The Swiss watch market has had a hard time in recent years, in part thanks to a severe crackdown on bribery within the Chinese government and a rise in grey-market goods in the United States. But surprisingly, China now seems set to lead the recovery of this entire industry, and it’s all due to a large generation of young, affluent consumers and the e-commerce strategies luxury watch brands have designed specifically for them.
The Time is Now
According to data from The Federation of the Swiss Watch Industry, the early part of 2018 saw the luxury watch market’s largest growth in almost five years, with Hong Kong and Mainland China leading the comeback. From January to June of 2018, Hong Kong and Mainland China contributed over $237.6 million in exported sales, with the U.S. purchasing $108.6 million worth of luxury watch exports. This equates to a huge 29.5 percent rise from 2017 in Hong Kong, 13.4 percent in Mainland China, and 9.1 percent in the United States.
The boost comes after a serious slump in the Swiss watch market that followed the Chinese government’s anti-corruption measures, which took effect in 2014. The measures saw harsh punishments to government officials and diplomats for engaging in lavish gift-giving or spending, near devastating many of China’s luxury industries that had previously relied heavily on these sales. The far-reaching anti-corruption campaign led the Swiss watch market’s global export value to drop by 3.2 percent in 2015 and then a hefty 9.9 percent in 2016, according to The Federation of the Swiss Watch Industry.
Fortunately, there was a slight recovery in 2017, with export value rising by a mild 2.7 percent.
“Thanks to recovery in the Chinese economy and consumers trading up, demand for high-quality watches increased,” said market researchers Euromonitor International in a company statement to Jing Daily, “and exports of Swiss watches to Mainland China witnessed a rebound over the recent 2018 review period.”
The Power of the Chinese Influencer
A positive start to 2018 has boosted optimism within the industry, and luxury brands have begun to strategize on how to make the most of the growing Chinese market.
One brand doing this through the reach of China’s celebrity influencers is luxury watchmaker Audemars Piguet, which last month announced that the Chinese singer Lu Han would become the brand’s first-ever Chinese ambassador. The star has an incredible 50 million followers on Weibo—a number boosted by his massive fan base of loyal millennial consumers.
For the global luxury watch market to continue to benefit from strong China sales, von Gunten explains that it’s not just the marketing strategy that needs to be creative. “Chinese clients are increasingly discerning in their taste,” he said. “We therefore constantly push the boundaries of innovation and quality with the aim to provide qualitative product styles and unique client experiences that address their needs.”
Di Lieto agrees and believes that design innovation and exclusivity is key in China. “Millennials want classic design, and something others do not have, so there is great scope for limited editions, particularly based on historic design,” said the CEO. “There is great opportunity for smaller producers of authentic high quality watches. The fact that they do not have large distribution is a distinct advantage – Chinese millennials would prefer what they buy to be difficult for others to source.”