Lunar New Year: A Chance for Luxury Brands to Rekindle Chinese Customers
In the lead-up to the Year of the Horse, luxury brands are gearing up with special collections to entice Chinese consumers. From Harry Winston's $81,500 rose gold watch adorned with diamonds and a red lacquer horse to Chloé's silk scarves and snakeskin bags, these brands are making a splash.
But why the focus on the Year of the Horse? It's a time of cautious optimism for designer brands, marking a potential turning point in the Chinese luxury market's recovery. Once the primary driver of the global luxury sector, Chinese consumers have scaled back in recent years due to economic and housing market challenges.
Despite a projected 3-5% contraction in 2025, the Chinese luxury market is estimated to be worth around $50 billion. Bain analysts predict a recovery in the second half of 2025, driven by improved stock markets and consumer confidence. However, the market remains more competitive than ever.
Luca Solca, a senior analyst at Bernstein, forecasts mid-single-digit percentage growth in Chinese luxury spending in 2026. Before the pandemic, Chinese consumers accounted for about one-third of the global luxury market, but that figure has dropped to around 23%.
Lunar New Year collections, dating back to the early 2010s, have become a way for Western brands to pay homage to Chinese culture. The holiday is associated with the colors red and gold, symbolizing good luck and fortune. However, to truly resonate with Chinese consumers, brands must go beyond the expected motifs.
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Veronique Yang, leading BCG's consumer practice in Greater China, emphasizes the importance of fresh interpretations. Younger shoppers, she notes, appreciate old Chinese culture but seek modern twists. Daniel Langer, a professor of luxury strategy, highlights the evolving sophistication of Chinese high-income consumers, who now have higher expectations.
The pandemic shifted luxury shopping habits, with Chinese consumers increasingly favoring domestic brands. Before the pandemic, two-thirds of Chinese luxury spending was done abroad. Now, only a third is spent overseas. This shift presents an opportunity for Western brands to reconnect with Chinese customers.
To succeed, brands should take a nuanced approach. Langer praises Loewe's creative use of horse imagery, while Yang warns against over-emphasizing the zodiac animal. Instead, immersive experiences that blend cultural elements can create a more authentic connection with Chinese consumers.
Valentino's lantern festival and Burberry's extensive Lunar New Year campaign are examples of successful strategies. By weaving cultural narratives, brands can capture the attention of Chinese consumers, especially the younger generation, and build a strong connection.
