What: Local Chinese luxury brands and global players are redefining the luxury market through emotional connections, experiential retail, and strategic expansion in key cities.

Why it is important: This shift reflects a broader trend of experiential retail and local brand empowerment.

China’s luxury market is entering a new era, marked by the rapid ascent of local brands such as Labubu, Laopu Gold, and Songmont, which are reshaping consumer perceptions of luxury through emotional resonance and cultural relevance. Global brands, facing a maturing market and economic headwinds, are intensifying competition by focusing on unique, immersive experiences and architectural innovation, as seen in Louis Vuitton’s ship-shaped Shanghai flagship and Dior’s reimagined retail spaces. The landscape is further complicated by a redistribution of spending among a more cautious middle class, patriotic new rich, and traditional VIP shoppers, leading to more selective purchasing and a preference for entry-level luxury and experiential propositions. Strategic expansion in key cities like Beijing, Shanghai, and Wuhan remains crucial, with brands adapting to local tastes and investing in flagship locations to maintain excitement and relevance. As the market stabilises, success increasingly depends on cultural intelligence, value-driven offerings, and the ability to create lasting emotional connections with consumers.

IADS Notes: China’s luxury market transformation is underscored by the October 2025 rise of local brands like Labubu, which are leveraging emotional connections and premium collaborations (“Pop Mart goes luxe with $2,000 Labubu gold necklace,” WWD, October 2025). Louis Vuitton’s June 2025 Shanghai flagship exemplifies the experiential retail trend (“Louis Vuitton’s latest Shanghai store is a futuristic boat,” WWD, June 2025), while October 2025 reports highlight the shift to immersive, personalised experiences (“Why luxury brands are turning on the charm in China,” Inside Retail, October 2025). March 2025 saw lower-tier cities emerge as growth drivers (“Succeeding in China’s new reality,” BoF, March 2025), and by January 2025, flat sales had become the new normal, requiring brands to focus on top-tier consumers and adapt to a restructured market (“Flat sales in China’s luxury market are the ‘new normal’,” Inside Retail Asia/Bain & Company, January 2025).

China’s evolving luxury market reset