y signs of stabilization, supported by favorable base effects, a stronger domestic stock market, and a tentative return of confidence among affluent consumers.  “What we are seeing is not a broad-based rebound, but the start of a recalibration phase, with early signs of recovery emerging in the second half of the year,” Bruno Lannes, senior partner at Bain & Company.  “This recalibration is also segment specific, with the VICs continuing to represent a large share of the market, while younger aspiring consumers have delayed entry into the luxury category.”  From whiplash to selectivity Bain’s data suggests Chinese consumers have become more selective, informed, and pragmatic. Last year, discretionary spending remained restrained, particularly among younger aspirational buyers whose entry into luxury consumption has been delayed by weaker job prospects and slower wealth accumulation. At the other end of the spectrum, top-tier consumers continued to account for a disproportionate share of spending, reinforcing a “barbell” market dynamic where both affordable luxury and ultra-premium segments outperform the middle. “Brands catering to affordable luxury and ultra-premium segments emerged as winners, delivering perceived ‘true value’,” the consultancy said in its latest China luxury report. Experience-led spending, travel, wellness and lifestyle, has continued to compete directly with material luxury, limiting upside even as sentiment improves.  Beauty shines, watches struggle  According to the report, beauty emerged as the strongest performer last year, rebounding to growth of 4–7 per cent. Ultra-premium skincare and fragrance proved resilient, benefiting from their lower price points, repeat-purchase dynamics, and alignment with consumers’ desire for sensory and emotional gratification even in uncertain times. Meanwhile, fashion held up better than many expected, declining 5–8 per cent but outperforming leather goods, which fell 8–11 per cent. Bain attributes fashion’s relative resilience to faster innovation cycles, stronger digital engagement, and its role as a vehicle for self-expression and social participation – areas where Chinese consumers remain highly engaged. Watches, however, remained under severe pressure, with sales down 14–17 per cent. The sector is now under pressure from the increasing demand for secondhand alternatives, smart devices, and other financial assets. Jewelry fared better, with declines narrowing to 0–5 per cent, supported by value-preservation logic amid rising precious metal prices. “Brands that maintain strong desirability and deliver clear value through innovation and targeted pricing strategies are proving more resilient,” the consultancy said. The end of the overseas spending mirage Bain estimates that 65 per cent of Chinese luxury consumption took place within Mainland China, with only 35 per cent occurring abroad, a sharp reversal from pre-pandemic norms. This, however, was not due to a lack of travel as outbound tourism continued to recover. Instead, narrowing price gaps, driven by currency movements and brands’ pricing discipline, reduced the financial incentive to shop overseas. Domestic mall promotions and improved in-store experiences further encouraged consumption repatriation. Daigou tightens, secondhand accelerates The grey market continued to evolve. The Daigou sales across leading brands rose 3 per cent last year, down from 5 per cent growth in 2024, as brands intensified efforts to control overseas supply chains and protect pricing integrity. Brands with tightly controlled wholesale channels have reduced daigou exposure significantly. Others, particularly those with looser overseas distribution, still see daigou volumes equivalent to a majority of their official mainland sales.  Meanwhile, still underpenetrated at less than 10 per cent of the primary market, the resale segment grew 15-20 per cent last year. Livestreaming has emerged as a critical enabler, providing authentication, transparency and access, especially in lower-tier cities. Leather goods and watches dominate resale, while classic models with strong value retention outperform seasonal designs. Local brands are no longer niche  Bain said Chinese luxury players are gaining share not just in beauty, where they have long been competitive, but increasingly in ready-to-wear, jewelry and leather goods. Their advantage lies in cultural fluency, digital-native engagement and price competitiveness enabled by local supply chains. As overall growth slows, consumer spending is consolidating around fewer brands, both global and local, that deliver what Bain describes as “true value.” A market growing up Looking ahead, Bain expects modest growth to return this year, albeit unevenly. Policy support, improving sentiment and ongoing consumption repatriation should help stabilize the market. But the era of easy growth is over. China’s luxury market is now maturing. Growth will be harder won, more category-specific, and more brand-dependent. Further reading: Why Burberry’s China recovery looks different this time.