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Forecast Projected Growth of Chinese Luxury Market in 2025: A Shift Towards Experience, Innovation, Chinese Brands and Sustainability
HONG KONG SAR - Media OutReach Newswire - 13 December 2024 - MDRi, a leading provider of business insights, today released its China Luxury Consumer Forecast 2025, presenting an in-depth analysis of luxury consumption trends in Mainland China and Hong Kong. The report highlights a market in transition, where Chinese consumers exhibit sophisticated preferences for experiences, domestic brands, sustainability, and innovation.
Despite the prevailing macroeconomic uncertainty and inconsistent growth across various luxury segments, the overall sentiment for luxury spending remains robust. The report reveals that 56% of Mainland Chinese luxury consumers plan to increase their spending in 2025, compared to only 48% in Hong Kong. This divergence is largely influenced by a more pessimistic outlook on Hong Kong's economy, shaped by international monetary policies and geopolitical tensions.
Economic uncertainty continues to loom over Hong Kong, where 12% of luxury consumers intend to reduce their spending next year, compared to 9% in Mainland China. This cautious sentiment reflects broader concerns about the region's economic stability.
In Mainland China, luxury spending is expected to be driven by high-end jewellery, handbags, and travel experiences, with nearly 60% of consumers planning to allocate more of their budgets to luxury travel. In contrast, positive sentiment is less pronounced in Hong Kong, where the luxury market is becoming increasingly polarized. Over 10% of consumers in each luxury category in Hong Kong plan to reduce their spending, showcasing a cautious approach, especially in categories like handbags (9%) and travel experiences (4%).
This report underscores the importance of understanding the evolving preferences of luxury consumers in both regions, as brands navigate a rapidly changing market landscape.
Simon Tye, CEO of MDRi, commented: "Mainland China is currently experiencing a dynamic shift in luxury market. Recent industry data has unveiled contrasting trends, with certain luxury conglomerates witnessing declines in Asia-Pacific revenues, while others have observed growth in parallel instances. This disparity prompts inquiries into the authentic sentiments of Chinese luxury consumers. Luxury brands should obtain deep understanding of the unique preferences, behaviour, and aspirations of consumers in these cities that are conducive to crafting highly targeted and resonant marketing strategies. The strong consumer demand for luxury watches, handbags, jewellery, and travel experiences positions these categories as key growth drivers for the industry. Brands that make consumer insights the foundation of their product development and go-to-market plans will be best positioned to solidify their leadership in these high-potential luxury segments; and agile brands that continuously monitor and respond to changing consumer preferences will be the ones to dominate these in-demand categories."
The report identifies five key trends shaping the Chinese luxury market in 2025:
1. Luxury Lifestyle & Experiences
1. Luxury Lifestyle & Experiences
Mainland Chinese consumers are increasingly prioritising lifestyle-driven luxury, with 57% planning to boost spending on wellness, fitness, and luxury travel. Gen Z emphasises self-care and wellbeing, while Millennials seek exclusive, adventurous experiences that create lasting memories. Notably, wellness and spa treatments rank among the top items the youngest consumers (aged 21-25) in Mainland China plan to spend more on in the next 12 months (63%, ranking number 2 and just slightly below health and fitness activities (64%)).
2. Shopping Destinations
Mainland China's Tier 1 cities, led by Shanghai, remain dominant luxury shopping hubs. However, Sanya is emerging as a rising destination, with 23% of Mainland Chinese luxury shoppers making purchases there in 2024, driven by duty-free policies. Hong Kong remains a luxury shopping destination for Tier 3 city shoppers but is losing appeal among Tier 1 consumers, who increasingly find comparable luxury experiences closer to home. Hong Kong's attractiveness among lower-city luxury consumers could be partly attributed to the Chinese Government's efforts in fostering Hong Kong's tourism in these cities.
3. Preferences for Domestic Brands
National pride is driving a growing preference for domestic luxury, with 56% of Mainland Chinese consumers planning to buy more from Chinese luxury brands in 2025. Millennials, in particular, balance global prestige with domestic pride, driving demand for both French and Chinese brands, especially in watches and fashion. The success and influence of Chinese luxury brands have the potential to shape the future direction of the global luxury industry, setting new standards and pushing the boundaries of what luxury means in the years to come.
4. Sustainability and Second-hand Luxury
Sustainability is now a central value for Mainland Chinese consumers, with 85% stating it is important and 42% willing to pay a premium for sustainable luxury products. Younger luxury consumers (aged 21-25) are leading the charge in embracing the allure of second-hand premium products highlighting the rising environmental consciousness. Second-hand luxury is also gaining traction, with 59% of Mainland Chinese luxury consumers purchasing pre-owned items in 2024, particularly small leather goods and shoes. Younger consumers, especially Gen Z, view second-hand luxury as a way to express individual style rather than just a cost-saving option.
5. The Role of Technology and AI in Luxury
Mainland Chinese consumers are embracing tech-driven luxury, with 90% willing to pay a premium for innovative products. AI-powered personalisation is seen as a key enabler for tailored customer experiences, though concerns about its impact on exclusivity remain, with 66% expressing reservations about AI-driven mass customisation.
Driven by evolving consumer sophistication and upper-middle-class expansion, Chinese luxury consumers are increasingly globally mobile, technologically advanced, and discerning. With 42-47% of Chinese luxury consumption projected to occur abroad, Mainland China's luxury market is setting global trends. Growth will be propelled by domestic brands, sustainability, and the rising influence of younger consumers.
