Are Western Luxury Brands Losing Appeal in China?

For much of the past three decades, Western luxury brands held a privileged position in China. French fashion houses, Italian designers and Swiss watchmakers became powerful symbols of success, sophistication and social mobility. A Louis Vuitton handbag, a Rolex or a piece from Chanel said far more than an appreciation of craftsmanship or design. For a generation of newly affluent Chinese consumers, these purchases represented personal achievement and membership of a growing, prosperous class.

That relationship has become more complicated. Chinese consumers are more selective about where they spend their money, and domestic premium brands are emerging as credible alternatives to their international competitors. Consumer confidence has weakened and luxury spending has slowed for a prolonged period, so even some of the world’s most recognisable fashion houses have struggled to sustain the growth they once enjoyed in China.

Bain & Company’s 2025 China Personal Luxury Report highlights the pressure on China’s luxury market, alongside consumer preferences. Domestic brands are gaining ground in Categories from jewellery and handbags to premium beauty, suggesting that Chinese consumers remain willing to pay substantial premiums for products they find genuinely desirable.

The open question is whether these developments reflect a temporary response to difficult economic conditions or a more lasting change in how Chinese consumers see Western luxury. Answering it means looking at what motivates luxury purchases, how domestic competitors have risen and how cultural values are shifting. For international brands, understanding these changes will be essential to staying relevant in one of the world’s most important luxury markets.

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Any discussion of Western luxury’s appeal has to start with China’s economic environment. The luxury sector has had several difficult years, shaped by weaker consumer confidence, the prolonged property downturn and greater caution among middle- and upper-income households. Discretionary spending has fallen as a result, particularly among aspirational consumers who previously contributed significantly to the market’s expansion.

The impact has been substantial. Bain estimates that mainland China’s personal luxury goods market contracted by approximately 17% to 19% in 2024, before the decline moderated to 3% to 5% in 2025. There were tentative signs of improvement in the second half of 2025, but the recovery has been uneven, with significant differences between product categories and consumer segments.

Beauty and personal care proved comparatively resilient, with growth of approximately 4% to 7% in 2025. The fashion and lifestyle category declined by 5% to 8%, and sales of leather goods and handbags fell by 8% to 11%. Watches saw an even sharper contraction of 14% to 17%. Bain links this decline to more cautious purchasing decisions, growing interest in alternative investments, second-hand watches and sports-oriented or smart devices. Jewellery performed somewhat better, although the category still declined by between 0% and 5%.

These differences point to a market where Chinese consumers have become more deliberate about their luxury purchases. Many still spend on products that offer compelling benefits, whether that is personal enjoyment, distinctive design or perceived long-term value. Purchases that are harder to justify, particularly after several years of substantial price increases, are increasingly being reconsidered.

Pricing deserves particular attention for Western fashion houses. Luxury brands have traditionally used higher prices to reinforce exclusivity and protect their premium positioning. That becomes harder to sustain when consumers feel that product quality, design or innovation has not kept pace with the price increases. Bain specifically identifies rising prices and insufficient innovation as factors contributing to weaker demand in leather goods, a category that has historically been one of the most important sources of growth for European luxury groups.

Second-hand luxury is also gaining acceptance. Bain estimates that China’s pre-owned luxury market expanded by 15% to 20% in 2025, although it remains relatively small compared with the primary market. The willingness to buy pre-owned designer goods suggests that consumers are increasingly comfortable separating the value of a luxury product from the experience of buying it new. For some, an authenticated second-hand handbag offers access to the craftsmanship and prestige of an established fashion house without the full retail price.

Luxury spending in mainland China also needs to be separated from purchases Chinese consumers make overseas. According to Bain, approximately 65% of Chinese luxury consumption took place domestically in 2025, whilst the remaining 35% occurred abroad. International price differences, exchange rates and travel patterns can therefore influence reported mainland sales without necessarily indicating a corresponding decline in overall interest in particular brands.

The economic slowdown clearly explains part of the pressure facing international luxury houses. It does not fully account for the emergence of new competitors or the changing expectations consumers bring to their purchases, which have been taking shape for considerably longer.

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To see why the current changes matter, it helps to look at how Western luxury brands established their position in China in the first place. As China’s economy expanded during the 1990s and 2000s, rising household wealth created a rapidly growing audience for international premium products. European fashion houses offered newly affluent consumers access to brands that were already associated with success and sophistication around the world. Prestigious flagship boutiques opened in major cities, giving shoppers the chance to experience products that had previously been difficult to obtain, and owning recognisable luxury goods became an increasingly visible expression of personal achievement.

Luxury consumption in this period was closely connected to status and the Chinese concept of mianzi (面子), commonly translated as face. Buying a recognisable international brand could signal a person’s prosperity, professional achievements and position in society. A fashion house’s international reputation was especially valuable because it provided a widely understood symbol of success.

