Interview: What’s Next For China’s Luxury Watch Market

A watch enthusiast eyes a timepiece at the 2013 Grand Prix d'Horlogerie de Genève exhibition in Beijing. The exhibit will return this year from October 8 to 10. (Grand Prix d'Horlogerie de Genève) As the Chinese government’s anti-corruption crackdown shows no signs of relenting, Swiss watch exports to China have taken a major hit since it began. That doesn’t mean the China market is any less important to watchmakers than it was before, however. That’s why this October, Beijing will be one of the tour stops of the famous Grand Prix d'Horlogerie de Genève luxury watch competition. From October 8 to 10, Chinese watch enthusiasts will be able to check out an exhibit in the Chinese capital city featuring the contest’s entries, which include pieces by top global watchmakers such as Chopard, Blancpain, and Jacquet Droz. Winners will be announced on October 31. In order to learn more about the importance of the China market to the watch brands in the competition, we talked to jury member and the editorial director for watches at Hong Kong Tatler Sean Li. An avid watch collector, Li is also the chief editor of the quarterly Hong Kong-based Revolution, which is considered by some to be the best watch magazine in the world. In the interview below, Li shares his thoughts on what he’s looking for in the competition, the top China watch trends, and how watch companies can make it through the current China sales slump. What are you looking for in a winning watch at this competition? I look first of all whether the watch is entered in the correct category, whether it fits well within the specific criteria, and if it stands out amongst the other watches that are competing. For me, it doesn’t have to necessarily be ground-breaking, but rather a watch that’s well executed, a watch that’s sets a benchmark as a complete timepiece. It has to be a watch that’s aspirational, that can be cited as a prime example of a specific kind of timepiece. Bovet's Amadeo Fleurier 43 “Barb Horse” unique piece created for the year of the horse is entered in the "Artistic Crafts" category of the competition. (Bovet) What kinds of watch characteristics are popular with Chinese buyers? Classicism, history, and value. Chinese buyers are not necessarily in search of the highly complicated watches, and some functions are not at all appreciated, for example chronographs, although the very classical tourbillon is well appreciated. My impression is that they want something genuinely Swiss, and are not in search of watches that were “designed for China.” Authenticity is very important. Which watch brands are the most popular in China right now? Are certain brands more popular in Hong Kong than on the mainland? Without citing specific brands, I’d say that it’s the ones that have been established in China for a long time, those that entered the market well before China became such a focal point for the watch industry. The brand preferences between Hong Kong and the mainland are defined by the customer; you must bear in mind that a lot of people who are buying in Hong Kong are from the mainland, and the fact that they’re in Hong Kong doesn’t change their preferences. Local Hong Kong buyers are more open to younger brands, and to more unusual designs and materials. The Chinese government’s anti-corruption campaign has caused luxury watch sales to slow in China. What can brands do to win consumers and keep growth rates up? Beyond the Chinese policies at the moment, I don’t think that the recent growth rates were sustainable over the medium to long term. China’s watch market has matured considerably, and the local buyers are much more knowledgeable than just four to five years ago, not only in terms of the watches themselves, but also in regards to their personal preferences. What has happened though, and not just in China, is that the brands have focused more on the mid to low range in prices in their new collections. Keeping growth going will be a question of expanding the market base, and getting the attention from more potential customers, rather than trying to sell more complicated and expensive pieces to existing clients. Do you think Chinese watch brands will ever catch up to Swiss watches in terms of popularity? Chinese brands need to establish their own niche outside of their country before we can analyze what their long- term prospects are. There is a very particular mindset that’s required to design and produce watches, amplified as you approach high end/luxury watchmaking, which is not easy, if not impossible to export. You have to bear in mind that it’s an industry that makes the Swiss watches, and that brands cannot stand on their own, as they rely on several suppliers. Some may rely in international suppliers too, but the mindset and knowledge is very much centered on Switzerland.

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Interview: What’s Next For China’s Luxury Watch Market