China signals: Selective luxury, Eastern beauty, and a PE power play

Recent earnings point to a cautiously improving picture for China’s luxury market. Burberry and Richemont have returned to growth after a challenging period, while brands such as Ralph Lauren and On continue to deliver standout performance. At the same time, three investment trends are reshaping the landscape: L’Oréal is leaning into “Eastern Aesthetics,” Chinese beauty giants are turning to Hong Kong listings to fund global ambitions, and domestic private equity firms are stepping in to take control of international food and beverage brands — marking a broader shift toward localised ownership. Earnings point to a more selective Chinese luxury consumer Market intel: The latest earnings season points to a gradually strengthening outlook for China’s luxury market. Burberry posted a 3% like-for-like sales increase in Mainland China — its first rise in more than a year — suggesting early traction for its turnaround strategy. Richemont also saw its sales across Mainland China, Hong Kong, and Macau return to growth in the second quarter, led by robust demand for high-margin jewelry. They join brands such as Ralph Lauren, which reported over 30% growth in China, and On, which posted 109% revenue growth in Asia-Pacific, underscoring the breadth of recovery across price tiers and categories. Market indicator: The synchronized rebound across diverse segments — from Burberry’s accessible luxury to Richemont’s high jewelry — points to a more confident yet discerning Chinese shopper. Richemont CEO Nicolas Bos has described a shift from “YOLO” (You Only Live Once) to “YONO” (You Only Need One), highlighting a move toward selective, value-driven purchasing. For luxury brands, this signals that Chinese consumers are prioritizing timeless design, product quality, and brand heritage over trend cycles. In this environment, labels with clear identities and consistent craftsmanship are best positioned to win. L’Oréal’s Lan deal exemplifies the rise of ‘Eastern Aesthetics’ Market intel: L’Oréal has made a minority investment in Chinese clean beauty brand Lan through its Shanghai Meicifang investment arm — marking Meicifang’s first independent investment in a local skincare brand. The move follows earlier co-investments in fragrance-led labels To Summer and Documents. Lan, which has built strong traction with its oil-based skincare approach and refined aesthetic rooted in traditional Chinese principles, represents the growing consumer appetite for beauty brands that integrate cultural identity with scientific formulation. Market indicator: L’Oréal’s portfolio signals where it believes the next wave of growth will come from. By grouping Lan with To Summer and Documents, the company is making a definitive bet on the commercial and cultural strength of “Eastern Aesthetics.” What began as a marketing shorthand has evolved into a mature, consumer-led movement that blends traditional Chinese ingredients, sensorial design, and contemporary science. For global luxury and beauty houses, the lesson is clear: Chinese consumers increasingly reward brands that demonstrate authentic cultural fluency — not merely imported narratives reframed for the local market. Marubi’s Hong Kong IPO points to the global ambition of Chinese beauty giants Market intel: Chinese cosmetics leader Marubi Biotech has announced plans to seek a Hong Kong listing, following in the footsteps of peers such as Proya and Forest Cabin. These moves reflect the domestic beauty sector’s push to strengthen capital reserves and expand internationally amid intensifying competition at home. The strategy has proved lucrative: Mao Geping, which listed in Hong Kong last December, has since become China’s most valuable listed pure-play beauty company by market capitalization — a benchmark that underscores the global investment appetite for high-performing C-beauty brands. Market indicator: The rush toward Hong Kong listings marks a strategic shift among mature C-beauty players that have already secured significant domestic market share and are now seeking capital, credibility, and visibility for global expansion. With stronger balance sheets, these brands can increase investment in R&D, elevate their creative direction, and accelerate retail rollouts overseas — directly challenging international beauty conglomerates on their home turf. For the wider luxury sector, the message is clear: China’s leading consumer brands are entering a new phase of outward ambition, starting with beauty but likely expanding into adjacent premium and luxury categories. Burger King sale reveals the new imperative of local capital and control Market intel: A major shift is unfolding in China’s food and beverage sector, with international brands increasingly handing operational control to Chinese private equity. In the latest example, CPE Funds will inject approximately 2.5 billion RMB ($350 million) in new capital into Burger King China, securing an 83% stake while parent company Restaurant Brands International retains 17%. The deal follows Boyu Capital’s acquisition of a majority stake in Starbucks China, and comes amid reports that Chinese investors — including backers of Luckin Coffee — have explored a potential bid for Costa Coffee. The model mirrors the successful transformation of McDonald’s China under Citic Capital, which nearly tripled its store footprint and turned the market into one of its most profitable globally. Market indicator: The era of international brands operating independently in China is fading. The new blueprint for scale and resilience is deep partnership with local capital — the kind that brings not only funding, but also on-the-ground insight, supply-chain access, regulatory fluency, and faster execution. For luxury, the parallels are clear: while the ownership structures differ, the underlying principle is the same. Winning in China increasingly requires empowered local leadership and a high degree of localisation. Brand heritage alone is no longer enough; success depends on adapting global identity to local realities with precision and speed.

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China signals: Selective luxury, Eastern beauty, and a PE power play