China’s luxury slump may not bounce back soon, forcing global brands to rethink growth, says Bernstein

Bernstein says China’s luxury recovery looks more like an L than a U. See why brands may need to cut growth expectations

PGurus Newsdesk

October 17, 2026

Are Chinese shoppers abandoning luxury or trading down?

Chinese consumers account for roughly 15% to the high-30s% of consumption at some luxury companies

Global luxury brands have been waiting for Chinese shoppers to return in force. A new report from Bernstein suggests they may be waiting a long time.

An “L,” not a “U”

According to the report, a recovery in Chinese consumer demand is unlikely to give the luxury industry a strong lift in the near term. A long economic slowdown, weak consumer confidence and pressure on household wealth are all expected to hold growth back.

Bernstein’s global luxury analyst, Luca Solca, said the recovery the firm had expected to follow a U shape now looks much more like an L. His advice to the industry is to cut its expectations for growth over the next few years.

Chinese shoppers remain central to the luxury business. For some of the companies Bernstein covers, they account for anywhere between about 15 per cent and the high 30s per cent of consumption.

The industry grew by close to 8 per cent a year over roughly three decades up to 2019, and by some estimates, between half and two-thirds of that growth came from Chinese consumers. Without a revival in Chinese demand, Solca said it would be prudent to assume growth of only about 4 to 5 per cent, rather than 7 to 8 per cent.

What is holding Chinese consumers back

The report points to falling property prices, high youth unemployment and slower wealth creation through real estate and financial services. It also flags worries that households are drawing down their savings without spending more in return.

Exports are one of the few bright spots for China’s economy, which reduces the pressure on policymakers to switch to a consumption-led model. Bernstein expects only small and possibly temporary stimulus unless conditions get worse. It also cautions that artificial intelligence and robotics could add pressure on salaries and jobs, especially for white-collar workers.

Trading down, not walking away

Chinese buyers have not given up on luxury, the report says, but they are trading down. Brands may have to offer more accessible products and make their value case stronger, without hurting their premium image.

Waiting for the economy to improve, the report says bluntly, is not a strategy. Brands that do not adjust their pricing, product mix and offerings risk losing customers, and the industry’s outlook remains closely tied to whether Chinese household demand picks up.

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