China’s economy is worth $18 trillion, making it one of the largest economies globally. It also has the second-largest apparel market in the world, showing the significance of consumer-spending in the fashion market.
From 2013 to 2019, China’s GDP grew at a high rate of about 7% per year. In 2025, the GDP is expected to grow by 4.5%, higher than the global average of 3%, but slower compared to past performance. By 2029, growth is forecasted to decline to 3.3% due to the aging population, as well as slower productivity growth. There are fewer young workers and retirees in the country which results in lower productivity and decreasing efficiency gains in the economy.
This economic deceleration has furthermore affected apparel industry; In the first half of 2024, apparel sales grew by only 1.3%, much slower than the 3% growth seen in 2019. This indicates weaker consumer demand and spending power which in turn leads to people being less optimistic about the economy. Real estate sales are at historic lows, reflecting broader financial uncertainty. China’s debt-to-GDP ratio has reached a high of 288%, indicating potential financial risks and reduced room for more borrowing.
While China remains a global economic powerhouse, its once rapid growth has noticeably slowed down. This slowdown is hitting people’s wallets, as consumers are spending less even on everyday items like clothing. It also raises big questions about the country’s future—like how it will handle its demographic challenges, productivity issues, and high debt levels. These challenges suggest that China’s path to growth might be tougher in the years ahead.
While there’s a significant decline in China’s economic growth, fashion enthusiasts are feeling very optimistic about other Asian countries potential for growth in the fashion industry. Asia offers a mix of well-established markets like Japan and Korea where Luxury expenditure is high and regions like India and Southeast Asia are fast-growing with younger populations. rising incomes and increasing interest in fashion.
India’s growing demand in fashion market
India is a key area of interest for fashion brands in 2025. The region contains more than half of the world’s population, including a large share of young, tech-savvy consumers. India is set to become the fourth-largest economy in 2025, growing at an impressive rate of 7% per year, faster than any other major economy.
By 2027, India will have one of the largest consumer markets, reflecting the growing spending power of its people due to rising incomes, urbanization, and digital connectivity.
India’s middle class is already huge, with 430 million people, larger than the combined middle class of US and Western Europe. By 2050, this number could reach 1 billion, especially from smaller cities (tier-two and tier-three cities). This growing middle class is driving demand for affordable and sustainable fashion.
India’s middle class totals to 430 million people, which is larger than the combined middle class of the United States and Western Europe. By 2050, this number could reach 1 billion, especially from smaller tier-two and tier-three cities. This growing class is driving the demand for affordable and sustainable fashion.
Indian consumers are becoming more environmentally conscious and are aware of the negative impact fast fashion has on the planet. Young, educated buyers are actively seeking eco-friendly and ethical alternatives. Brands like FabIndia, Okhai and No Nasties are getting popularized due to its sustainable aspect.
India’s Luxury Market Growth
The number of ultra-high-net-worth individuals (with over $30 million in assets) is expected to grow by 50% from 2023 to 2028, making India the fastest-growing market for UHNWIs globally. This group fuels demand for luxury goods and experiences.
There are middle- and upper-middle-class customers who save for and aspire to buy luxury goods. Their numbers are expected to grow from 60 million in 2023 to 100 million by 2027, expanding the luxury market. India is developing more high-end shopping destinations, like the Jio World Plaza and Galeries Lafayette, to cater to luxury consumers, especially in tier-one cities. India’s economic growth, expanding middle class, young population, and the rising number of ultra-wealthy individuals make it a key growth market for both non-luxury and luxury fashion.
Japan’s Luxury Fashion Market Growth
Sentiment is even stronger for well-established fashion markets like Japan and South Korea. Japan’s luxury fashion market was worth about $20-25 billion by the end of 2023.
In the first half of 2024, this market saw a 25-30% increase in sales (at constant exchange rates), compared to the same period in 2023. Major luxury brands like LVMH, Richemont, and Hermès saw double-digit sales growth in Japan, exceeding pre-pandemic levels.
Additionally, brands that struggled in other regions, such as Kering (-11%) and Ferragamo (-13%), saw significant growth in Japan which accelerated Japan’s apparel industry. Sales in Japan, where tourists are taking advantage of the weak yen, continued to grow.
LVMH CFO Jean-Jacques Guiony said that it was difficult to provide an outlook on the Chinese market, but added that “the Chinese customer is holding up quite well”.
Factors Driving Japan’s Strong Luxury Fashion Market
The Japanese yen dropped to a 38-year low against the US dollar in July 2024. This made luxury goods cheaper for international shoppers, which helped boost sales in Japan, particularly in duty-free stores and department stores, attracting foreign tourists. Unlike other markets, Japan’s tourism sector has fully recovered from the pandemic. The top tourist groups were from South Korea, China, Taiwan and the US. Many of these tourists were interested in luxury shopping, contributing to the overall growth of the market. Emerging brands like Gemmyo, Ganni, and Studio Nicholson opened their first stores in Japan in the last year, showing that the market continues to attract new entrants.
Moreover, Japan’s domestic luxury demands remains strong proving that Japanese consumers play a significant role in their luxury market. Japan is the second-largest market for ultra-high-net-worth individuals (UHNWIs) in Asia, and this group is expected to grow by more than 12% from 2023 to 2028, which will in-turn lead to a boost in luxury sales.
Focus on Sustainable Fashion
The Japanese apparel industry is increasingly prioritizing sustainable fashion, driven by growing consumer demand for eco-friendly practices and government initiatives to reduce carbon emissions. Japan’s advanced technology sector supports innovations like low-water dyeing techniques, energy-efficient production, and fabric recycling technologies. Japanese brands and retailers such as UNIQLO, Muji, Issey Miyake are incorporating circular economy practices like recycling, upcycling, and repair services to reduce waste.
Indonesia and Thailand as new fashion hubs.
Countries like Indonesia and Thailand are becoming more significant, thanks to the rise of cities like Bangkok as fashion hubs. The influence of Southeast Asian celebrities and social media influencers are also playing a significant role in the rise of fashion industry.
While these markets are still relatively small, fashion experts believe that they hold strong growth potential for the future.
The stagnation of China’s economic growth can be seen as a great opportunity for other Asian countries to grow in terms of apparel industry. Mature markets like Japan and South Korea can be global trendsetters in fashion and luxury. Emerging markets like Indonesia, Thailand, and Vietnam have the potential to be fashion capital due to a growing middle class and their increasing role in global fashion influence (e.g., social media influencers). This combination makes the region a top focus for fashion brands looking to expand or strengthen their global presence.
