Statistics from Bain & Co show that the annual growth of China's luxury market is expected to show only 2 percent increase in 2013, following a 7 percent rise in the previous year. The slowdown is expected to continue in 2014.

The production lines of luxury brands are getting polarized, the US-based consulting firm said in its report on China's luxury market. Twenty-five percent of luxury bags in China were priced below 5,000 yuan ($826), while 33 percent of them cost more than 20,000 yuan.

"Some customers of luxury goods turned to fashion brands with lower prices, while many opted for fashion brands that are well-known and affordable," Zhou said.

Another significant reason for the increase in Coach's sales in China was that the brand diversified its products in the nation's market, Zhou added.

However, Coach will not enjoy China's market exclusively in the long term because other international fashion brands are also exploring it, business insiders said.

"What happened in the US market also will occur in China in the future," Zhou said.

Such fashion brands as Michael Kors and Kate Spade present strong competition to Coach. Most of their prices and target customers overlap, she said.