This image is merely representative of a wave, a big tsunami-sized wave of watch brands pouring over China and other places in Asia. Recently, the Swatch Group (who owns Swatch, Omega, Breguet, Longines, Tissot, and other brands) opened up a Hotel (well reopened) with their name on it. In Shanghai, the Swatch Peace Art Hotel is just a small sample of Swiss attention on the orient.
Watch brands go where the money is. At least where the money being used to buy watches is. I’ve always felt that watch brands are a great bellwether of regions with new money, or high economic growth. With China and surrounding countries experiencing growth unparalleled in other places in the world, spending for luxury items is high. That fact, mixed with China’s traditional high value placed on image and brands, makes for the perfect environment to market watches. A recent statement by the Swatch Group mentioned that about half of the major company’s income last year came from places like China, Hong Kong, Singapore, and Japan.
The western market isn’t dead, just finicky. Luxury brands find it harder to squeeze money out of value conscious consumers. Luxury as we know it thrives on high margins. Meaning that a brand is able to make a lot of money when they sell an item. This isn’t about quality, it just means that they are used to making a high profit after each sale. Consumers on the other hand, feel strongly that they should be paying closer to what an item is actually worth. Resources like eBay and the gray market in the US and Europe have made people who do buy luxury watches less inclined to venture into a store and pay the full retail price. I suspect the distribution of these resources may not be as wide in many parts of Asia.
While China is the hot spot of the replica watch market, they are also the hot spot of the authentic watch market. An unquenchable thirst for all things “luxury” spurs a larger portion of the population to have interest in fine timepieces. Not only a treat for enthusiasts, but a sign of success and status. While many people in Asia are looking for something well-known and pretty on their wrist, there is a growing community of serious and highly educated watch lovers. This new breed of watch lovers who are not only collectors, but also regular buyers of new watches present fertile grounds for luxury brands to set up shop. As long as these watch lovers continue to be well funded, new and existing brands will vie for their attention and budgets.
A relative lack of independently owned luxury item stores in many parts of Asia has spurred major groups like the Swatch Group or the Richemont Group to instead rely on brand owned stores. But there are other reasons for this move as well. The last year has seen dozens of new stores open all over Asia that sell just one watch brand as opposed to a number of them. This is part of the next phase of mature major luxury brand’s efforts to infiltrate new and existing markets. Total control over inventory and information protects them from watch inventory reaching the dreaded gray market. While another topic unto itself, groups like Swatch are ensuring that luxury watches don’t enter the luxury good gray market, as well as the replica market, in regions where such markets are strong – by controlling the distribution of watches entirely.
Is all the focus on Asia – especially China – merited? It is true that luxury watches are in demand and sold with frequency in the region. However, Europe and the US see a different store. There are far fewer new brand boutiques, and luxury brands are still benefited/held-back by independent watch and jewelry stores. China gets much more attention from the brand even in regard to the development of new products. Will this trend continue long enough to justify the significant investment watch brands are making in the success of this new eastern focus? Only time will tell. Like all markets, China is clearly as volatile as the next. Like sharks in a frenzy over food in a school of fish, at some point the meal will have to be over. Prudence tends to dictate that brands focus on what works around the world, so equal efforts on the west, as well as the east would seem to best encourage stable growth in the future.
By Ariel Adams