The relationship between Chinese consumers and luxury brands was already evolving well before the recent economic downturn. In the academic volume Luxury Fashion Retail Management, published by Springer in 2017, researchers Francesca Bonetti, Patsy Perry and John Fernie examined the development of China’s luxury retail sector and documented how increasing market sophistication was changing consumer preferences. Their research identified growing interest in distinctive products, more exclusive experiences and subtler expressions of luxury among increasingly knowledgeable shoppers.

Their observations matter today because they show that changing attitudes towards luxury cannot be attributed exclusively to the current economic environment. As Chinese consumers gained more experience with international brands, they became better at telling products apart, judging design and forming individual preferences. Recognising a famous logo still carried value, but familiarity also meant that international brand recognition alone was becoming less exceptional.

Sara Ieracitano examines a similar generational shift in her 2023–2024 Ca’ Foscari University master’s thesis, The Chinese Luxury Market and Digitalization: Possible Strategies for Western Brands and Louis Vuitton as a Case Study. She describes how younger Chinese luxury consumers became more discerning about storytelling, product quality, individuality and digital engagement.

For consumers who grew up surrounded by international fashion, luxury is no longer necessarily about discovering an unfamiliar world of European brands. Many young Chinese shoppers have followed international designers since adolescence and have seen major luxury campaigns across digital platforms, so they know the industry in a way that previous generations only learned later in life.

As a result, Western origin is less of a differentiating factor in itself. European heritage and craftsmanship remain valuable, but consumers now have more experience evaluating the individual products and brands that claim them. A longstanding international reputation remains an advantage, although it is increasingly subject to scrutiny.

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Perhaps the clearest sign of changing preferences is the rise of domestic brands that can compete for customers who might once have considered only European or American labels. For many years, Chinese fashion and lifestyle companies were associated mainly with accessibility and competitive pricing, whilst international luxury houses held a considerable advantage in perceived prestige, craftsmanship and design reputation. That competitive landscape has become more diverse as domestic companies invest in distinctive creative identities, higher-quality products and more sophisticated retail experiences.

Laopu Gold demonstrates how traditional craftsmanship and Chinese cultural symbolism contribute to a premium brand’s appeal. Consumers buy its jewellery for reasons that go beyond the value of the precious metal, since design, exclusivity, traditional craftsmanship and the associations attached to the brand all add to its desirability. These are many of the same attributes that have historically allowed European jewellery houses to command substantial premiums.

The company’s financial performance shows the commercial potential of this positioning. According to its 2025 annual results announcement, Laopu Gold generated approximately RMB 27.3 billion in revenue in 2025, an increase of 221% from RMB 8.5 billion the previous year. That growth reflects several factors, including store expansion and gold-market conditions, but it also illustrates the willingness of Chinese consumers to spend substantial amounts on premium domestic products.

Laopu Gold is particularly interesting because of the way it connects craftsmanship, cultural meaning and luxury positioning. Consumers buy its jewellery for reasons that go beyond the value of the precious metal, since design, exclusivity, traditional craftsmanship and the associations attached to the brand all add to its desirability. These are many of the same attributes that have historically allowed European jewellery houses to command substantial premiums.

Songmont, the Chinese handbag brand founded in 2013, offers a different example. It is known for understated designs and an emphasis on everyday functionality, and it has attracted consumers seeking well-designed alternatives to international designer handbags. Its restrained aesthetic, practical detailing and clearly defined product identity have helped the brand build a following among fashion-conscious consumers in China and increasingly overseas.

The success of brands such as Laopu Gold and Songmont should not be interpreted as evidence that domestic labels have displaced European luxury houses across the market. The differences in pricing, distribution, international recognition and target audiences remain substantial. A Songmont handbag, for example, does not necessarily compete directly with an Hermès Birkin or an expensive limited-edition piece from a leading fashion house.

Nevertheless, Chinese consumers now have a broader range of credible premium brands to choose from. These domestic alternatives increasingly compete through design, quality, craftsmanship and emotional relevance rather than price alone.

Their emergence is closely connected to a broader change in cultural attitudes. The popularity of guochao (国潮), often translated as China chic, reflects growing appreciation for products that incorporate Chinese cultural references and reinterpret them through contemporary design. Traditional motifs, historical craftsmanship and local aesthetics have become more visible across fashion, jewellery, beauty and lifestyle categories.

This shift is sometimes described as a nationalist move away from foreign brands, although the reality is considerably more nuanced. Growing cultural confidence can influence consumer preferences without eliminating appreciation for international design and craftsmanship. A Chinese customer may buy Laopu Gold jewellery because of its cultural symbolism and still admire Cartier for its distinctive design language and longstanding reputation.

