China signals: Emotional consumption, beauty rebound, and bigger retail

The global retail landscape this week is being defined by a stark contradiction: unshakable consumer demand collides with intensifying ethical and regulatory scrutiny. As major beauty giants like Coty and Amorepacific report a robust rebound in China, and Shein projects massive profit despite protests in Paris, the market sends a clear message — the engines of consumption are roaring back, but the rules of the game are changing fast. From the emotional economy of Pop Mart’s blind boxes to the strategic expansion of Shanghai’s Plaza 66 luxury mall, success now hinges on mastering both desire and integrity. Beauty sector revival points to broader luxury uptick Market intel: The third-quarter earnings season has confirmed a robust recovery for the beauty sector in China. A trio of major international players — Coty, Amorepacific, and Kao — all reported significant growth, painting a picture of broad-based demand resurgence. Coty highlighted a standout 15% growth in its Chinese prestige business, Amorepacific saw Greater China sales rebound with 9% growth led by Sulwhasoo and Laneige, and Kao's Asia ex-Japan cosmetics sales surged nearly 50%, driven by the stellar online performance of focus brands. This collective uptick, spanning Western and Asian beauty conglomerates, signals a return of consumer confidence and spending power in the critical Chinese market. Market indicator: The synchronized rebound across price segments — from Coty's premium fragrances to Kao's clinically-oriented Curél — suggests the Chinese beauty market is heating up across the board. For luxury brands, this is a vital leading indicator. A thriving beauty sector often foreshadows strengthened demand for higher-ticket luxury items, as consumer appetite for personal grooming and brand-centric spending returns. The success of premium skincare lines like Sulwhasoo and Sensai, in particular, points to a receptive audience for high-margin, efficacy-driven products, a positive sign for the luxury fashion and watch segments. Plaza 66 expansion signals intensifying mall competition Market intel: Shanghai's renowned luxury mall, Hang Lung Properties' Plaza 66, is in talks to take over the management of the adjacent Meilongzhen Plaza. This strategic move is a direct response to intensifying competition from newer retail powerhouses like IFC Shanghai and Taikoo Li Qiantan. Having long been a barometer for China's luxury market, Plaza 66 has recently faced challenges due to its limited physical space, which restricts brand diversification and experiential retail. The acquisition is a clear bid to secure the necessary square footage to expand its offerings and reinforce its dominance in the city's most prestigious retail district. Market indicator: For the luxury industry, Plaza 66 is more than a mall; it's an institution. Its expansion is a defensive maneuver in the high-stakes battle for Shanghai's luxury shoppers. This move signals that established players are no longer relying on legacy prestige alone and are actively adapting to a more competitive landscape. For luxury houses, this could mean new opportunities for larger flagship stores, enhanced in-mall experiences, and a renewed focus on the Nanjing West Road area, ensuring that this historic luxury corridor remains at the heart of Shanghai's retail scene. Pop Mart livestream gaffe reveals emotional consumption’s resilience Market intel: A Pop Mart livestream incident went viral after the broadcast ended, capturing staff members remarking that a 79 RMB ($11.10) blind box was "a bit expensive" and that "someone will pay for it." The unguarded comments sparked an online debate about the true value of emotional consumption, making loyal fans feel betrayed by the candid admission. However, the controversy had a muted commercial impact; the implicated Dimoo series sold out immediately, hidden editions commanded resale premiums of over 700%, and Pop Mart's stock price subsequently rose 8%, buoyed by stellar quarterly results. Market indicator: The Pop Mart incident is a masterclass in the dynamics of the modern Chinese consumer market. The backlash revealed an underlying anxiety about pricing and value, a sentiment luxury brands must constantly navigate. Yet, the business’ commercial resilience proves the formidable power of a strong IP and community and points to the growing importance of emotional spending, whereby consumers chase non-functional pleasure. For luxury, this reinforces that the ultimate defense against value criticism is an unassailable brand narrative and emotional equity. While a 79 RMB ($11.10) blind box and a $2,900 handbag are worlds apart, both rely on consumers buying into a story — and the Pop Mart case shows that when the story is strong enough, it can withstand a PR storm. Shein protests underscore non-financial risks for Chinese brands Market intel: Shein's debut of its first permanent physical store in Paris was a spectacle of contrast, with long lines of budget-conscious shoppers facing off against protesters decrying its environmental and labor practices. The controversy escalated immediately as the French government moved to suspend Shein’s online platform over illegal content, with Italy's government and fashion industry also uniting against its expansion. Despite this mounting regulatory and public relations crisis, Shein projected $2 billion net profit for 2025, nearly doubling its 2024 results, proving that mass consumer demand remains fiercely strong. Market indicator: The Shein saga presents a complex case study for Chinese brands going global. Its financial success demonstrates the immense power of an affordable, trend-driven model. However, the fierce European backlash highlights the growing non-financial costs of global expansion, particularly around sustainability and ethics. For the luxury sector, Shein operates in a different universe, but the protests underscore a broader European narrative that is increasingly critical of disposable fashion. This environment may ultimately benefit luxury's core value proposition of longevity and craftsmanship, even as it forces all Chinese consumer brands to carefully manage their ESG profile abroad. The Weekly Compass tracks key market signals from China and presents our editorial team’s take on their implications for luxury. In this recurring column, we analyze everything from beauty sector recoveries and mall expansions to consumer controversies and regulatory developments.

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China signals: Emotional consumption, beauty rebound, and bigger retail