After five years of exponential growth, luxury in China is slowing down. So says Bain.

2022 was a difficult year. Despite strong momentum at the beginning of the year, Covid-related lockdowns hampered Chinese shopping from the second quarter onward, along with a declining housing market, rising unemployment, and pandemic fears. Most brands in China declined in 2022 due to challenging conditions. The watch market saw the sharpest decline, with sales plummeting 25 per cent year on year. The fashion and lifestyle categories dropped by 15 per cent to 20 per cent while jewelry and leather goods performed slightly better, with a fall of ten per cent to 15 per cent.

The economic slowdown hit entry-level luxury consumers more than high net worth customers. Segments with a strong online presence were less impacted, and put up a slightly better performance than others. Some Chinese luxury brands achieved sales through high-spending customers that were 40 percent higher than the global average, especially in digital channels.

However positive conditions are expected to return by the first quarter of 2023. Consumer fundamentals are still solid, thanks mainly to the concentration of middle- and upper-income consumers, a cluster that will double by 2030.