Swiss luxury watch brand Patek Philippe announced a significant markdown in prices by up to 22% in the Hong Kong market, a move analysts believe is aimed at taking on an influx of European watches through parallel imports, Shanghai’s the Paper reports.
Patek Philippe’s announcement caught the market off guard, since several of its rivals, such as Rolex and Cartier, have just increased their product prices in the Hong Kong market.
Rising parallel imports of European high-end wrist watches result from a plunge of the euro, The Paper said. The report said that the cheaper euro has placed heavy pressure on Swiss watch brands, which have suffered from the strength of the Swiss franc.
After the Swiss National Bank lifted the currency cap Jan. 15, the Swiss franc rose 41% against the common currency in Europe at one point, and climbed more than 15% against other major currencies.
Yu Xin, vice president of Handeli, one of the largest watch distributors in China, told The Paper that the price cut by Patek Philippe shows the brand’s determination to fight the cheaper parallel imports.
In mainland China, Yu added, it could be a trend for Swiss watch vendors to cut prices since their products carry higher price tags in the China market when they are priced overseas. Under such circumstances, Yu said, many Chinese buyers tend to buy overseas.
The Paper said Patek Philippe’s most basic wristwatch is priced at 178,000 yuan (US$28,500) in China, higher than the roughly 120,000 yuan (US$19,000) the same model would cost in Switzerland. The wide price gap has prompted many Chinese buyers to go overseas.
Market statistics show that China bought a total of 380 billion yuan (US$61 billion) worth of luxury goods, including high-end watches, in 2014, but only 30% of the transactions took place in China.
Read more at Want China Times.