Which way will the China and Hong Kong luxury watch market swing in 2024?

Mainland China and Hong Kong continued to reign as the single largest global market for Swiss watches in 2023. Their collective imports reached $5 billion (CHF 4.3 billion) from January to October, despite the mainland’s economic deceleration. The US remained in second place, with Swiss watch imports valued at $3.9 billion (CHF 3.4 billion), 24 percent less than the combined total of China and Hong Kong. Hong Kong, where watch sales are driven largely by buyers from the mainland, saw a 25.5 percent jump in Swiss watches imports from January to October 2023 versus the same period last year, per data by the Federation of the Swiss Watch Industry (FH), making it one of the highest growth markets globally. While these numbers may indicate decent growth for Swiss watches in the world’s most important watch market, did they meet the high expectations anticipated after lockdowns were lifted? In 2023, China's macroeconomic issues had a widespread impact on consumer sentiment, leading to a post-lockdown recovery in the watch market best described as restrained. Chinese imports of Swiss watches grew by 9 percent from January to October 2023 compared to the same period in 2022, yet they remained 5 percent lower than the corresponding period in 2021. Most luxury watch brands projected a fast acceleration of the business and now feel that they should have been more cautious. “Our expectations were quite high at the beginning. We were too optimistic and buoyant,” Antoine Pin, Managing Director, Bulgari watch division, tells Jing Daily. As 2023 comes to an end, how will the Greater China watch market evolve in 2024? Experts cautious on Swiss watch market’s growth According to a Deloitte Swiss watch industry report released in October 2023, China's watch market could swing in either direction. The survey of senior Swiss watch industry executives revealed that 51 percent anticipate a continued decline or stagnation in 2024, while 49 percent expect growth. “For 2024, I would be super cautious. But I also think that 2024 will be better than 2023,” asserts Pin. In 2024, 51 percent of Swiss watch industry executives expect the watch market in China to decline or stagnate, while 49 percent anticipate growth. As luxury watch brands express cautious optimism for 2024, a recently released McKinsey report names watches as one of the few categories in hard luxury goods that will emerge as a preferred item in discretionary spending, as consumers seek to invest in pieces that will maintain or increase in value over time. The aforementioned Deloitte study highlights similar findings. In Hong Kong, more than 30 percent of consumers surveyed showed interest in buying a watch as an investment to hedge against inflation. Globally, 21 percent of respondents planned to buy a watch for investment purposes in the next 12 months. In China, where macroeconomic issues are looming, ultra-luxury watches are now being considered as an interesting alternative portfolio asset for high-net-worth individuals, says Karine Szegedi, Managing Partner of Consumer Industry, Fashion, and Luxury at Deloitte Switzerland and co-author of the report. This may not have been the case a couple of years ago, she says. Echoing these findings, figures from FH assert that global demand for higher-priced watches has not diminished despite the economic slowdown seen across major luxury markets. Notably, watches priced at or above $3,452 (3000 CHF) witnessed a 9 percent increase in global exports from January to October compared to the previous year. Chinese watch consumers prioritize brand image, in-person shopping China’s e-commerce ecosystem is arguably one of the most widely penetrated and advanced in the world. Yet, the majority (55 percent) of the Chinese consumers surveyed by Deloitte prefer to shop for luxury watches in brick-and-mortar stores “as it is an emotional experience for them,” Szegedi tells Jing Daily. The majority of the Chinese consumers surveyed by Deloitte prefer to shop for luxury watches in brick-and-mortar stores as it is an emotional experience for them. Pin explains that the more content consumers see on digital platforms, “the more they are eager to feel and test the products in store, because they want to confirm what they are seeing.” According to the Deloitte report, in-store purchases will continue to dominate sales, with 62 percent of the surveyed Swiss watch industry executives indicating offline to be the main source of global sales for at least the next five years. Brand image is another winning factor for consumers in China, where watches and jewelry are considered important status symbols. Deloitte states that 43 percent of Chinese respondents found a watch brand's image to be a bigger draw than sustainability, which was a priority for only 35 percent of the respondents. Conversely, in the US, 50 percent voted for sustainability and only 19 percent prioritized a brand's image. Pre-owned watches will be another interesting segment to watch as buying habits of Chinese consumers evolve. In the Deloitte report, 55 percent and 67 percent of the consumers surveyed in China and Hong Kong, respectively, showed interest in buying a pre-owned watch in 2024. The main motivation for buying pre-owned watches is to get them at lower price points, according to 48 percent of global respondents. Conversely, some watch buyers view the pre-owned watch market as an opportunity to acquire certain timepieces faster than waiting on long lists at authorized retailers. According to the Deloitte report, enthusiasts seeking watches with long waitlists, such as the Rolex Daytona, Patek Philippe Nautilus, or Audemars Piguet Royal Oak, may find it necessary to pay well above the retail price in the secondary market just to secure these watches on their wrists in a much shorter amount of time.

Which way will the China and Hong Kong luxury watch market swing in 2024?

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Published December 26, 2023

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Which way will the China and Hong Kong luxury watch market swing in 2024?