For Western luxury brands, the more consequential development is that Chinese origin no longer carries the disadvantage it might once have had in premium categories. Domestic brands can increasingly claim many of the qualities traditionally associated with international luxury, whilst also having a particularly close relationship with local cultural references and consumer expectations.

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Growing competition from domestic brands raises a basic question: what do Chinese consumers actually value when they buy luxury products? A useful perspective comes from a study by Eric Tafani, Franck Vigneron, Audrey Azoulay, Sandrine Crener and Abdul Zahid, titled The Influence of Culture and Gender in Luxury Brand Consumption: A Comparison Across Western and Eastern Culture Consumers, published in the Journal of International Marketing in 2024.

The researchers examined luxury consumption across four countries: France, the United States, China and the United Arab Emirates. The study involved 2,048 luxury buyers, with 512 participants in each market, recruited in major luxury-shopping destinations including Shanghai, Paris, Los Angeles and Dubai. By comparing established and developing luxury markets, it set out to understand how cultural background and gender influence the values consumers associate with luxury purchases.

The researchers organised those values into four broad dimensions. Elitism covers prestige, social status and expensiveness, whilst exclusivity covers rarity, uniqueness and creativity. Refinement relates to beauty, elegance and the pleasure associated with luxury consumption, and heritage covers a brand’s history, quality and trustworthiness.

The results challenge some widely held assumptions about luxury consumption in China. Among the Chinese respondents, elitism emerged as the most important luxury value, followed by heritage and refinement. Exclusivity ranked lowest of the four dimensions. French consumers displayed a different hierarchy, placing heritage first, followed by refinement, exclusivity and elitism. The researchers also found that Chinese and American consumers attached relatively strong importance to elitism, which suggests that luxury preferences cannot be adequately explained through a straightforward distinction between Western individualism and Eastern collectivism.

European luxury houses devote considerable attention to their history, artisanal production and established traditions. These qualities contribute to perceptions of luxury, although consumers do not necessarily value them equally. Someone may appreciate a fashion house’s heritage whilst being drawn more strongly to the prestige and social recognition that come with owning its products.

The research also identified differences linked to gender and age. Men generally placed greater emphasis on elitism, whilst women attached more importance to refinement. Older consumers tended to value heritage more strongly, whereas younger respondents placed greater importance on exclusivity. The findings reflect the preferences of the consumers surveyed across the four markets, rather than those of every Chinese luxury buyer.

Still, the study provides a useful framework for understanding why different luxury messages resonate with different audiences. A campaign centred on craftsmanship and history may appeal strongly to one customer segment, whilst another responds to the prestige associated with the brand, its distinctive creative identity or the opportunity to express personal taste.

For international marketers, this means working out which attributes of their brand are genuinely meaningful to the consumers they want to reach. Many global luxury campaigns are built around brand values that have been carefully developed over decades, and their effectiveness in China depends partly on whether those values address the motivations that matter most to local customers.

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The growing popularity of understated luxury has prompted considerable discussion about whether Chinese consumers are moving away from conspicuous displays of wealth. International brands such as Loro Piana, Brunello Cucinelli and Bottega Veneta have attracted attention for their restrained aesthetics, discreet branding and emphasis on materials and craftsmanship. Their products can communicate wealth and sophisticated taste without prominent logos, which appeals to consumers who prefer their luxury purchases to be recognised mainly by those familiar with the brands.

Yet the assumption that Chinese consumers are collectively abandoning visible branding overlooks the different motivations luxury products can satisfy. A 2022 study by Ling Jiang, Annie Peng Cui and Juan Shan, published in International Marketing Review, examines these motivations in Quiet Versus Loud Luxury: The Influence of Overt and Covert Narcissism on Young Chinese and US Luxury Consumers’ Preferences?

The researchers conducted an initial survey involving 370 Chinese luxury consumers aged between 18 and 40, followed by experiments involving 224 American and 365 Chinese participants. Using products associated with brands including Louis Vuitton and Gucci, they investigated how psychological characteristics and attitudes towards social recognition influenced preferences for conspicuous or discreet branding.

Their findings suggest that preferences for quiet and loud luxury are influenced by different forms of self-expression. Consumers with stronger overt narcissistic tendencies were more likely to favour quiet luxury products, which allowed them to express their individuality and distinctive tastes. Consumers with stronger covert narcissistic tendencies showed greater interest in prominently branded products, which could provide reassurance through external recognition and social approval. The researchers also found that social anxiety influenced these relationships, strengthening the role of consumers’ attitudes towards social acceptance and personal expression in shaping their preferences.

