Foreign brands in China are losing market share to domestic rivals, year after year
Industry findings and trending online comments help explain how Chinese brands are steadily outpacing foreign firms, as their store closures make headlines
The world’s largest jewellery company by volume is facing a wave of store closures across China – a move that serves to illustrate a broader retreat by foreign brands as consumer preferences shift towards practical products that offer more value for the money.
Danish jewellery brand Pandora, known for its fast-paced product launches and global sales of more than 100 million pieces a year, announced in its second-quarter earnings report on August 15 that it would expand its original plan to close 50 stores in China this year to 100 stores.
According to Pandora’s annual financial reports, its sales in China peaked in 2019 at 1.97 billion Danish kroner (US$305.73 million). But since the global pandemic, sales in China have steadily declined, dropping to 1.126 billion kroner in 2021, 737 million kroner in 2022, and 564.2 million kroner in 2023. Last year, Pandora’s revenue in China plummeted to just 416 million kroner, less than a quarter of the 2019 peak.
“Pandora is more about aesthetics and versatility for me; it’s not something to buy for value retention,” said Vicky Wang, a Pandora enthusiast from Jiangsu province.
Over the past three months, she spent 7,500 yuan (US$1,044) on a half-dozen charm bracelets but is now trying to sell what she considers “impulse purchases” on China’s second-hand trading platform Xianyu.
The closures by Pandora, which did not immediately respond to an emailed request for comment, are not isolated incidents among foreign retailers struggling in China.
According to the 2025 China Shopper Report released in June by Bain & Company and Worldpanel, Chinese domestic brands have steadily eroded the market share of foreign brands, with local brands accounting for 76 per cent of the market by 2024. That was up from 75 per cent in 2023, 74 per cent in 2022, and 73 per cent in 2021. Back in 2012, it was 66 per cent.
Foreign firms closing stores in China include fast-fashion clothing brands such as GU, owned by Japanese multinational Fast Retailing Group, and Spain-based Zara, as well as beauty and skincare brands such as Australia’s Aesop and Japan’s Decorte. Retail chains such as US-based Walmart and Japan-based Aeon have also announced withdrawals from certain regional markets.
Analysts say these types of retreats can be partly explained by subdued consumer spending amid deflationary pressure, coupled with uncertainties surrounding China’s economic outlook.
“Over the next decade or beyond, we will be in an era of low-price retail; this is a major trend,” said Chen Liping, a professor at Capital University of Economics and Business, in comments posted earlier this month to the social media account of a Chinese retail industry platform. “For some companies, it’s no longer just about operational challenges, but about whether they can survive.”
China’s consumer price index in July was flat from a year earlier, and producer deflation continued, indicating persistent weak demand in the world’s second-largest economy amid trade disruptions.
Wang said she was initially drawn to Pandora’s charm bracelets due to their marketing concept of “one bead, one story”, allowing her to create personalised memories. However, her attention, like that of many young consumers, has been shifting to safe-haven investments.
“I started to lose interest because, compared with gold, Pandora doesn’t hold its value [in terms of resale],” Wang explained. “Many people around me also didn’t understand why I spent so much on silver jewellery.”
Meanwhile, popular Japanese lifestyle brand Muji, which focuses on selling a minimalist lifestyle to the middle class, has made headlines following its string of store closures in China. The Shanghai-based China Business Network recently reported that multiple Muji locations, including in the cities of Beijing, Shanghai, Suzhou and Changsha, as well as in Zhejiang province, have shut down in recent months.
On Rednote, a popular Chinese social media platform, the hashtag “Muji pitfalls” has garnered 1,800 posts and 334,100 views in the past couple of years. The platform’s users have criticised the brand’s products for failing to meet their quality expectations and for offering what some contend are overpriced items that lack practical value for daily use.
One comment from May, liked more than 1,000 times, lamented the 68 yuan (US$9.50) cost of a cardholder, saying the price would have been more fitting for a backpack. “With that kind of money, I’d rather buy two cat bowls - they’d be far more useful,” the person said.
Muji did not immediately reply to an emailed request for comment, but it was quoted by the China Business Network earlier this month as saying that selective store closures were routine adjustments to improve operational efficiency.