KPMG's latest industry report reveals that China's smart wearables sector continues its rapid expansion, with market value climbing from RMB 69.5 billion in 2021 to RMB 105.3 billion in 2025. This trajectory reflects an average annual compound growth rate of 11%, closely trailing the global benchmark of 12.2%.

Wrist-worn devices remain the most established and largest category within this ecosystem. During the first quarter of 2026, China shipped 18.14 million wrist devices, marking a 3.5% year-over-year increase. This volume accounts for 38.6% of global wrist-wear shipments, cementing China's position as the world's largest market for this product segment.

The global smart wearables market has similarly demonstrated robust momentum, expanding from RMB 503.6 billion in 2021 to RMB 797.7 billion in 2025. North America leads with a 39% market share, supported by its concentration of technology innovators, high disposable income levels, and advanced healthcare infrastructure that enables adoption across both consumer and medical applications.

China has elevated smart wearables to a national strategic priority, with major cities pursuing differentiated approaches. The 2025 action plan to boost consumption marked the first time smart wearables were integrated into the country's domestic demand strategy. Beijing is focusing on the convergence of smart wearables with AI agents, Shanghai targets the silver economy demographic, Guangzhou leverages its display industry to develop specialized industrial parks, and Shenzhen cultivates emerging product categories like AI-powered eyewear.

Investment activity in China's smart wearables sector reached unprecedented heights in 2025, with momentum carrying into 2026. Data shows 88 financing events occurred during 2025, with disclosed funding totaling RMB 9.3 billion—substantially surpassing the combined totals of the previous three years. The first half of 2026 has already witnessed 83 financing transactions, with disclosed amounts exceeding full-year figures for 2022, 2023, and 2024 individually. The six-month funding total of RMB 8.623 billion represents approximately 92.53% of the entire 2025 annual figure.

Brain-computer interfaces and smart eyewear are leading this financing wave. Across sectors including brain-computer interfaces, smart glasses, VR/AR/XR headsets, and related hardware and supporting services, both ten-million and hundred-million-yuan funding rounds are occurring at nearly comparable rates. Meanwhile, consumer experience, medical diagnostics and rehabilitation, health management, and sports wearables predominantly attract investments at the ten-million-yuan tier.

Brain-computer interfaces stand as the most popular investment category, recording 171 financing events between 2020 and the first half of 2026—approximately 30% of all transactions. Smart eyewear follows with 80 events, representing 14% of the total, while VR/AR/XR headsets trail closely at 71 events. The share of financing activity directed toward brain-computer interfaces and smart glasses has shown consistent upward momentum since 2020, positioning these technologies as the primary drivers of industry investment.

Looking ahead, KPMG has identified ten transformative trends shaping the smart wearables landscape.

Domestic supply chain capabilities are shifting from cost advantages to innovation leadership. China is transitioning from a cost-benefit model toward innovation-driven growth, with upstream components seeing accelerated localization and software ecosystems maturing. Midstream operations serve as critical hubs integrating design, manufacturing, and brand management, characterized by specialized manufacturing, enhanced product value, and sophisticated brand operations.

The dual demographic forces of Generation Z and the aging population are creating a trillion-yuan market opportunity. Digital-native younger consumers are driving adoption, while China's aging population and prevalence of chronic conditions are fueling demand for wearable devices with health monitoring, fall detection, location tracking, disease management, and safety features.

Health data is evolving from simple records into valuable digital assets. Smart wearables applications have reached 150 million monthly active users, with continuous health data becoming a critical asset for insurance pricing, clinical research, and personalized health services, spawning innovative value-added models based on monitoring, feedback, and rewards.

Artificial intelligence is fundamentally reshaping wearable device interactions, transforming them from functional tools into digital companions. AI-integrated wearables are experiencing qualitative changes across four dimensions: cognitive-collaborative interaction patterns, predictive scenario-based services, intent-driven application architecture, and seamless cross-device connectivity.

The AI eyewear market is expanding rapidly due to multiple converging factors. China's smart glasses market has surged from RMB 450 million in 2022 to RMB 11.21 billion in 2025, representing a compound annual growth rate of 192.1%. This trajectory is expected to continue, with projections indicating the market will surpass RMB 100 billion by 2029.

Smart rings are emerging as the lightest health terminals capable of breaking through wearable comfort barriers. These devices integrate miniature sensors, low-power processors, and AI algorithms into a lightweight form factor weighing just 2-4 grams with approximately 2.5mm thickness. With IP68 waterproof ratings, they enable 24-hour unobtrusive wear, addressing the discomfort, wrist pressure, and screen-light sleep disruption associated with traditional watches.

Non-invasive brain-computer interface technology is maturing, ushering in an era of thought-controlled consumer interaction. The 2026 government work report included brain-computer interfaces for the first time as a priority future industry. The sector generated approximately RMB 5.1 billion in product market value in 2025, with medical applications contributing RMB 3.49 billion. Non-invasive BCIs, which require no surgery and offer superior safety and usability, hold the largest market share at 78%.

Health monitoring is professionalizing, transitioning wearables from novelty health gadgets to wrist-worn clinical tools. China's wearable health monitoring devices are bridging the gap between consumer electronics and professional medical assistance, featuring more precise monitoring, unobtrusive form factors, and closed-loop intervention capabilities. Medical-grade certification has become a critical competitive barrier.

Sports and fitness wearables are evolving from optional accessories to essential fitness equipment. The global market for sports and fitness wearables reached RMB 43.313 billion in 2025, with China contributing approximately RMB 13.4 billion. Projections suggest a 14% compound annual growth rate over the next seven years, driven by heightened health awareness, AI and multimodal sensing advances, and deeper integration into professional sports scenarios.

Smart wearable technology is extending into military and industrial applications. The global military wearables market reached $4.17 billion in 2024 and is projected to grow to $5.53 billion by 2032. China's industrial wearables market, supported by broader digitalization and informatization initiatives across manufacturing, reached RMB 27.436 billion in 2025. These technologies are increasingly moving beyond consumer applications into military situational awareness, industrial safety protection, and operational efficiency enhancement.