The terminology in the study comes from psychological research and should not be applied casually to individual customers. The findings still offer a useful insight into luxury consumption, because visible branding and understated design can satisfy different psychological and social needs, even among consumers of similar ages and income levels.

Someone buying a discreet leather handbag may appreciate the confidence that comes with owning an expensive item recognisable only to knowledgeable observers. Another person may prefer a prominent designer logo because it allows them to communicate an identity or social position more explicitly. Both purchases can reflect a genuine appreciation of luxury, and individual preferences may change depending on the occasion or product category.

The implications for Western luxury houses go beyond decisions about logo size. Understanding the social and emotional meanings attached to individual products can help brands communicate their value more effectively. Collections that emphasise craftsmanship, creative distinction or subtle exclusivity may appeal to different audiences from products whose desirability is closely connected to recognisable branding.

It would therefore be premature to read the growing visibility of quiet luxury as evidence that conspicuous consumption has disappeared from China. The market accommodates both preferences, and brands should be cautious about treating a widely discussed fashion movement as a uniform change in consumer behaviour.

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Generational change has played an important role in reshaping China’s luxury market, although the influence of younger consumers is not always reflected directly in their current spending. Bain’s 2025 research indicates that top-spending customers continue to account for a large amount of sales among premium jewellery and ready-to-wear brands. Younger aspirational consumers, meanwhile, have become more cautious about entering premium categories, particularly when major purchases compete with financial uncertainty and other priorities.

Younger audiences influence a brand’s cultural relevance without necessarily contributing an equivalent share of immediate sales. Their conversations, recommendations and preferences help shape perceptions of fashion and desirability, even when their own purchasing power remains relatively limited.

Chinese Gen Z consumers have grown up with an unprecedented degree of exposure to global fashion. They follow designers, discover collections through social platforms and see international brands alongside emerging Chinese labels. Fashion information is no longer limited to magazines, boutiques or carefully controlled advertising campaigns, so consumers can develop individual tastes from a much broader range of influences.

This familiarity can work in favour of established international houses, particularly those that continue to demonstrate creative relevance. It also means that younger consumers may recognise and respect a brand without feeling particularly motivated to buy its products. The reputation that helped a luxury house attract previous generations does not automatically create the same emotional connection with younger audiences.

For these consumers, distinctive design, cultural relevance and the ability to express personal taste can be important influences on purchase consideration. They may admire a well-established European label whilst gravitating towards a younger designer whose creative direction feels closer to their own aesthetic preferences.

International luxury brands consequently need to maintain an active relationship with younger cultural audiences, even when those consumers are not yet regular customers. Creative campaigns, product storytelling and relevant partnerships can help develop that relationship, provided they communicate something meaningful about the brand and do not rely only on familiarity or celebrity visibility.

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China’s digital ecosystem has fundamentally changed the way luxury consumers discover, evaluate and engage with brands. The influence of social media now extends well beyond generating awareness, shaping how customers assess products, compare alternatives and form opinions about the brands they encounter.

Earlier academic research had already picked up on this change. In the 2017 volume Luxury Fashion Retail Management, researcher Mark Ng examined the growing influence of social media on luxury consumption through interviews with young consumers in Hong Kong. The study was limited in scale and predates today’s digital environment, but it documented how online networks were becoming embedded in luxury shopping decisions and product research. Ieracitano’s subsequent research on luxury digitalisation in China went on to explore how brands such as Louis Vuitton adapted to an increasingly interconnected shopping journey, in which social platforms, e-commerce and physical retail influence one another.

Today, Xiaohongshu occupies an important position within that journey, particularly for consumers researching fashion, beauty, jewellery and lifestyle products. Users can find recommendations, explore styling ideas and look at the experiences of people who already own the products they are considering. For expensive purchases, this information can be particularly influential because it helps consumers evaluate whether a product is likely to meet their expectations.

Take a customer researching a premium handbag. Alongside a brand’s professionally produced campaign images, they may find detailed reviews discussing leather quality, practical functionality, durability and alternative models. Other users may compare the bag with similarly priced products from domestic and international competitors, whilst fashion creators demonstrate how it can be styled or discuss its place within the designer’s wider collection.

These conversations give consumers access to information that previously might have been available only through specialist publications, sales advisers or personal acquaintances. They also make it easier to question the perceived value of expensive products, particularly when online reviews do not support the expectations created by advertising.

For international brands, the quality of information available throughout the customer journey therefore matters more and more. An advertising campaign may introduce a collection to millions of people, but the impression it creates will then be tested against product reviews, creator recommendations and the experiences shared by other consumers.

The same applies to influencer marketing. High-profile celebrities remain capable of generating enormous attention, and the association between a luxury house and a carefully selected ambassador can still contribute to desirability. Visibility alone, however, provides limited assurance that consumers will understand or appreciate the qualities that make a product worth buying.

