Swiss luxury watchmakers are navigating through a potential slowdown in Chinese demand, with indications that Chinese tourists are curbing their spending. However, there is a ray of hope for many high-end brands as the shift in demand to mainland China is expected to drive growth this year.
The concerns surrounding a softer economic climate in China were exacerbated by the release of weak Chinese trade data, causing shares of luxury goods companies to plummet. Despite this, brands like Parmigiani, known for producing around 3,000 units a year with an average price of 35,000 Swiss francs (£27,665), are staying positive and focusing on tapping into the Chinese market.
The change in consumer behavior among Chinese shoppers, who are increasingly opting to splurge within China instead of overseas, has prompted luxury brands to rethink their strategies and bolster their local presence. CEO Davide Traxler of Parmigiani views this as a strategic opportunity to make a mark in the Chinese market amidst evolving trends.
Chinese consumers have traditionally been a key demographic for luxury goods globally. However, the devaluation of the yuan and government policies reducing import taxes are steering consumers towards making luxury purchases within China. As a result, business in Hong Kong has experienced a slowdown, as reported by luxury conglomerate Richemont and others in the industry.
The impact of the trade war on demand within Greater China has been noted by Edouard Meylan, CEO of H. Moser & Cie, leading to a temporary sales dip. Despite this, recent months have shown signs of recovery. Meylan acknowledges the various global uncertainties, such as the U.S. government shutdown and Brexit, which continue to pose challenges for luxury brands.
While luxury watch manufacturers like Hublot are witnessing a slight downturn in Chinese demand, they are optimistic about sustained growth in the long run. The enthusiasm of young Chinese consumers in their 20s and 30s for luxury goods is a driving force behind this optimism. Ricardo Guadalupe, CEO of LVMH’s Hublot, remains confident in the brand’s performance, expecting a growth of 10 to 15 percent in Greater China in 2019 and an overall global sales increase of 6 to 7 percent.
Amidst geopolitical uncertainties, luxury watchmakers like Hublot are keeping a positive outlook on the Chinese luxury market. Embracing the evolving consumer trends and shifting market dynamics, these brands are poised to weather the challenges and thrive in the ever-changing landscape.
To learn more about luxury watches and the Chinese market, check out these articles: The Shifting Landscape of the Chinese Luxury Watch Market, The China Luxury Watch Market: Digital Trends.
