Western luxury brands feel squeeze as China's pre-owned market booms
China's personal luxury market contracted again in 2025 as consumers turned to second-hand goods and homegrown brands, with Bain & Company estimating the pre-owned sector grew 15-20 per cent. Analysts say foreign labels must adapt to shifting tastes and digital habits, while legal friction with loca
Western luxury brands are facing mounting pressure in China as cost-conscious consumers increasingly turn to second-hand goods and upstart domestic labels, according to industry data and analysts.
Chinese shoppers once accounted for around a third of global luxury spending, generating billions of dollars for firms such as LVMH and Hermes. But belt-tightening has forced a rethink, with Louis Vuitton closing five stores in mainland China in the past two years, including a chocolate boutique in Shanghai, while Galeries Lafayette shut its Beijing flagship in May.
"People used to compare who had spent more," dance teacher Yuan told AFP at a new two-storey warehouse-style retail space in central Shanghai filled with second-hand luxury handbags, belts and jewellery. "But now everyone compares who got a better deal and spent less," the 24-year-old said.
Mainland China's personal luxury market contracted another three to five per cent in 2025 after plunging as much as 19 per cent in 2024, according to consultancy Bain & Company. LVMH recently blamed a "slowdown in demand in China" for a drop in organic sales in its fashion and leather goods unit in the third quarter.
The second-hand luxury market, by contrast, exploded 15-20 per cent in 2025, Bain estimated. Domestic consultancy Insight & Info Consulting said total sales reached 38.4 billion yuan (US$5.7 billion) in 2025 and forecast they could top 100 billion yuan by 2030.
At the new Shanghai store Super Zhuanzhuan, shoppers wear black gloves to avoid marking the products. Customer Phoebe Ma, 24, said her mother's generation formed a "deep-seated impression" that Louis Vuitton was the most prestigious brand. "I just feel that the monogram is dated. It suits my mother's generation, but Gen Z would rather buy trendy Korean brands," the freelancer told AFP.
Chen Luo, head of China consumer research at Bank of America, said shoppers were moving away from associating luxury solely with social status and towards "self-identity, distinction, experience, quality, emotional value (and) cultural relevance". "Foreign brands should work very hard to stay relevant in this context," Luo said.
Adding to the headwinds is legal friction. LVMH recently won a trademark lawsuit against Chinese beverage chain Molly Tea over a four-petal floral pattern resembling its monogram, but the case sparked an online backlash after users and state media noted the motif shares roots with ancient Chinese patterns. "It feels a bit absurd," said shopper Echo Wang, 31, who works in marketing. LVMH called its intellectual property "an absolute key asset" but admitted the furore had "had a negative impact".
Analysts stress China remains vital to the global luxury industry. "China will still be an important market, although it may not be a growth engine in two to three years," said Luo, adding that luxury spending usually rebounds in sync with the economy.