I have written several blogs about how the Asian market is currently booming and has kept the watch industry alive during the toughest of times. Luxury item sales have more than doubled over the last five years in China. Meanwhile, Chinese consumers buy approximately half of the watches sold worldwide either in their home market or abroad. Consequently, many brands have decided to open up more and more boutiques in China and Hong Kong. For instance, Bulgari is opening up 18 boutiques in China this year.
In order to stock these Asian boutiques, brands have to take away many of the watches that would normally be sent to the European and US markets. A lot of companies cannot produce more watches than they are currently manufacturing. They simply do not have the watchmakers, the facilities or the parts. It could take brands five to ten years to increase production.
A mistake I think a lot of watch brands could easily make during the next few years is overinvesting in China. One brand that definitely will not is Patek Philippe. Patek Chaiman Thierry Stern recently was quoted as saying, “I’m not putting all my eggs in the same basket. It’s a big mistake I think that a few brands are doing by going only in China. They focus everything on China and it’s dangerous.”
Could it be penny wise and pound foolish for brands to focus too much on China and lose concentration on other markets? Is China going to continue to grow? What if things slow down in China?
With the dollar at an all-time low to the Swiss Franc, brands have another reason to send their watches to other markets aside from the US. The weakness of the dollar is what has led many brands to increase US retail prices this year. Rolex, Jaeger LeCoultre, IWC, Breitling, Patek Philippe, Glashutte, Ulysse Nardin and Omega have all had one or are going to have one, while Audemars Piguet and Hublot have had two!
I think it is essential for brands not to lose focus on the American market. The world is constantly changing, and it is important to have a worldwide presence and following.
“For three to five years it should be fine,” in China, Stern said. “After that, it’s hard to know, but one day, of course, there will be something happening. This is why you have to really watch out.”
I will take the Patek Philippe Chairman’s word for it!