to Cartier, the big brands are all there to capture the lucrative market in the city of Seoul. Singapore and Bangkok are quickly becoming luxury hotspots, attracting a young and affluent crowd that is accustomed to international standards and Westernised tastes, eager to adopt a lifestyle that reflects their social advancement. Lastly, India is on the rise, powered by a growing upper-middle class. In recent months, revenues for brands like Gucci and Louis Vuitton have already doubled in the country.
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How Can Western Luxury Brands Stay Ahead in China?
Here are four key strategies to maintain a leading position in the Chinese market:
- Sustainability – Chinese consumers are increasingly concerned about the origins of their products. Materials need to be as eco-friendly as possible, supply chains need to be transparent, and sustainability-based campaigns need to be real, not just image-driven.
- Cultural relevance – Local consumers love brands that embrace their cultural heritage. Collections inspired by local holidays like the Lunar New Year are particularly popular.
- Digital experiences – The youth of the Middle Kingdom are virtually immersed in online life, so why not meet them there? Dior’s virtual showrooms and live-streamed fashion events are hitting all the right notes. One interesting idea could be to create exclusive drops on WeChat or to offer augmented reality trials. However, caution is necessary; consumers on digital platforms are increasingly facing “choice paralysis.” Faced with an overwhelming number of products online, they often feel more daunted than excited, leading them to hesitate or even avoid making a purchase.
- Storytelling – Today’s consumers seek a deeper connection with brands and want to feel involved in their narratives. Consider sharing your brand story in creative and engaging ways, like behind-the-scenes videos showcasing craftsmanship or Q&A sessions with your designers.
What’s Next for Luxury in China?
Experts predict a recovery by mid-2025, but the brands that thrive will be the ones that adapt. Eco-friendliness, personalised shopping experiences, digital innovation, and cultural relevance will all play a role. The future of luxury in China isn’t about sticking to old formulas, it’s about embracing change and finding new ways to connect with a younger, more conscious audience. Remember, when it comes to luxury, standing still is never the plan.
Jolana Prokešová
BA student in Fashion Business, Paris