Fashion commentators, stylists, collectors and category specialists can help consumers understand design references, craftsmanship and product characteristics. Their expertise may be particularly relevant when the purchasing decision involves a substantial financial commitment. For premium beauty brands, knowledgeable creators can explain the sensory qualities, application techniques and product characteristics that customers want to understand before making a purchase.

The aim is a coherent presence across the different stages of the customer journey. Brand-led creative content can establish the emotional appeal of a collection, whilst creator partnerships provide additional perspectives that support product discovery and consideration. Relevant search content then makes this information easy to find when consumers actively research the brand.

WeChat gives luxury brands a way to maintain more personal relationships with their customers. Beyond official brand accounts, sales advisers can use the platform to arrange appointments, recommend products and provide after-sales support. For established luxury clients, these regular interactions offer another way to reinforce the personalised service and sense of exclusivity associated with the brand.

At Red Ant Asia, we see particular value in connecting creative development with an understanding of how content will be experienced across Chinese social platforms. A compelling campaign concept needs to keep its creative integrity whilst giving consumers relevant reasons to engage with individual products, which requires knowledge of the platforms, the creators who shape conversations and the competing brands that consumers are already considering.

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Discussion about Western luxury's declining appeal often treats the sector as a single market. In practice, consumer motivations and competitive dynamics vary considerably between fashion, jewellery, beauty and other premium categories.

Established European fashion houses continue to benefit from internationally recognised identities, extensive retail networks and generations of investment in creative reputation. Their competition increasingly includes sophisticated domestic designers, but the differences in brand recognition, price positioning and customer relationships remain significant.

Beauty presents a different picture. Chinese skincare and cosmetics companies have invested heavily in product development, branding and digital marketing, and they are increasingly able to address local preferences through sophisticated premium offerings. Some incorporate Chinese cultural references into their visual identities, whilst others compete through ingredients, formulations and a close understanding of domestic beauty trends.

International beauty brands consequently face competition from companies that can respond to contemporary consumer interests with considerable speed and cultural familiarity. At the same time, the category’s relatively strong performance in 2025 shows that demand for high-end beauty products remains substantial. Consumers may be reluctant to purchase another expensive handbag whilst continuing to spend on skincare, fragrances or other products that provide personal enjoyment and a more accessible form of luxury.

Jewellery is influenced by a different combination of factors. Traditional gold craftsmanship carries substantial cultural significance in China, and the appeal of premium domestic jewellery brands reflects both aesthetic preferences and the perceived value of precious materials. The success of Laopu Gold shows how historical symbolism and artisanal production can support a compelling premium proposition.

Jewellery purchases may also be influenced by gold prices, investment considerations and perceptions of value retention. It would therefore be misleading to interpret the success of a domestic gold jewellery brand as direct evidence that consumers are abandoning European fine jewellery houses.

Luxury competition needs to be examined by product category and customer segment. Someone buying premium skincare may have very different priorities from a customer choosing jewellery, even when both purchases account for a similar share of their discretionary spending. Understanding those motivations helps international marketers decide which brand qualities to emphasise, which competitors to watch and how to assess changing consumer preferences.

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Interest in experiences adds another dimension to the changing luxury picture. According to Bain’s research, Chinese consumers have continued to show interest in travel, wellness and other experience-based purchases even as demand for several categories of physical luxury goods has weakened. These preferences reflect a broader development in how affluent consumers allocate their discretionary spending, with exceptional hospitality, cultural activities and memorable experiences becoming increasingly important parts of luxury consumption.

A stay at an extraordinary resort, a private dining experience or access to a distinctive cultural event can satisfy many of the emotional motivations traditionally associated with luxury products. These experiences offer opportunities for personal enjoyment, self-expression and social recognition, and they create memories that consumers may value long after the occasion itself.

For fashion and lifestyle brands, this has encouraged greater investment in retail environments that go beyond a conventional shopping experience. Louis Vuitton’s The Louis in Shanghai is an interesting example. Opened in 2025, the ship-shaped destination brings together retail, a café and the Visionary Journeys exhibition, which explores the maison’s history, craftsmanship and creative development.

The project draws on Louis Vuitton's longstanding association with travel and presents that heritage through an experience designed for a contemporary Shanghai audience. Visitors encounter the brand through architecture, hospitality, storytelling and physical exhibits, which creates opportunities to engage with its identity beyond the immediate act of buying a product.

Experiences such as The Louis give visitors a more tangible sense of a brand’s values and identity. Through exhibitions, cultural collaborations and thoughtfully designed retail spaces, luxury houses can help consumers understand what sets them apart whilst encouraging conversations that continue beyond the visit itself.

