Most famous foreign fragrances, Chanel or Dior among them, held the market for decades. But a native ingredient is now stealing the spotlight. Chen Xiang, known internationally as agarwood, is winning over China’s wealthiest consumers. I’ve watched this shift happen in real time. Brands that come to us asking about the luxury fragrance market in China are increasingly told the same thing: if you’re not speaking to heritage ingredients, you’re behind.
Chen Xiang was used in ancient times for religious rituals. Its history spans thousands of years. It has been valued across South and Southeast Asia for its healing properties and its distinctive, earthy scent, used in incense and perfumes alike. It is also one of the most expensive natural raw materials on the planet, which puts it squarely in high-end territory.
Why Chen Xiang is different from anything else
Agarwood is becoming endangered. It can only be produced or collected by a few. Wang Yinan, a well-known TV host in China and director of the National Chen Xiang Research Association, explained it clearly: “If you buy a house, antique or jewellery, they remain as concrete items. But Chen Xiang is different. It is burned for its fragrance, the fleeting moment of enjoyment. Nothing is left, but the fragrance. Isn’t this the most luxurious thing in the world?”
That logic resonates deeply with Chinese luxury buyers in 2026. They’re not chasing logos anymore. They’re chasing experiences, memory, identity. Chen Xiang delivers all three.
The ingredient itself originates from Central Vietnam and spread quickly through trade with China and Japan. Today it is found across Southeast Asia. It is a dark resinous heartwood formed in Aquilaria and Gyrinops trees infected with a particular fungus. That infection is what produces the scent. A sweet, rich and earthy fragrance, from a rotten wood.
The 2026 luxury fragrance market in China
China’s premium fragrance market crossed RMB 42 billion in 2025 and is growing at around 18% year-on-year. The growth is not coming from Western niche houses. It is coming from domestic and hybrid brands that anchor their identity in Chinese cultural codes: ink, tea, silk, and now agarwood.
I’ve seen this firsthand working with beauty brands entering the China market. Consumers under 35 are driving it. They grew up with international brands, they know the codes, and they’re deliberately turning toward Chinese heritage instead. This is not nostalgia. It’s a status move. Wearing Chen Xiang says something. It says you understand something that foreigners don’t.
Brands positioning around this ingredient are seeing strong traction in the gifting segment. Corporate gifting, Lunar New Year boxes, collector sets. The price point is not a barrier. It is the point.
How Douyin and Xiaohongshu are driving the trend
Chen Xiang content on Douyin exploded in 2024 and hasn’t slowed. Videos showing the burning ritual, the smoke, the meditative atmosphere, they accumulate millions of views. It’s visual, it’s sensory by proxy, and it fits perfectly with the platform’s short-format storytelling.
On Xiaohongshu, the dynamic is different. Users write detailed reviews comparing grades of agarwood, sourcing regions, extraction methods. The community is educated and skeptical. Brands that come with vague claims get torn apart in the comments. Brands that show transparency, traceability, and deep product knowledge earn trust fast.
I always tell clients the same thing: Xiaohongshu is not a place to advertise. It’s a place to be legitimate. Your Chen Xiang story has to be real, documented, and told by people who genuinely know the ingredient. KOL selection matters enormously here. One credible fragrance expert with 80,000 followers outperforms a mass celebrity with 5 million who has no connection to the category.
AI fragrance discovery and what it changes
In 2025, several major Chinese e-commerce platforms, including Tmall and JD.com, introduced AI-powered scent recommendation tools. Consumers answer a series of questions about mood, season, occasion, and cultural preference. The algorithm surfaces results. Chen Xiang scores very high in profiles that value calm, spirituality, and distinction.
This matters because it changes how you structure your product listings. Keywords like 沉香 (Chen Xiang), 木质香, 古典东方香 are now algorithmically weighted. Your Tmall page title, attribute tags, and product description need to reflect that vocabulary. Brands that optimize for these tags are surfacing in AI recommendation results ahead of established Western names.
A rare product, and a counterfeit problem
The rarity of genuine Chen Xiang makes counterfeiting a serious issue. Wang Yinan estimates that roughly 90% of the Chen Xiang on the market is faked or artificially produced. The only reliable tool, he says, is your nose. Commercially produced substitutes smell different. The difference is not subtle once you know the real thing.
To put the price in perspective: gold runs around 260 yuan per gram. Genuine Chen Xiang runs 10,000 yuan per gram. The difference with gold is that the fragrance disappears in a moment. But China’s wealthiest consumers don’t mind. That impermanence is part of what they’re buying.
For brands selling in this space, authentication is not optional. It is your primary marketing asset. A certified presence on Tmall’s luxury channel signals legitimacy in a way that no standalone website can. The official store badge, verified sourcing documentation, and brand story all work together to separate you from the 90% that consumers distrust.
What the ingredient trend tells us about China beauty in 2026
Chen Xiang is not an isolated case. Across China’s beauty and wellness market, there is a clear move toward traditional Chinese ingredients: ganoderma, pearl powder, tiger grass, moxa. Consumers are reading labels. They want to know where ingredients come from, how they’ve been used historically, and what they mean culturally.
Western brands that lean into this vocabulary and do it authentically are winning. Those that use vague Eastern aesthetics as decoration are losing credibility fast. The Chinese consumer in 2026 is informed, connected, and quick to call out posturing.
Brands that work with us on their China cosmetics marketing strategy know we push hard on ingredient storytelling. Not because it sounds good. Because it converts. It builds the kind of trust that keeps a customer in your ecosystem long-term.
Further readings:
- Stay tuned here for our next cosmetics news here
- Do you want to know how to promote your high end cosmetic brand in China? Go here
Contact us for a free consultation on your China cosmetics strategy.
