On January 21, 2025, Bain & Company released its annual report concerning the luxury market in China, projecting a significant downturn in the personal luxury goods segment for 2024. The report anticipates a decline of between 18% to 20% in sales within China's mainland market.

Looking back over the last five years, the Mainland Chinese luxury goods market has faced notable fluctuationsAccording to Bain’s findings, 2020 witnessed a remarkable contradiction; while global luxury markets shrank by 23%, China’s luxury sector surged by an impressive 48%. This positive momentum continued through 2021, with a staggering 36% growth rateNevertheless, the market hit a stumbling block in 2022, suffering a 10% dropThe following year showed signs of recovery with a 12% increase, yet this upward trajectory seems to have stalled as the new year unfolds.

The downturn has been primarily attributed to a lack of consumer confidence and increased cautiousness in spendingEven the more resilient high-value consumers (VICs) have adopted a conservative stance towards luxury purchasesIn the face of economic uncertainties, they now lean toward “dispersing risks,” diverting their expenditures toward a more diversified array of reputable investment assets.

Among various categories of luxury goods, watches appear to be the hardest hit, suffering a decline of as much as 28% to 33%. Bain's report highlights that this trend results from two main factors: an increasing rationality among Chinese consumers concerning watch purchases and a persistent price reduction in the secondary market for Swiss luxury timepieces, undermining the watch's perceived value retention.

Moreover, Bain's report emphasizes that the luxury goods market is also affected by the resurgence of outbound tourism and favorable exchange rates abroadRemarkably, overseas markets now constitute roughly 40% of the total luxury expenditure by Chinese consumers

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Spending on luxury items in Europe has rebounded to approximately 50% of pre-pandemic levels from 2019, while demand in the Asia-Pacific region has surged to around 120% of that benchmarkHowever, this growth in international markets has not been adequate to offset the decline in the mainland market, resulting in an overall predicted decrease of about 7% in the total luxury spending of Chinese consumers on a global scale for 2024.