Everything is changing in the luxury sector in China: why can a high fashion bag now cost less than 30 euros? The economic and social reasons for this change.
To understand the economic context of China, struggling with deflation, tariffs, weak domestic demand, one can observe the ongoing change in luxury goods purchasing habits.
Just a few years ago, the dragon was the home of high-end shopping and luxurious, exclusive brands. From 2017 to 2021, for example, the luxury market in the country tripled in size. Chinese shoppers appeared to be obsessed with the consumption of these goods and China thus became the new target for fashion conglomerates, who hoped to enjoy that growth. The middle class boom was the real engine of the sector.
Today, however, the situation has definitely changed. China is in deflation, domestic demand is stagnant and not taking off and this is changing the way consumers perceive luxury goods. New products from high-end brands are now competing with second-hand luxury brands, which are sold at heavily discounted prices. Shoppers who want a branded item but have less money to spend, prefer to buy a used luxury bag for less than 30 euros.
This is the reflection of deeper economic and social changes, capable of shaping new business trends. Here’s what’s happening in China in the luxury sector.
Luxury increasingly cheaper in China, here’s why
The alarm on the Chinese luxury market went off years ago, in the aftermath of the crisis caused by the outbreak of the pandemic. In essence, the economic slowdown in China caused by the coronavirus has facilitated the business of shops like ZZER, a second-hand luxury goods market based in Shanghai. In three years, this sector has become increasingly flourishing and widespread in Chinese cities.
The trend signals a significant shift in China’s approach to luxury goods, which are worth more than $74 billion. second-hand luxury has been slow to take off in the country compared to other markets like Japan and the United States, due to shoppers’ preference for novelty and fear of unknowingly buying a fake. That’s no longer the case.
Brands like Coach and Givenchy are finding their products discounted up to 90% on resale sites like Super Zhuanzhuan and Xianyu. Zhiyan Consulting reports that this shift has pushed the second-hand luxury market to grow by more than 20% a year.
New businesses are targeting savers, from restaurants selling breakfast menus for 3 yuan (0.37 euros) to supermarkets offering flash sales four times a day. But this trend worries economists, who see price wars as unsustainable, as loss-making businesses (forced to sell at ever-lower prices) may have to close and people may lose their jobs, further fueling deflation.
“In the current economic environment, we are seeing more and more luxury consumers moving to the second-hand market,” said Lisa Zhang, an expert at Daxue Consulting, a China-focused market research and strategy firm.
At Super Zhuanzhuan, a Coach Christie bag, bought by its first owner for 3,260 yuan (about 400 euros), can be bought back for 219 yuan (26 euros). A Givenchy necklace worth 2,200 yuan (268 euros) can be found for 187 yuan (22 euros).
What’s happening in China? The economic crisis and social implications
Economic tensions such as falling wages, plummeting property values, uncertainty related to the trade war with the US, the slow and difficult post-Covid recovery, the fragile employment of young people, and slow domestic demand are pushing Chinese consumers, especially in cities like Beijing, towards used luxury goods.
Maintaining a certain status by showing off branded products, but at lower costs, has become the new trend. Chinese consumers have effectively turned their backs on luxury fashion for several reasons. Much of this has been due to the country’s economic slowdown after the pandemic. One social group in particular has been affected: young, ambitious workers. They once accounted for more than half of luxury goods consumers in China. But in recent years, work has been hard to come by and with rising unemployment, their purchasing power has visibly declined.
Lowering prices, even for luxury, has been key. And that only fuels the spiral of deflation — when prices are low because demand for goods and services is weak — that Beijing is trying to counter.
Data on Monday showed that consumer prices fell 0.1% in May from a year earlier, with price wars raging across sectors from autos to e-commerce to coffee, amid concerns about oversupply and weak household demand.
“We still believe that persistent overcapacity will keep China in deflation this year and next,” Capital Economics said in a research note.
In practice, with demand for goods that is rather subdued and seeking savings, competition between sellers of goods at discounted prices — needed to attract buyers — will only increase and prices could fall even further. This is a sign of a deep crisis for the Asian powerhouse.
Original article published on Money.it Italy 2025-06-10 12:51:00. Original title: Le borse di lusso in Cina ora costano meno di 30 euro
