The topic of weakening luxury sales in China has been much discussed for some time now. Adding to that the politically sensitive period of the government shift once every decade, which leads to a calming of extravagant gift-giving between officials, this year has certainly been an interesting and dramatic time to take a closer look at the luxury watch sector in China. The recently released World Luxury Index™ China: Watches, gives an opportunity to evaluate the rhythms of the market, the ups and downs of individual brands, as well as what is going on in the consumer’s mind.
The western region is waking up
Maybe not surprising to those who have been following China for some time, the first significant trend our report reveals is that the western region is really waking up. To give some quick background, among three major economic regions in China, the west is known as the least developed, and the least “infiltrated” by luxury brands. Starting a decade ago and accelerating in recent years, the central government is giving the western region increasing strategic support to narrow the gap between the inland and coastal cities. Consequently, the economy of the west has started to boom, and luxury consumption follows with it.
Reflected in the luxury watch industry, we observed a clear increase in the share of luxury watch related searches in the west. In particular, the awareness of brand names, specifically, grows the fastest with a year-on-year increase of 8.4 per cent (as compared to 4.8 per cent in the eastern region). No doubt that it is just a matter of time before luxury watch brands all lunge for the west, just like they did years ago in the big eastern cities of Shanghai, Beijing, etc.
Winners monopolise but a market difficult for new players to crack
In an immature market where awareness of many smaller brands is yet to be cultivated, the lucky winners enjoy greater dominance than in other markets. The top three players in China, Omega, Rolex and Longines, seized 50 per cent of the total search volume share, while the top 10 represents an overwhelming 80 per cent share. Benchmarked against a mature market such as France, where the top three brands take only 31 per cent and the top ten take 64 per cent, the difference is clear. A similar market dynamism is also observed at model level, as the top five most searched for models capture over half of the search market share (see chart).
As this shows, the watch market in China is, for the moment, difficult for new players to crack. Unlike in the luxury fashion or accessories sector, where we have observed a trend that Chinese consumers are actually turning to those more understated, niche brands, watches are different. Consumers are still seeking the most well-known brands and models, possibly to feel more secure in spending such a large amount of money on an item that they will wear every day, and that their business partners and peers will see.
Chinese consumers express clearer and more distinguished needs
This year, volume for searches for specific watch styles (such as “classic” or “women’s”) has surpassed the volume of searches for price in China. Now the most common category of searches, the hunt for specific styles represents 8.6 per cent of total searches (the worldwide average of style searches being 1.5 per cent). This is a sign of a more sophisticated need expressed by Chinese consumers, as more and more people are searching for a Brand Name + Style , such as ”Rolex men’s watches”, or ”Longines classic watches,” instead of simply the brand name. Moreover, it’s also interesting to note the ”Chinese way” of approaching a brand: instead of first discovering the models as consumers usually do in a mature western market, the Chinese will seek to meet their own needs as a first request: men’s, women’s, couples etc.
Couples? It is worth noting the popularity of couples’ watches in China, which seems to be a the result of a particular consumer demand. So-called ”couples’ watches” or ”lovers’ watches” are a popular gift option for weddings, as well as an anniversary or Valentine’s Day gift between the couple themselves. Some brands have long sensed this demand and designed exquisite packaging to feature a pair of carefully selected watches matched for colour and shape.
Remember that Chinese speak Chinese!
The language barrier between English or French and Chinese is phenomenal, as more and more western marketers are now realising. However, it could become even more overwhelming for some watch brands who didn’t get it right from the outset. To ask your consumers to remember your Western name is hard in China. On the flip side, once a name is remembered, even if it’s not the official brand name, it can be hard to forget too. As an example, Hublot, which changed its Chinese name from ‘恒宝’ (Heng Bao) to ‘宇舶’ (Yu Bo) years ago, is still receiving over 50 per cent of brand name search queries under their old name. The implication of this could be more serious than you might think: it basically means the brand needs to double its efforts in search engine marketing in order to enable people who are looking for the brand online to actually find it.
The language issue does not only spring up at a brand name level, but goes much deeper at all levels of a brand’s marketing efforts, such as watch model names. Here the principle is either you as the brand create the name, or else consumers will do it for you. Omega’s De Ville collection has achieved enormous success in China. Among all the reasons for this, its carefully translated Chinese name may have been an important contributor. The Chinese translation of De Ville, ‘蝶飞’, whose pronunciation is close enough to the original, means ”flying butterfly” in Chinese, an easy-to-remember, yet extremely elegant name for the local audience. A counter (although not necessarily negative) example is for the Rolex Oyster Perpetual Submariner, to which Chinese followers have given the name of “green water monster” (绿水鬼) for the green-dial version and “black water monster” (黑水鬼) for the black-dial version. It is, however, the official semantic translation for the model that is mostly used in the brand’s own press releases and news reports.
A free version of the World Luxury Index™ China: Watches is available for download at:
Source: Europa Star December - January 2012-13 Magazine Issue