Luxury hotels and travel brands face similar developments. Affluent consumers increasingly encounter destinations and hospitality experiences through social content, recommendations and the experiences shared by others. Distinctive service, atmosphere and cultural relevance can therefore become important sources of competitive advantage, particularly when content allows prospective guests to imagine the experience for themselves.

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The growing success of domestic premium brands gives international luxury houses a chance to examine how contemporary Chinese consumers understand their established strengths. One lesson concerns the relationship between product identity and cultural relevance. Successful Chinese brands often build their propositions around specific aesthetic preferences, cultural references or consumer needs from the outset, so their product development, visual identities and communications can feel naturally connected to the audiences they are designed to attract.

International brands face a more complicated challenge because they must maintain globally consistent identities whilst adapting to local expectations. The solution requires careful thought about which brand attributes are distinctive and how those qualities can become meaningful within the Chinese cultural environment.

Incorporating Chinese cultural references into a campaign, for example, can strengthen relevance when those references have a credible connection with the brand’s identity. Seasonal motifs or familiar festive colours, however, provide relatively little differentiation when they are used without a broader creative concept.

Louis Vuitton offers an example of how international brand heritage can be expressed through locally relevant storytelling. Its China-focused travel campaign, photographed by Alec Soth in 2025, explored Chinese landscapes whilst maintaining a clear connection with the maison’s longstanding association with travel. The creative approach used an established part of the brand’s identity as the foundation for imagery that resonated with the local market.

Emerging Chinese premium brands are also attracting customers through their products, from distinctive design features and practical details to craftsmanship that feels worth the price. Their success shows how much consumers value qualities they can recognise and appreciate for themselves.

For established European luxury houses, this is a reminder that brand reputation must be supported by desirable products. Historical prestige can attract attention and provide reassurance, but the product itself ultimately needs to justify the emotional and financial commitment involved in buying luxury.

Domestic competitors also show the value of understanding local digital behaviour. Brands developed within China’s social commerce environment often have considerable experience in working with creators, responding to online conversations and adapting content to local platforms. International luxury houses can learn from these practices whilst preserving the creative standards, exclusivity and service expectations associated with their own positioning.

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Maintaining luxury brand desirability in China requires a coherent approach across consumer research, brand positioning, creative development and the channels through which customers encounter the brand. The priorities will differ according to the brand's category and existing market position, although several considerations apply more broadly.

Understand What Your Target Consumers Actually Value

The research discussed earlier shows that Chinese luxury consumers place different degrees of importance on prestige, refinement, exclusivity and heritage. These motivations vary across age groups, genders and individual circumstances, which makes it difficult to rely on a single understanding of the Chinese luxury customer.

Brands should begin by examining the motivations of the specific audiences they want to attract. A European fashion house targeting established high-net-worth clients in Shanghai may need a substantially different approach from a premium lifestyle brand seeking to build awareness among younger aspirational consumers in Chengdu or Shenzhen.

Research should explore how customers perceive the brand's quality, design, exclusivity and value, alongside the alternatives they consider when making purchases. Understanding why consumers choose competing products is particularly valuable, as it helps identify whether a brand's challenges are related to awareness, perceived relevance, product desirability or pricing.

This analysis also needs to account for domestic competitors. International luxury houses have historically focused much of their competitive attention on other European and American brands, but the increasing sophistication of Chinese premium labels means that local competitors now deserve a place in that assessment, particularly where they address similar consumer motivations.

Brands need to understand which of their distinctive qualities matter most to the customers they want to reach. That understanding provides a stronger foundation for positioning and creative development than assuming an established global campaign will appeal equally to consumers in different markets.

Make Brand Heritage Relevant to Contemporary Consumers

Many Western luxury houses possess extraordinary historical and creative assets. Their craftsmanship, archives, design traditions and longstanding reputations represent advantages that younger brands cannot easily reproduce. The significance of these assets becomes clearer, though, when consumers understand how they contribute to the products available today.

A fashion house’s historical relationship with a particular material, technique or design approach can provide a good foundation for contemporary storytelling. By showing the choices involved in producing a collection, brands can help consumers appreciate why their products have distinctive qualities and command premium prices.

This matters particularly in a market where luxury customers have become more attentive to craftsmanship and perceived value. Product-focused storytelling can connect heritage with tangible attributes such as construction, design, durability and creative innovation.

Digital platforms make it possible to communicate these details through formats that encourage closer consideration. Carefully produced films, editorial photography, interviews with designers and knowledgeable creator collaborations can help make craftsmanship and creative thinking accessible to consumers without compromising the sophistication of the brand’s presentation.

