According to the Chinese zodiac, the year that began on 22 January 2023 falls under the sign of the rabbit. This symbol of good fortune aligns perfectly with the hopes pinned on the country not only to fuel the growth of the luxury industry, which has been riding a wave of euphoria for over a year now, but to drive growth globally. While the country’s structural challenges are well known – particularly a high burden of national debt and a shaky real estate sector – the outlook for the current year remains promising. Having recorded an unexpected 4.5% increase in GDP in the first quarter, China clearly intends to sustain this pace throughout the year. Although we’re a long way from the growth rates of the 1990s, in the current context this performance is remarkable, even if the government has played a significant role.
Robust growth
With the year off to such a promising start, Swiss watchmakers have every reason to be optimistic. According to customs statistics from the Federation of the Swiss Watch Industry, watch exports to China leapt by 108% in April and a staggering 158% in May, which equates to average growth of 30% over the first five months of the year. Although watchmakers have not yet completely made up for the downturn of the three Covid years (in China, and specifically in Shanghai, the lockdown extended to the end of 2022), recovery is in full swing. The same holds true for Hong Kong, a critical conduit in the watch trade with Asia, where imports of Swiss watch products have risen by 26% over the same period. The only missing ingredient, as far as the luxury industry’s leading players are concerned, is the return of Chinese tourists. As consulting firm Bain & Co points out, before the pandemic Chinese customers accounted for one-third of luxury purchases worldwide, with two-thirds of these transactions taking place outside China. Since the travel ban was lifted earlier this year, Chinese nationals are gradually picking up their old habits, although the movement is still in its early stages.
A key market
For now, then, luxury houses are focusing their efforts on domestic consumption. This includes watchmaking institutions, which are increasingly organising events and shows locally. For several years now, the Grand Prix d’Horlogerie de Genève has organised a world tour of the competing watches. This year, it will be stopping off in Macao (25-26 September) and Hong Kong (28 September-1 October) under the aegis of the Tatler Asia media group, which is organising meetings, conferences, seminars and other receptions in conjunction with the exhibition for collectors and the general public who, year after year, show their keen interest in these exceptional timepieces. On the agenda are expert-led exhibitions, meetings with watchmaking specialists, thematic seminars, exclusive receptions for collectors and public panel discussions. “Timeless” is already set to become a landmark event on the Asian watchmaking calendar. Meanwhile, Watches and Wonders Shanghai is preparing for its third edition this September at the West Bund Art Center. The event will feature 14 exhibitors and, for the first time, it will be open to the general public. Although the city’s lockdown last year meant the event had to be rescheduled, it was certainly not cancelled. From December 2022, Watches and Wonders took a three-month residency on Hainan Island, at both the CDF Mall in Sanya and the new CDF Mall in Haikou. In line with the Chinese government’s plans, Hainan is rapidly becoming a vast duty-free shopping hub, primarily targeting Chinese customers, who spent a staggering $5 billion on the island last year. As Panerai CEO Jean-Marc Pontroué often emphasises, China is a key market, and there is little doubt that it will reclaim its top spot in Swiss watch exports.
