CHINA’S luxury market contracted 10% in 2022 on the year, snapping a five-year streak of high growth, Bain & Company said in a report Tuesday.

The luxury market grew 42% annually between 2019 and 2021 but its fortunes changed in 2022.

The figure compared with growth of 1% between 2012 and 2016, and a 26% rise in sales between 2016 and 2019, Bain said.

Mirroring recent results from the likes of French luxury goods group LVMH and Italy’s Salvatore Ferragamo for 2022, Bain said all luxury categories were affected to varying degrees last year.

While categories with high online penetration, such as luxury beauty, suffered single-digit declines, the watch market fell the most, with sales dropping 20% to 25% from 2021.

Fashion and lifestyle experienced a decline of 15% to 20%, while sales of jewelry and leather goods contracted 10% to 15%.

But China’s decision to dismantle the zero-COVID policy in early December is likely to bring back growth this year as mall traffic improves and consumer sentiment rebounds, Bain said.

“We expect to see 2021 sales levels sometime between the first and second half of 2023,” said Xing Weiwei, a Hong Kong-based partner at Bain & Company.

“While optimism abounds, there are also risks. Brands need to resolve pricing gaps between China and Europe before international travel resumes,” she said.  ‌(SD-Agencies)