A cofounder of the well-known Chinese
horological club, the Shanghai Watch
Gang, Kelvin Sa shared with us his
personal notebook, shedding some
light on the advance of the pandemic
in China as well as its impact on the
collectors’ mindset. The concept of
“revenge saving” seems much more
appropriate than “revenge spending”
as a new normal, different from the past,
is establishing itself in the country. An
intimate glimpse with valuable lessons.
“T
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.
“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.”
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