How to thrive in the world’s fastest changing market

The Chinese luxury market, long regarded as the industry’s growth engine, is undergoing a profound transformation. After years of explosive expansion driven by domestic consumption and pandemic-related shifts, 2024 marked a historic turning point with an 18-20% decline in sales. As we enter 2025, the market is stabilizing, signaling the need for brands to recalibrate their strategies. To label this shift merely as a cyclical downturn would be myopic. It reflects deeper changes in consumer behavior and expectations. Chinese luxury buyers, especially millennials and Gen Z, are no longer satisfied with traditional markers of prestige. They demand more: more inspiration, more personalization, and more alignment with their values. The days when a logo alone could drive desirability are quickly fading. During recent in-depth interviews with Gen Z high-net-worth individuals in China, my team at Équité uncovered a fundamental dissatisfaction with the client experience. Through mystery shopping exercises across the country, we were able to confirm these insights in practice. Additionally, in recent luxury masterclasses in Shanghai and Hong Kong, I personally witnessed how dramatically brands can improve their sales approach when the right root causes are identified and people are trained in a transformative way. In a recent discussion on the Future of Luxury Podcast with Thomas Derksen, the host of the Made in China podcast, and Damian Maib, founder & CEO of Genuine, an e-commerce enabler and consultancy based in Shanghai that connects global brands with the Asian e-commerce landscape, I had the opportunity to take a closer look at the massive shift in client expectations, alongside two experts with extensive experience and success in China. The rise of experiential luxury One of the most striking trends reshaping China’s luxury landscape is the rise of experiential luxury. Younger consumers are increasingly prioritizing meaningful experiences over material possessions. This doesn’t mean they’ve abandoned luxury products; rather, they now seek a seamless blend of both. A luxury handbag or watch must come with an emotional story or an exclusive experience that enhances its value. In my mystery shopping exercises and in the in-depth client interviews, the absence of storytelling contrasts starkly with client expectations. Complacency is no longer an option. For brands, this means rethinking their approach to customer engagement. Collaborations with wellness retreats, immersive pop-ups, or curated cultural events can create the kind of “wow” moments that truly resonate with Chinese consumers. However, what is crucial is ensuring a logical and inspirational alignment between the brand and the experience. These experiences must go beyond mere transactions, fostering emotional connections that build long-term loyalty. A social media-first ecosystem China’s digital ecosystem is unlike any other in the world. Super apps like WeChat, Tmall, and Alibaba dominate daily life, offering everything from payments to social networking to e-commerce. Social commerce has emerged as a dominant force, with platforms like Douyin (TikTok’s Chinese counterpart) and RedNote seamlessly integrating shopping into their user experiences. Today, social commerce accounts for 20% of China’s e-commerce market, a number that continues to grow at breakneck speed. For luxury brands, mastering this ecosystem is essential. It’s not just about being present on these platforms but understanding how to engage audiences authentically. Livestreaming, influencer partnerships, and interactive content are no longer optional — they have become prerequisites for success. However, many managers still underestimate how dramatically different the requirements for success are in an increasingly social-commerce-driven luxury world. One data point that surprises many is the sheer number of paid influencers in China today: it has just surpassed 100 million, or roughly 7% of the total population. While recording videos for my podcast in several luxury brand stores, I was surrounded by others doing the same or livestreaming. Another surprise for many is that standalone brand websites have virtually become irrelevant in China. The price sensitivity paradox A critical factor reshaping China’s luxury market is price sensitivity. A recent study by Bain & Company revealed that nearly half of luxury consumers now view luxury goods as overpriced. This perception has been amplified by the rise of domestic Chinese brands offering comparable (or, in the case of cars, often higher-perceived) quality at lower price points. To address this challenge, international brands must justify their pricing through innovation and storytelling. It’s not enough to rely on heritage alone. Brands must demonstrate how their products enhance lives in tangible ways while creating an emotional connection. Call to action To embrace radical client-centricity, there is no time to waste. The speed of change in China is about twice as fast as in any other country. By the time many Western brands make decisions, they have already been leapfrogged by Chinese competitors — just ask managers of Western luxury car brands. Clients need to be at the center of every decision — not just in words but in actions. This means dramatically increasing investments in client-focused storytelling and training. The stakes have never been higher: brands that fail to adapt risk irrelevance in one of the world’s most dynamic markets. To dive deeper into these insights and hear firsthand from experts on the ground in Shanghai, tune into the latest episode of the Future of Luxury Podcast with Dr. Daniel Langer. I explore with my guests how brands can navigate these seismic shifts and emerge stronger than ever. This is an opinion piece by Daniel Langer, CEO of Équité, recognized as one of the “Global Top Five Luxury Key Opinion Leaders,” and advisor to some of the most iconic luxury brands in the world. He serves as an executive professor of luxury strategy and pricing at Pepperdine University in Malibu and as a professor of luxury at NYU, New York. Daniel has authored best-selling books on luxury management in English and Chinese, and is a respected global keynote speaker. Daniel conducts in-person masterclasses on various luxury topics across the world. As a luxury expert featured on Bloomberg TV, Forbes, The Economist, and others; Daniel holds an MBA and a Ph.D. in luxury management, and has received education from Harvard Business School. Sign up for his online luxury masterclasses at the Jing Academy. Follow him: LinkedIn and Instagram. Listen to his Future of Luxury podcast.

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How to thrive in the world’s fastest changing market