Swiss Watch Exports to China Gain Momentum in April, But Will It Last?

The Swiss watch industry has no doubt been facing challenging times. Shipments last month to Hong Kong dipped 17 percent as the luxury shopping destination continued to struggle to bring in tourists from the mainland, dragging down overall exports by 5.7 percent. Mainland China offers the industry a little more hope, with exports rising nearly 40 percent in April. But a recent report from Exane BNP Paribas suggests the future of the top-end Swiss watch in China may be more “uncertain.” Watchmakers bidding on China's luxury market have been dealing with setbacks since President Xi Jinping launched China's anti-graft campaign in 2012, which put the brakes on lavish gifting and sent Swiss watch exports to the country into decline. Late last year, things started looking up again, with exports to China witnessing a nearly 30 percent boost in December as more consumers started buying watches for themselves instead of gifting them to others. However, the report suggests that the Chinese consumers the Swiss watch industry could once count on are getting to the point where they have had their fill of watches and are now buying far fewer. The research by Exane BNP Paribas shows that consumers tend to stop buying after they have acquired three to five big-ticket watches. Some would look to China's emerging middle class consumers to take up the slack, but this group is opting for timepieces at more affordable price points, a segment that may also soon be competing with smartwatch makers. A recent survey from RBC Capital Markets showed that 39 percent of Chinese consumers with an annual income of RMB 450,000 (US$65,000) or higher considered “a reasonable price” as an important criteria for buying a watch, compared to 35 percent two years ago. While smartwatches weren't a top choice for these consumers (Cartier watches, falling at a lower price point compared to brands like Rolex, Omega, and Longines, ranked number one), the number of those who owned one jumped from 14 to 21 percent in two years. More than 70 percent of respondents were looking to purchase one in the future, according to the report. Despite all this uncertainty, there are major players in the industry who remain optimistic. Michel Parmigiani, founder of Parmigiani Fleurier, told Jing Daily earlier this year he was “seeing very positive signs” coming from China following tougher times in 2016. However, with export recovery "progressing slower than expected" in other major markets for Chinese consumers, the path to success is far from assured.

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Swiss Watch Exports to China Gain Momentum in April, But Will It Last?