China's Luxury Market Declines 18-20%, Sales Expected Flat in 2025

China's luxury market experienced a significant decline of 18-20% in 2024, reverting to levels not seen since 2020, primarily due to low consumer confidence and a shift toward overseas spending. The downturn was particularly pronounced in the third quarter, with slight recovery noted in the fourth quarter driven by anticipated stimulus measures. Bain & Company reports that while luxury sales in China fell, overseas spending surged, especially in regions like Japan, leading to an overall 7% decrease in total luxury goods spending. The decline in Hainan's duty-free sales, which fell by 29%, further illustrated the challenges faced by the domestic market. Looking ahead, the first half of 2025 is expected to remain challenging, though there are cautious hopes for improvement in the latter half of the year. Analysts note that the luxury sector's struggles are exacerbated by economic uncertainty and a prolonged property crisis affecting consumer behavior.