Reflecting on 2024, Mainland China showed stronger growth in the luxury sector, with an average annual spend of RMB234,500, a 7% year-on-year increase. Spending in Tier 2 cities surged by 22%, outpacing Tier 1 cities. In Hong Kong, luxury spending rose modestly, with average expenditures increasing by 3% to HKD223,900. Significant growth was seen in high-value items like jewellery (+64%) and handbags (+66%), highlighting a preference for big-ticket purchases.
The survey was conducted from April to May 2024, with a sample size of 1,500 luxury consumers from Mainland China and 500 luxury consumers from Hong Kong. All respondents were required to have made purchases of luxury items and to have spent a minimum of 50,000 in their local currencies on luxury purchases within the past 12 months.
Simon said: "The Chinese luxury market is undergoing a profound transformation, largely influenced by the preferences of the younger generation, particularly Gen Z. This cohort is not only redefining luxury consumption but is also poised to reshape the global luxury industry. Their demand for personalization, wellness, and sustainability, combined with a strong inclination towards innovative Chinese brands, signals a departure from traditional luxury norms. As they prioritize exceptional experiences and meaningful connections over mere ownership, existing and new brands must adapt to these evolving expectations. By continuing to learn about their needs, building strong relationships with them and investing in personalized services and holistic wellness initiatives, luxury brands can foster loyalty and build lasting relationships with this discerning demographic, ultimately revolutionizing the industry."
For a deeper dive of the report, please click here.
For further information, interviews, or comments, please contact info@mdr-i.com.
Appendix
Categories Overview of Chinese consumers (Top 3 brand aware and brand purchased)
Luxury Watch
| China | Hong Kong | ||
| Brand aware | Brand purchased | Brand aware | Brand purchased |
| Cartier ▲2% | Rolex - | Cartier ▲8% | Rolex ▲1% |
| Bulgari ▲2% | Omega ▲1% | Rolex ▲7% | Omega ▲1% |
| Rolex ▲4% | Cartier ▼4% | Omega ▼2% | Longines ▲10% |
Luxury Jewellery
| China | Hong Kong | ||
| Brand aware | Brand purchased | Brand aware | Brand purchased |
| Cartier ▼1% | Cartier ▲1% | Gucci ▲14% | Cartier ▲8% |
| CHANEL - | CHANEL - | Cartier ▲10% | CHANEL ▲8% |
| Bulgari ▲3% | Bulgari ▲2% | CHANEL ▲11% | Gucci ▲3% |
Luxury Fashion
| China | Hong Kong | ||
| Brand aware | Brand purchased | Brand aware | Brand purchased |
| CHANEL ▲5% | CHANEL ▲2% | CHANEL ▲11% | CHANEL ▲5% |
| Balenciaga ▼6% | Balenciaga ▼1% | Balenciaga ▲2% | Balenciaga ▲4% |
| Dior ▲2% | Dior - | Gucci ▲9% | Gucci ▲5% |
Luxury Handbag
| China | Hong Kong | ||
| Brand aware | Brand purchased | Brand aware | Brand purchased |
| CHANEL - | CHANEL ▼2% | Balenciaga ▲4% | CHANEL ▼1% |
| Balenciaga ▼1% | Balenciaga ▼1% | CHANEL ▲9% | Balenciaga ▲1% |
| Dior ▲1% | Dior ▲1% | Hermes ▲12% | Dior ▲6% |
Beauty and Cosmetics
| China | Hong Kong | ||
| Brand aware | Brand purchased | Brand aware | Brand purchased |
| Dior Beauty ▲2% | Estee Lauder ▲7% | Lancôme ▲9% | Shiseido ▲6% |
| Estee Lauder ▲3% | Lancôme ▲1% | Shiseido ▲5% | SKII ▲1% |
| Lancôme ▲4% | Dior Beauty ▲5% | SKII ▲9% | Lancôme ▲1% |
Wine and Spirits
| China | Hong Kong |
| Brand aware | Brand aware |
| Chivas ▲2% | Rémy Martin ▲6% |
| Rémy Martin - | Martell ▲4% |
| Hennessy ▼1% | Hennessy ▲6% |
Consumer preferences of each luxury category
| Luxury Category | Mainland Chinese Preferences | Hong Kong Preferences |
| Watches | - Prefer multifunctional and jewellery watches - 31% prefer Chinese-made watches - Value brand design | - Favor simple, everyday styles - 12% prefer Chinese watches - Consider resale value |
| - Prioritize craftsmanship | ||
| Jewellery | - Favor yellow gold (55%) and diamonds (52%) - Value easy recognition | - Prioritize diamonds (61%) - Emphasize craftsmanship |
| - Resale value influences decisions | ||
| Fashion | - Recognize CHANEL and Balenciaga as top brands - Prioritize quality of materials and comfort | |
| Handbags | - Prioritize style and aesthetic appeal | - Emphasize brand awareness and material quality |
| Cosmetics | - Prefer international brands - 55% purchase through e-commerce platforms | - Favor Japanese brands |
| - Prioritize ingredients and efficacy | ||
| Wine and Spirits | - Prefer Chinese Baijiu (56%) and high-end whiskey (56%) - Values brand awareness and taste | - Prioritize high-end whiskey (53%) and red wine (45%) - Values taste and cost-effectiveness |
| - Increases in high-end whiskey purchases | ||
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MDRi
Based in Hong Kong and with operations in London and Singapore, MDRi is a leading provider of business insights, empowering organisations with data-driven advice to make informed decisions and drive growth.
Through advanced analytics, industry expertise, and innovative methodologies, MDRi uncovers strategic opportunities, mitigates risks, and helps businesses stay ahead in a rapidly evolving marketplace. With a commitment to excellence and client-centricity, MDRi is revolutionising the way organisations harness insights for success.
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