Watchmakers not marking time
Updated: 2013-11-08 09:19
By Liu Lu (China Daily Europe)
A woman admires Swiss watches at a luxury expo in Beijing in June. Industry insiders say the sale of Swiss watches in China will rebound even though there has been a slump in orders since last year. Provided to China Daily
Despite economic slowdown, luxury timepieces continue to serve Swiss manufacturers well in China
Pandas are to China what watches are to the Swiss -all integral part of the county. Since the first Swiss watch began ticking in Geneva more than 400 years ago, they have become famous around the world for their exquisite craftsmanship, quality and reliability.
Yet who among the artisans of Geneva in the mid-1500s could have imagined how timeless their wares would be, and that one day it would be Asia, and particularly China, that would play a great role in keeping the wheels of their businesses turning?
But perhaps Swiss watches and Chinese buyers were always destined to meet, the best of the timepieces dripping elegance and sophistication, the richest of the buyers wanting not only to look good but to show off their immense wealth as well.
"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.
"Thanks to aggressive brand marketing, Swiss watches have become one of the most popular luxury purchases for China's wealthy."
China's appetite for high-end Swiss watches has enabled the country to become one of the fastest-growing markets for the Alpine nation's timepieces, he says.
The Federation of the Swiss Watch Industry says that in 2002 Swiss watch imports to the Chinese mainland were worth SFr94.2 million ($96.3 million), and that by last year that figure had risen almost 18-fold, to SFr1.65 billion, making the mainland the third-largest buyer of Swiss watches after Hong Kong and the United States.
However, after years of double-digit growth, Swiss watchmakers have noticed a clear slowing of consumer demand in China since the end of last year, which industry experts attribute to the country's economic slowdown and the government crackdown on illegitimate gift giving and conspicuous consumption by officials.
Industry insiders say it is just a matter of time before sales rebound, which they say will happen soon, and that the Chinese will remain the most important customers for the Swiss watchmakers.
Pablo Mauron, general manager of Digital Luxury Group's China office, a research and marketing firm that focuses on luxury brands and digital marketing services, says that despite the lull, "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".
Some experts say there is nothing abnormal about lower sales of luxury watches in recent months and believe the prospects for Swiss watchmakers in China are bright, given that the rapid increase in incomes has generated huge purchasing power.
William Bai, editor-in-chief of Horlogerie Culture Center of China, says in DLG's 2013 World Luxury Index China, an analysis of Chinese consumer interest for more than 400 luxury brands: "The unleashing of purchasing power promises future growth for the Chinese luxury watch market. Personally I think it will maintain its rapid growth rate, though it might drop to a stable rate compared to previous years, just as China's GDP needs to slow down. This is a result of the growing maturity of consumers, selection range expansion and dispersed purchase channels."
Facing the slump in orders from China, the confidence of Swiss watchmakers seems to be undiminished. They hope the decline in sales figures is just a blip and are showing no intention of stepping on the brake in China.
"China and its people have shown themselves to be resourceful and resilient," says Stephen Urquhart, president of Omega SA, whose watches have kept time at the Olympic Games since 1932, and been worn on the moon.
"We strongly believe that the economy is being managed with a long-term view in mind," Urquhart says. "The fact that Omega continues to add new boutiques in China makes it clear that we still see enormous potential there."
Omega opened its first store on the Chinese mainland in the early 1990s, and has since opened more than 100 monobrand boutiques and plans to continue to locate them at all the best retail addresses in the country.
"Omega is constantly working on opening these 'houses of Omega' around the world, and there are plans to celebrate the opening of a new Omega Boutique in Beijing later this year," Urquhart says.
"China remains a very important market for us. Last year marked a successful year for Omega in China, where we upheld our leadership position in the market while consolidating our retail strategy, and we are confident that this trend will continue as we expand our network of monobrand boutiques."