economie

There’s more to China’s luxury spending slump than its struggling economy

October 19, 20240
Price hikes have hit aspirational consumers in China.

Edward Berthelot/Getty Images

One symptom of China’s post-pandemic luxury boom was “greedflation,” the theory that companies take advantage of disruptions to push price increases on consumers.

“Practically every time after a crisis, people are drawn into more luxury because these are brands that give people a bit of a sense of comfort and belonging,” Daniel Langer, CEO of brand development and strategy firm Équité and a Pepperdine University luxury professor, said.

He explained that many firms reacted to pandemic-driven demand by significantly increasing prices — sometimes up to 50%.

“Western brands thought, ‘whatever prices we ask for, Chinese customers are going to buy us,'” Langer said.

But consumers have cottoned on to soaring prices, and outrage over price differences between China and other markets have spread on social media. This has meant that some shoppers are reevaluating which brands they purchase from, when they purchase, and where they purchase, he added.

2. Chinese millennials and Gen Zers see luxury differently
Experiences like attending concerts are higher up on the agenda of Chinese consumers now.

TAS2024/Getty Images

With travel resuming post-pandemic, Chinese consumers’ spending habits have also shifted.

“People are going overseas, and much more experiences are open to them,” Amrita Banta, managing director of the luxury insights firm Agility Research & Strategy, said.

Whether attending a Taylor Swift concert or flying to a new destination to experience a local cultural event, experiences are increasingly taking precedence over luxury goods for some consumers, Plotnick said.

Eschewing luxury purchases for experiences also aligns with the “rural revival” trend gaining traction among Chinese Gen Z shoppers.

This trend is built around a desire for slower-paced living, making wellness and longevity the ultimate marker of luxury.

4. The government sowed the seeds of ‘luxury shame’
China’s secondhand luxury market is growing.

credit should read CFOTO/Future Publishing via Getty Images

Instead of buying brand-new products, younger Chinese consumers are also increasingly turning to pre-loved clothes selling platforms, like Vestiaire Collective, The RealReal, and Mercari, to buy secondhand luxury.

“There’s been a sharp rise in secondhand luxury goods in China,” Banta said. “A lot of young people like it because it’s sustainable, it’s a circular economy.”

There was a time when buying secondhand had negative connotations in China, but it’s now very much accepted, especially among millennials and Gen Zers, she added.

6. Japan is a new luxury hub
Some Chinese shoppers are taking advantage of better prices in Japan.

CHARLY TRIBALLEAU/AFP via Getty Images

Instead of shopping at home, some Chinese consumers are buying luxury products abroad to take advantage of better pricing.

This includes Japan. Since 2021, the yen — the country’s official currency — has steadily declined, making luxury goods more affordable there.

According to Bain, the country’s personal luxury goods market increased from 29 billion euros ($31.4 billion) in 2023 — a 27% increase from the year before at constant exchange rates. And luxury brands have continued to report strong momentum in this market throughout 2024, touting it as new luxury hotspot.