China signals: Quality over scale, local wins, and experiential depth

China’s consumer market is showing selective strength — and sharper strategic intent. Hang Lung’s resilient mall portfolio points to a flight to quality in retail real estate, while Starbucks’ 11% year-on-year revenue growth in China in its first fiscal quarter of 2026, which ended on December 28, 2025, underscores what deep localization can still achieve in a saturated market. Pop Mart’s decision to establish its European headquarters in London signals a new phase of global IP expansion, even as questions linger over the durability of its hype-driven model. Meanwhile, the latest Hurun survey offers a macro snapshot of a broader recalibration: affluent Chinese consumers are shifting spending away from hard luxury goods and toward experience-led categories such as travel, health, and well-being — redefining what premium consumption looks like in 2026. Hang Lung’s core-city bet and the flight to quality Market intel: Hang Lung Group reported a mixed performance in 2025, with total revenue down 11% while underlying profit rose 3%, reflecting the divergent fortunes within its mainland portfolio. Its top-tier malls in core cities remained resilient, while regional assets — including projects in Wuxi and Dalian — delivered double-digit growth, underscoring the strength of well-located, high-quality retail even amid broader market pressures. The results reinforce Hang Lung’s “V.3” strategy, which prioritizes reinvestment in established core cities and a disciplined approach to new development, on the premise that flagship assets will continue to outperform in a more selective consumer environment. Market indicator: The developer’s results reflect a broader bifurcation taking shape across China’s retail real estate market. As discretionary spending becomes more selective, scale alone is no longer enough: performance is increasingly concentrated in experience-rich, irreplaceable assets located in top-tier cities. For luxury and premium brands, this reinforces the strategic importance of being in the right mall — and doing the right concept — rather than pursuing blanket expansion. The company’s continued confidence in long-term foreign capital inflows further suggests that flagship commercial assets in gateway cities will remain critical hubs, serving not only domestic consumers but also a gradually returning international business and tourism audience. Starbucks shows why localization still wins in China Market intel: Starbucks delivered a strong performance in China in its first fiscal quarter of 2026, reporting 11% year-on-year revenue growth and a 7% rise in comparable store sales, driven by increased customer traffic. The results reflect the payoff from a deeply localized strategy, spanning expansion into lower-tier cities, tailored low-sugar product offerings, and high-impact IP collaborations with franchises such as Disney and Zootopia. The momentum comes ahead of Starbucks’ $4 billion transaction with Boyu Capital, which will see the U.S. coffee chain bring in a Chinese partner to help steer its next phase of growth in a highly competitive market. Market indicator: The multinational’s China performance illustrates what the second act of a global brand in the market now demands. Having reached near-ubiquity, growth is no longer driven by scale alone but by cultural granularity — an ability to read regional tastes, shape occasion-led consumption, and tap into local pop culture with credibility. For consumer brands across categories, the takeaway is clear: China rewards those willing to operate as local players, with China-specific product development, marketing narratives, and store experiences. Localization is no longer a differentiator; it is the price of admission for sustained growth. Pop Mart’s London HQ points to a new chapter of global IP ambition Market intel: Pop Mart has named London as its European headquarters, outlining plans to open seven new stores in the U.K. — including a flagship on Oxford Street — and a further 20 across Europe. The expansion builds on surging overseas performance: in the first half of 2025, the company reported that revenue from Europe and other international markets jumped 729.2% year-on-year to RMB 480 million ($67 million), reflecting rapid new customer acquisition outside China. The London move also positions Pop Mart within a major global creative hub, enabling closer collaboration with local artists and IP partners as it shifts from exporting Chinese IP to building a more internationally integrated creative ecosystem. Market indicator: The toymaker’s expansion marks a clear evolution from a China-centric collectibles brand into a global lifestyle IP player. Establishing a base in London lends cultural legitimacy and provides access to Western creative talent, helping the company localize its offering rather than simply export Chinese-designed IP. At the same time, Pop Mart’s reliance on limited editions and secondary-market hype continues to invite scrutiny over long-term sustainability. The test in Europe will be whether the brand can convert novelty and scarcity into enduring emotional attachment — building community, not just demand, as it scales internationally. Hurun: China’s affluent go deeper into experience-led luxury Market intel: The latest Hurun China Luxury Consumer Survey points to a shift in how the country’s affluent define value. According to the research, China’s high-end consumption market declined 5% year-on-year in 2025 to RMB 15.6 trillion, as spending intentions moved away from hard luxury categories such as watches and jewellery and toward services and experiences — particularly travel, health, education, and well-being. While gold remains the top investment choice, interest in overt status symbols has softened as consumers prioritise personal enrichment and family-focused spending. Market indicator: Hurun’s findings point to a deepening commitment to experience-led luxury, rather than a wholesale pivot away from goods. China’s affluent consumers are increasingly layering spending on travel, health, and personal enrichment onto their existing consumption patterns, expanding the definition of luxury beyond products alone. For luxury brands, this raises the bar on storytelling: craftsmanship and heritage remain foundational, but they must now be complemented by emotional resonance and experiential value. At the same time, the shift creates growing opportunities in adjacent premium services — from curated travel and wellness to culture, art, and education — as China’s luxury economy evolves into a more holistic lifestyle ecosystem.

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China signals: Quality over scale, local wins, and experiential depth