his time last year, I had a dozen watches in my mind that I wanted to acquire for 2020. My wife was excitedly searching for new homes that were big enough to contain our two-and-a-half-year old son and our 120lb Alaskan Malamut.
“During this time, a considerable portion of my time was spent solving a serious dilemma: McLaren 720s Spider or the F8 Tributo – and subsequently which strap should I be pairing my watch with? My wife would ask “Which colour?” BANG! The whole process would start again! During my social gatherings, the topic that seemed to circle round would be what to pursue and acquire next. Needless to say, at that time it was beyond even our wildest imagination that “today” was about to occur. Covid 19 hit the city of Wuhan right at the start of Chinese New Year. Similar to Christmas in the West, Chinese New Year represents the only major holiday and is a well-received respite for 450+ million migrant Chinese workers who, having spent 350+ days of the year working, return to their homelands for a family reunion.
“Shanghai felt like a ghost town, resembling its usual former self only during peak commuter hours. It was during this time that I also became aware of the term “revenge spending”.
“This mass migration is typically associated with a time for buying, similar to how in the West, people search for gifts in December in preparation for Christmas. There’s always one significantly big gift, whether it’s a Rolex or a new car, always reserved for themselves. Why? Because it’s important to return home with a sense of success, not least to show your neighbours, peers, relatives and friends.
- Kelvin Sa is a co-founder of Shanghai Watch Gang and co-organiser fo Shanghai Watch Festival.
“On the other end of the scale, a more affluent 70+ million Chinese decide to travel internationally to showcase the essence of Chinese Consumerism with a Big Capitalist C.
“For 2020’s Chinese New Year, all that was thrown out of the window. People couldn’t return home to see their families. Some couldn’t come back to the city they worked in and some simply no longer had a job. For me, I hoped that life would return to normal, but I know deep down that realistically things will never be the same again. The Government’s strict lockdown on many cities, including Shanghai, was lifted in early March. The streets remained empty however, and surprisingly, despite the Government doing its best to encourage us to return to normality, everybody voluntarily remained indoors, in their home. Occasionally one would venture outside for grocery shopping, but even that that was usually done in haste.
“But as time went on, I started to hear many stories of acquaintances that had gone out of business, factories that had employed 12,000 workers going bust simply due to the lack of exports.”
“Shanghai felt like a ghost town, resembling its usual former self only during peak commuter hours. It was during this time that I also became aware of the term “revenge spending” – a phrase that briefly resonated with me as I felt frustrated and trapped. Often, I played with the idea of going straight down to the shop to buy the watch I had eyed up, or taking my wife to every Michelin restaurant in Shanghai for some very serious mastication. After all we only live once!
“But as time went on, I started to hear many stories of acquaintances that had gone out of business, factories that had employed 12,000 workers going bust simply due to the lack of exports. Closer to home, two friends lost their businesses – one an affluent architecture firm, the other a well-known Chinese travel app.
“Now, I hear other stories of companies where all management level wages have been frozen for the whole of 2020 and where workers’ wages have either been dramatically cut or completely deferred in order to keep the company alive. Friends are selling off their investment properties to pay for wages and its not uncommon to hear of investment portfolios being down by half. This sounds like an exaggeration, but it actually isn’t.
“Ask any Chinese business owner today and they will tell you the same story. Those that had told me previously that they would “revenge spend” are now simply thinking of how to survive.
“Those that had told me previously that they would “revenge spend” are now simply thinking of how to survive.”
“In macro terms, Chinese GDP in the first quarter was down 6.8% compared to last year, with a 17.8% drop in the retail and wholesale sectors. However, in the first quarter, deposit saving has gone up by almost 8 trillion RMB (1.2 trillion USD). Instead of “revenge spending”, it seems we are seeing a remarkable surge of “revenge saving”.
“The 5-day-long Labour Day holiday which started on the 1st of May, affectionately called the “Golden Week”, is usually a prime time for travellers, diners and shoppers to be active. It’s a time where popular tourist destinations such as The Bund in Shanghai are busy, but this year, restaurants report on average a 40% occupation.
“According to Dianping (China’s equivalent of Yelp), some 20% of restaurants in Shanghai have shut down with no intentions of reopening, most notably Hakkasan on Bund 18 – a popular haunt for the Swiss watch industry. A friend of mine who used to dine on imported blue cheese and caviar for breakfast, served with half a bottle of Dom Perignon, now informs me of her newfound skill – cooking. She now tells me where the freshest food is and where the best bargains are to be had. Perhaps she would have learned this skill anyway, irrespective of Covid-19, but the virus would have accelerated such a decision.
“Perhaps finally, the Chinese will no longer be those consumers who have more money than sense.”
“Examples of friends who have still continued to spend a considerable amount during the 1st quarter do exist. A certain close acquaintance of mine spent 1M USD while quarantined at home, as boredom set in. Hengdeli has also reported a rather good Golden Week, but consumers have become sensible in their spending, preferring an interesting niche brand or Chinese alternatives as opposed to perhaps more luxurious brands such as Tissot or Longines.
“Second-hand and pre-owned are now an attractive option for potential buyers. There exists a plethora of platforms and online content available to the consumer, influencing and educating their purchase decisions. Perhaps finally, the Chinese will no longer be those consumers who have more money than sense.”