What: China’s luxury market saw a decrease in luxury sales as a result of tense lockdowns and rounds of crackdowns on the tech, real estate, and entertainment sectors.

Why it is important: For the first time in 5 years, China’s personal luxury sales contracted.

The consultancy firm, Bain, reported that spending in the personal luxury space in China shrunk by 10% in 2022. Almost all categories were impacted but those with higher online penetration such as luxury beauty performed better than those with a smaller online presence.

The report stated that watches and jewellery saw the sharpest decline, followed by fashion and lifestyle at a 15 to 20% decrease.

A few brands managed to stay flat or grew during the challenging market. These brands were bigger, with iconic portfolios, and had a higher concentration of VIP clients. Price hikes have also helped some brands recoup their losses with a 25 to 45% price gap in the leather segment and 25 to 345% in jewelry and watch sectors between China and Europe.

Bain states that brands who understand the nuances of the China luxury market will succeed over time. Additionally, they urged brands to adapt and cater to Chinese tourists’ distinct shopping behaviors and preferences as they return to Paris, London, and Milan.

The consultancy firm expects growth in the sector to resume in 2023 with sales returning to the 2021 level as soon as the first half.

Bain: China’s luxury market contracted 10% in 2022