Contrary to recent buzz on the luxury slowdown in China, Swiss watchmakers are not overly concerned over economic slowdown, reports China Daily, because the burgeoning wealthy class in China has buoyed demand for the classic timepieces. “China’s affluent population is growing rapidly and so is the demand for status symbols,” says Zhu Shunhua, secretary-general of the Shenzhen Watch and Clock Association.
Between 2002 to 2013, China’s share of Swiss watch importing has grown 18-fold – from approximately $93.6 million to approximately $1.8 billion. China has become the third largest importer of Swiss watches, after Hong Kong and the United States. While there has been a slowdown of sales in China since the end of last year, fueled perhaps by the government crackdown on bribery and the economic slowdown more generally, few inside the industry are predicting a serious decline. “We can’t realistically forecast a significant market decrease in the long run as the fast-growing middle-class, quick wealth creation from tier 2 and 3 cities as well as increasingly important travel spending are strong drivers that are here to stay,” said Pablo Mauron, general manager of Digital Luxury Group’s China office.
Stephen Urquhart, president of Omega SA, said he believes the Chinese economy is being managed with a long-term view in mind, and the fact that Omega keeps adding new boutiques in China clearly demonstrates the potential that the brand sees there. Urquhart said that, in step with most brands, Omega will move into smaller cities where there are more business opportunities.
Longines also sees the potential that remains in China. “Mid-priced brands have continued to sell well in China as people are looking to more moderately priced luxury brands in a slowing economy,” said Li Li, vice-president of Longines China, “Longines watches are priced between 10,000 yuan and 30,000 yuan in China, which is affordable for the Chinese middle class, making it a good choice for those who want to get a time-honored Swiss watch brand at a good price.” Li noted that Chinese consumers appreciate watches with “classic, elegant and timeless styling” as opposed to the chronographs popular in the West.
China’s General Administration of Customs says that nearly 4 million watches were imported in the first four months of this year, 43 percent more than in the corresponding period last year. Sales value of those watches, however, are significantly down: at $608 million, they are 22.6 percent less than last year.
This July, Switzerland and China signed a free trade agreement, which calls for tariffs on Swiss watches imported to China to be reduced 60 percent over ten years. Brand representatives do not believe this will affect retail prices of watches.
China is the world’s largest maker of watches, accounting for 82 percent of world production. “There is a big gap in quality between watches made in China and those made in Switzerland,” said Zhang Hongguang, deputy director of the China Horologe Association, “but China’s watch industry has begun to upgrade.”
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