Develop Creative Concepts That Connect With Chinese Culture

Cultural relevance is becoming increasingly important as consumers encounter more domestic brands with compelling creative identities. For international luxury houses, localisation should begin during the development of the campaign concept and not stop at adapting existing global advertising. Understanding the values, interests and cultural references of Chinese consumers can help identify creative opportunities that remain consistent with the brand’s positioning.

The strongest concepts tend to emerge when there is a credible relationship between the brand's existing identity and something meaningful to the local audience. This might involve exploring the cultural significance of craftsmanship, developing a campaign around contemporary interpretations of personal success or creating an experience that connects the brand's history with relevant local interests.

It’s really key to start by not only examining what makes a brand distinctive, but also determining which of those qualities matter to its target consumers in China. Our creative process draws on local cultural insights and an understanding of the platforms, creators and competitors shaping consumer expectations, which allows us to develop concepts that remain recognisably connected to the brand whilst feeling relevant within the Chinese market.

That relationship matters particularly for luxury brands, where consistency and authenticity are essential parts of maintaining desirability. Cultural relevance should strengthen the brand’s identity and give consumers additional reasons to appreciate it.

Connect Brand Building With Product Consideration

The growing influence of Chinese social media means that brands need to consider how their communications work throughout the purchasing journey. Creative campaigns remain essential for establishing aspiration and emotional appeal, but consumers also need access to convincing product information when they begin evaluating a purchase. The role of influencers, search content and retail communication should therefore be considered alongside broader brand-building activities.

On Xiaohongshu, for example, a well-developed strategy can introduce a collection through creative storytelling, support product consideration through relevant creator content and improve visibility when consumers search for information about the brand or individual products. Different creators can contribute different perspectives. A fashion personality may be effective in establishing the cultural relevance of a collection, whilst an experienced stylist or category specialist can communicate its design characteristics and practical appeal in greater detail.

Paid media can extend the reach of relevant content, whilst organic search visibility helps ensure that consumers find useful information during active research. WeChat communication and personalised retail relationships can then support further consideration, appointments and ongoing engagement with existing customers.

The effectiveness of this approach depends on consistency between the brand's creative message and the information customers encounter across different channels. A campaign that creates a strong emotional impression should be supported by product experiences and communications that reinforce the same qualities.

Evaluate Desirability Alongside Sales

Finally, brands should develop a clearer understanding of how consumer perceptions are changing over time. Sales performance remains an essential measure of commercial success, but revenue figures alone cannot explain whether consumers are becoming less interested in a brand or simply delaying purchases because of economic uncertainty.

Brand-related search activity, product-level engagement, consumer sentiment and share of relevant social conversations can provide additional insight. These indicators can also help identify whether particular collections or campaigns are generating stronger consideration among priority audiences.

For example, declining sales accompanied by relatively stable brand interest may indicate that consumers remain attracted to the brand but are reconsidering the timing or value of their purchases. A simultaneous decline in brand consideration and growth in attention towards competitors may point towards a more fundamental problem with relevance or desirability. Telling these situations apart helps marketers allocate resources more effectively and distinguish between challenges that require creative or positioning changes and those that are primarily related to economic conditions.

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Western luxury brands continue to hold substantial competitive advantages in China. Many have exceptional global recognition, established creative identities, sophisticated retail networks and reputations built over generations. European craftsmanship, international prestige and distinctive design remain meaningful to Chinese consumers, and there is little evidence that these qualities have ceased to matter.

The environment in which those advantages were established has changed considerably, though. Chinese consumers are more knowledgeable about luxury, domestic premium brands have become more sophisticated and digital platforms have made it easier to compare products and evaluate their value. Economic uncertainty has also encouraged consumers to be more deliberate about discretionary spending, which increases the pressure on brands to justify their premium positioning.

Bain expects China's personal luxury goods market to see modest growth in 2026, although the outlook remains uncertain and performance will vary by product category and brand. A recovery in spending will create opportunities for international luxury houses, but it is unlikely to reverse the changes in consumer behaviour that have been developing over many years.

For European and American brands, the challenge is to maintain their desirability among consumers who have more choices and increasingly sophisticated expectations. Established brand heritage, craftsmanship and international recognition remain powerful advantages when supported by compelling products, thoughtful creative direction and a genuine understanding of the market.

Western luxury brands are not all facing the same challenges in China. Those relying on established reputations without giving consumers convincing reasons to choose their products risk losing ground. Brands that connect their heritage with what Chinese consumers value today have a stronger foundation for maintaining their appeal. Ultimately, Western luxury houses need to demonstrate why their products deserve attention and command a premium, rather than relying on the prestige of their names alone.

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1. Are Western luxury brands becoming less popular in China?

