Going a step further than the recent WorldWatchReport, which claimed earlier this year that China had overtaken the US to become the world's #1 in terms of luxury watch demand, this week the Shanghai-based magazine Fortune Character released a report saying that China is actually set to become the world's largest watch market in terms of sales as well. According to the magazine's "China Top Wristwatch Report," despite a general contraction of China's overall watch market, the luxury sector continues to see “blow-out-like demand” from the country's newly wealthy, with watches becoming commonly used both to make fashion statements and for gift-giving purposes.
Purporting to be the first of its kind in China, the report surveyed 157 “frequent” luxury watch buyers with annual income that ranged upwards into the millions of yuan, along with 23 luxury watch brand execs.
According to the China Customs Information Center, luxury watch imports rose an impressive 49 percent in 2011 to nearly 90,000 units. With imports expected to rise to 130,000 over the course of 2012 and sales projected to reach 210,000 timepieces, China is poised to become the world's top sales market. As the Fortune Character study notes, Shanghai currently leads high-end watch imports, with more than 80,000 units flowing into the city last year, a staggering 93.8 percent of the national total and 38 times more than the second-largest single market, Beijing.
Though the study puts a lot of faith in projections, and we've known for quite some time that China is a massive watch market -- with its massive population, growing middle class, gift-giving culture, and inland nouveau riche -- one interesting takeaway from Fortune Character's survey is the high domestic consumption of high-end watches. As Zhou Ting, associate professor at the University of International Business and Economics in Beijing and lead author of the report, said this week, "Unlike other luxury goods like cosmetics, perfume and handbags, which are often bought overseas, 59% of luxury watches are bought from domestic stores." This fact has boosted profits for brands like Chanel and Burberry, which sell but do not specialize in watches, which have spent the last several years expanding rapidly into less sophisticated second- and third-tier cities.
As Zhou added, pressure among white-collar workers, even those considered far from middle-class from Western standards, to purchase premium watches has been a boon for brands that offer a range of watches at different price-points. "Although they contribute very little to the market (now)," Zhou pointed out, "[white-collar workers could become] the largest potential driving force” in the market in the years ahead.