Why China will save luxury in 2025

Data Snapshot The global luxury market is projected to rebound by late 2025, with Deutsche Bank forecasting 5% or more sales growth in the second half of the year. After a challenging 2024 that saw a rare 2% contraction in personal luxury goods spending, industry leaders anticipate mid-to-high single-digit growth in 2025 as consumer confidence stabilizes and spending patterns normalize. Mainland China, a critical driver of global luxury, experienced a sharp downturn in 2024 due to shifting spending abroad, economic pressures, and a “luxury shaming” stigma. However, Deutsche Bank expects these challenges to diminish, supported by recovering consumer sentiment and potential policy measures aimed at boosting domestic consumption. Analysis For mainland China, 2025 is poised to mark a turning point. The previous year’s 35% decline in Chinese luxury spending during Q3 highlighted the vulnerabilities of an overheated market suddenly facing geopolitical and economic pressures. Factors such as cautious consumer behavior, overseas luxury spending, and the rise of “luxury shaming” significantly dampened demand. Yet, the recovery narrative for 2025 suggests a gradual revival as these headwinds ease. Deutsche Bank forecasts that luxury spending in China will shift away from the subdued “quiet luxury” aesthetic of 2024, with consumers embracing confidence-driven purchases. Domestic consumption will likely strengthen as government policies encourage spending at home, supported by improved logistics, localized pricing strategies, and targeted promotions by luxury brands. These measures are intended to recapture spending that flowed to overseas markets, reflecting a strategic pivot toward meeting Chinese consumers on their home turf. Likely cultural and societal shifts in 2025 also point to a growing embrace of sustainability and value alignment. As “luxury shaming” fades, brands that integrate eco-conscious narratives and emphasize ethical practices will resonate more strongly with younger, values-driven consumers in China. At the same time, the market’s appetite for smaller indulgences — such as premium beauty products and eyewear — will remain robust, offering entry points for cautious buyers and younger demographics who are re-entering the luxury ecosystem. Compared to 2024, when many luxury brands in China saw double-digit revenue declines, 2025 promises a more balanced trajectory. Growth is expected to stabilize in the mid-single digits, with the likes of Burberry well-positioned to capture the upturn thanks to strategic investments in localized experiences and entry-level product offerings. Meanwhile, brands heavily reliant on static or globalized strategies may continue to face challenges, underscoring the importance of agility in the region. The Jing Daily Data Snapshot presents a swift take and analysis on the latest data from the leading research firms in the Chinese luxury and lifestyle markets.

Why China will save luxury in 2025

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Published December 14, 2024

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Why China will save luxury in 2025