Some Western luxury brands are experiencing declining sales and weaker consumer interest in China, particularly in categories such as fashion, leather goods and watches. However, the decline is uneven and partly reflects broader economic conditions, including weaker consumer confidence and more cautious discretionary spending. Established international luxury houses continue to enjoy considerable prestige, although they face growing competition from domestic premium brands and increasingly selective consumers.

2. Why are Chinese consumers buying more domestic luxury brands?

Chinese consumers are increasingly attracted to domestic brands offering distinctive design, strong product quality and culturally relevant identities. Growing confidence in Chinese craftsmanship and aesthetics has contributed to this development, whilst the success of brands such as Laopu Gold and Songmont demonstrates that local companies can build compelling premium propositions. Cultural pride plays a role, although it does not necessarily mean consumers are rejecting international brands.

3. How much did China's luxury market decline in 2025?

According to Bain & Company’s 2025 China Personal Luxury Report, mainland China’s personal luxury goods market contracted by approximately 3% to 5% in 2025. This represented an improvement compared with the estimated 17% to 19% decline recorded in 2024. Performance differed significantly by category, with premium beauty returning to growth whilst leather goods, fashion and watches remained under pressure.

4. Which Western luxury brands remain popular in China?

International luxury houses such as Louis Vuitton, Hermès, Chanel, Dior and Cartier continue to enjoy considerable recognition and established customer relationships in China. Their individual performance varies according to product category, creative direction, pricing and consumer segment. Brand popularity should therefore be evaluated through current consumer consideration, product demand and commercial performance rather than recognition alone.

5. What is the guochao trend in Chinese luxury consumption?

Guochao, commonly translated as China chic, describes growing interest in contemporary products incorporating Chinese cultural influences. In fashion, jewellery and beauty, the movement has contributed to greater appreciation of traditional craftsmanship, historical design references and local aesthetics. Premium brands can respond to these preferences by developing meaningful cultural connections that remain consistent with their identities and product positioning.

6. Do Chinese luxury consumers prefer quiet luxury or prominent logos?

Research indicates that understated and conspicuously branded luxury products appeal to different motivations among Chinese consumers. A 2022 study by Jiang, Cui and Shan found that psychological characteristics influenced preferences for subtle versus prominent branding. Some consumers appreciate quiet luxury as an expression of individual taste, whilst others value the social recognition associated with visible designer logos. Both preferences continue to exist within China's luxury market.

7. Is luxury brand heritage still important to Chinese consumers?

Brand heritage remains an important component of luxury value, particularly when associated with craftsmanship, quality and trust. However, cross-cultural research by Tafani and colleagues found that Chinese luxury consumers placed particularly strong emphasis on elitism and prestige, whilst French consumers assigned greater relative importance to heritage. International brands should therefore consider how their historical identities contribute to contemporary product desirability and consumer expectations.

8. How is Chinese Gen Z changing the luxury market?

Chinese Gen Z consumers have grown up with extensive access to international fashion, digital platforms and domestic premium brands. Their preferences are influenced by design, cultural relevance, social recommendations and perceived value. Although younger consumers play an important role in shaping brand desirability, economic uncertainty has made some more cautious about entering luxury categories. Brands consequently need to develop long-term relationships whilst recognising differences in purchasing power and consumer readiness.

9. How important is Xiaohongshu for luxury brands in China?

Xiaohongshu is an important platform for discovering, researching and evaluating luxury products. Consumers use it to explore styling ideas, compare alternatives and learn from other people's ownership experiences. For premium marketers, an effective Xiaohongshu strategy can combine creator collaborations, detailed product storytelling, search visibility and paid amplification to support both awareness and purchase consideration.

10. Should Western luxury brands develop China-specific marketing campaigns?

China-specific campaigns can help international brands connect more effectively with local consumer interests and cultural expectations. The strongest campaigns draw on a brand's established identity whilst developing creative concepts that feel meaningful to Chinese audiences. Effective localisation requires an understanding of local platforms, creator communities, competing brands and consumer behaviour, rather than relying exclusively on translated or adapted global advertising.

11. Are Chinese consumers spending more on luxury experiences than products?

Luxury experiences are becoming increasingly important, although spending patterns vary by consumer and category. Bain's research indicates continued interest in travel, wellness and other experiential purchases, whilst several physical luxury categories experienced declining sales in 2025. For brands, this creates opportunities to strengthen engagement through distinctive retail environments, hospitality, cultural activities and personalised services.

12. What can Western luxury brands do to remain competitive in China?

International luxury brands should begin by understanding the motivations and preferences of their priority customer segments. They can strengthen product differentiation, communicate craftsmanship and heritage more effectively, develop culturally relevant creative concepts and improve engagement across platforms such as Xiaohongshu and WeChat. Monitoring brand consideration, consumer sentiment and competitive performance alongside sales can also help identify opportunities to improve positioning and marketing effectiveness.