Although the conference took a broader look at Asian markets, there was an unavoidable focus on China in particular, which is not surprising in view of the Swiss watchmaking industry federation’s statistics for the first nine months of this year: exports to Hong Kong increased by 29% and those to China by a staggering 48%. The two countries combined accounted for CHF 3.9 billion in value and thus accounted for nearly a third of all Swiss watch exports.
The presentations throughout the day offered an in-depth view of this burgeoning market, from its history of watch imports to the current state of the luxury market in China and the tastes and perceptions of its consumers. This latter point is perhaps one of the most important, since India—which was also the subject of a market survey on the day—is only 100 million inhabitants behind the population of China (India has a population of 1.2 billion compared with China’s 1.3 billion) but people’s attitudes towards luxury there differ markedly from those of the Chinese. Indians place a great emphasis on price and value for money, whereas Chinese will, for example, happily invest one year’s salary in the purchase of a luxury timepiece!
While statistics on the number of rich and super-rich in China differ according to which base currency you use, Rupert Hoogewerf of the Hurun Report, which publishes the annual Hurun China Wealth Report, offered a detailed overview of the “iceberg” of Chinese wealth. The tip of this iceberg is represented by the 600 or so US dollar billionaires in the country. But beneath the surface there are a further 7,500 RMB billionaires, 60,000 people with a fortune of RMB 100 million and 960,000 with a fortune of RMB 10 million (1 RMB = 0.15 USD). In order to be financially independent, the Chinese millionaire needs a fortune of USD 17 million, of which on average nine million will be tied up in property and the remaining eight million in investments and collections, allowing for “expenses” of USD 300- 400,000 per year.
Hoogewerf drilled down further to reveal valuable insights to anyone aiming to market luxury goods to the Chinese: the Chinese super-rich are on average younger than their European counterparts, Beijing has more billionaires than Shanghai and 40 per cent of the nation’s billionaires are in the east of the country. He also revealed the more surprising facts that two-thirds of the world’s top 30 women billionaires are from China and that—contrary to brands’ efforts in advertising—swimming, not golf, is the preferred sport of the millionaire. (Golf does, though, come second, and is followed by yoga, badminton and mountaineering).
Discussing the meaning of time. From left: Georges Baumgartner, Japan correspondent for Swiss Radio and Television; Prof. Kunal Bhattacharya, University of Pune, India; Prof. Fang Liu, University of Changchun, China; Takahiro Hamaguchi, Designer, Audemars Piguet; Kalust Zorik, President of the International Watch Marketing Days (JIMH).
According to Alvin Lye of Azimuth Watches, who presented a snapshot of the Chinese market, the good days look set to continue for the foreseeable future. In China’s supply-driven economy, the motto “build and they will come” applies, with new stores generating new customers and, with the growth in population coupled with GDP growth rates that are the envy of any Western economy at the moment, new customers are emerging every year—even if over half of those who buy Swiss watches do so outside China.
The situation appears rosy, but there are still plenty of things that a brand needs to pay attention to in order to profit from the success of the Chinese economy. Since the Chinese consumer prefers a conservative design that is simple and elegant but which nevertheless exhibits a certain amount of “bling”, this can have an impact on the design of an international collection and can disadvantage brands with a high proportion of sports watches in their collection. Oddly, no mention at all was made throughout the day about the fact that the Chinese consumer is also very brand conscious, which makes it all the more difficult for new brands to break into the market.
Even if a brand wants to target the 0.8% of the population capable of buying luxury goods (according to figures in the prize-winning survey presented by Dorothee Lacroix of the “1000 Mercis” advertising agency), this is still a potential audience of over 10 million people to address. One elegant solution to this conundrum was offered by Guillaume Giroir from the University of Orléans in France, who presented the phenomenon of “gated communities”. These private communities, which house China’s super-rich, can comprise more than 10,000 dwellings and in Beijing alone cover a surface area the size of Paris. With an estimated 3,000 such communities in China—often with their own infrastructure—there is a clear opportunity here for geomarketing.
Round table of watch experts on Asia. From left: Prof. François Courvoisier, Dean of the Institute of Watch Marketing; Michele Sofisti, CEO Gucci Group & CEO Sowind Group; Philippe Laurent, Business School Lausanne; Fadi Marachly, Managing Director of RSW.
Customer feedback presented by Alvin Lye suggests that Chinese customers are no different to any others in terms of the shopping experience they expect. On a general level brands present in China need to improve their customer relationship management, train their sales staff to offer a warmer and more professional service, improve after-sales service and enhance the overall shopping experience.
Once a brand has addressed these points and established a firm presence in China, it may want to look further afield—to the broader “Asian Dream”—and consider how to tap the potential in what could be the next big market: Vietnam. Experts see the country as being like China five years ago, which, if true, could see its luxury watch imports increase five-fold by 2015. With an almost non-existent sales network and poor awareness of Swiss watch brands, there is undoubtedly a lot of work required to tap into this market, but with an estimated 300,000 US dollar millionaires already in the country, the potential is clearly there.
The top three Chinese regions by RMB millionaires:
1. Beijing, 2. Guangdong, 3. Shanghai
China’s millionaires’ favourite sports:
1. Swimming, 2. Golf, 3. Yoga, 4. Badminton, 5. Mountaineering
China’s millionaires’ favourite collections:
1. Watches, 2. Classic art, 3. Red wine, 4. Cars, 5. Contemporary art, 6. Trophy properties
Source: Hurun China Wealth Report
Source: Europa Star December - January 2012 Magazine Issue
