Indubitably, China will be the biggest market in the world, it’s only a question of time. Despite the pandemic, China’s share of the luxury market is growing at a constant pace. It becomes conspicuous that China is a very strong and stable market with a high purchasing power even in times of crisis. According to Bain & Company, it is anticipated that China will possess the biggest share of the luxury market by 2025. With the millennials and Gen Z as big players and emerging sources of market growth, it is essential to address their needs with features like a digital certificate.

Swiss watch exports to China

Based on 2020 data from Bain & Company, China takes the lead in demand for Swiss watches. Its high-end watch purchases have increased by roughly 20% from 2019 to 2020. The Federation of the Swiss Watch Industry calculates that exports of Swiss watches to mainland China have totaled USD 2.39 billion from January to November 2020. 

In times of the pandemic, it became ever more strongly visible that China is a very important if not the most important market of the Swiss watch industry. Swiss watch exports have collapsed on a global scale with China being the big exception. From January until September 2020, exports to China have increased by 11% according to Deloitte. These positive numbers underpin that it is important to invest in the Chinese market as its consumers are eager to be part of a flourishing economy. 

China’s watch market

2019 was not an easy year for China, it was the first to be tackled by the pandemic however it was also the first to recover and get its economy and businesses back to flourishing. Its sales provide grounds for optimism and growth. After the collapse in sales in May 2020 in China, the market has quickly recovered and sales increased by an impressing 48% in June 2020, further increasing and reaching 79% in September 2020, according to Deloitte. Whilst the USA, Europe, and Japan faced a continuous sharp decline in 2020, China has already recovered and is back on its feet with its watch industry accelerating. 

Rise of domestic duty-free zones in China

With the new regulations of duty-free shopping in the southern province of China-Hainan – citizens of China are incentivized to purchase more luxury products domestically which could potentially lead to domestic buying power in China to increase and move away from the trend of purchasing luxury products abroad. Growth outside China will be more difficult in the coming years due to travel restrictions; thus, Hainan will most probably become an important player in the watch industry. 

Watch retailers in China

Worldwide top watch retailers are located in Chinese-speaking regions. With XinYu being the largest offline watch retailer situated in China it has reached sales of USD 2.2 billion and accounts for 30% of Swiss watch sales in China, said Zhu in 2019 in the FHH Journal. Through close collaborations throughout many years with Swatch Group, LVMH, Richemont, Kering, and Rolex, XinYu proudly offers 52 internationally remarkable watch brands including Breguet, Omega, Vacheron Constantin, to name a few. Besides its offline stores, XinYu’s sales channels include a website, WeChat, and an app. In October 2018, XinYu has decided to collaborate with JD.com, China’s second-largest e-commerce platform after Tmall.com, to boost its online platform. With 600 million Gen Z and millennials in China, such a strategy to expand its online platform or create ecosystems is very meaningful as these consumers mainly make their purchases online. 

Luxury as part of everyday life in China 

With its over 1.25 billion users, WeChat is most definitely dominating the communication channels in China. Many watchmakers are represented on a WeChat channel, as this online ecosystem established around influencers brings along a lot of trust into the consumers of luxury brands. 

With the millennials and Gen Z as big players and emerging sources of market growth, it is important to adjust the sales channels accordingly, as these consumers purchase most luxury products in an online environment and expect digital documents. Indeed, 35% of Gen Z’s purchases are carried out online. The motivations of purchases no longer solely lie on aspects such as rewarding oneself and establishing an image of rich, but it becomes more about incorporating these luxury products into everyday life. This culture of gift-giving is key in China and plays a role in the purchase of luxury products however China’s society is on the move of growing individualism and in the case of luxury products, this has brought along change. There is a different motivation behind a watch when you buy it for yourself than as a gift. 

China is an attractive market for companies

With the close analysis of the Chinese luxury market, it becomes evident that it is an attractive and lucrative market with big opportunities for companies to prosper. Companies need to incorporate China into their ecosystem for foreseeable future growth. Adresta's solution is definitely highly interesting for the Chinese market and can help Swiss watch brands leveraging its growth. With the millennials and Gen Z becoming big players in the watch market, it is key to stay focused on topics such as digitalization and sustainability which attracts and retains them on the luxury market. 

Imagine an Instagram for watch lovers where the whole ecosystem comes together and interacts with one another. Stay up to date on this topic and subscribe to our Newsletter to receive the newest insights into Adresta’s developments.