Key points to remember:
- the dramatic slowdown in China’s real estate industry in 2021 could mean hard luxury could be ready for a crucial 2022.
- A recent survey of affluent Chinese consumers found that 88% of those surveyed planned to spend the same or more on luxury watches next year.
- Luxury competitors Richemont and LVMH are fighting online and offline to sell more watches to new and seasoned Chinese consumers.
As 2022 approaches, a key question for big luxury brands that already have a physical or e-commerce presence in mainland China is what Chinese consumers will spend more on in the coming year. Faced with increasingly influential trends such as growing interest in second-hand luxury and booming anti-consumerism among millennials and Generation Z, brands must now make their value proposition clearer than ever in China. This reality of emerging markets, associated with the dramatic slowdown in China’s real estate industry in 2021 – could mean hard luxury could be ready for a crucial 2022.
Events like the recent collapse from real estate giant Evergrande and President Xi Jinpingcommon prosperityâHave pushed a growing number of once-obsessed real estate investors and investment-conscious consumers towards wearable assets like jewelry and luxury watches. Rather than investing in a shaky real estate market or flashy automobiles, these buyers are particularly turning to Swiss watches. According to According to the Financial Times, Chinese imports of Swiss watches jumped 40% in the first 10 months of 2021, even as the economy as a whole cooled.
There are signs that the growing interest in luxury watches as an asset class – as well as a passion segment, as more affluent consumers become interested in and educated about watches – is likely to continue in the future. the foreseeable future. One october survey out of 1,500 Chinese people with more than 500,000 RMB ($ 78,480) in annual family income according to Hong Kong-based consultancy firm CSG Intage found that 88% of those surveyed planned to spend the same or more on luxury watches during of the coming year.
This follows a trend that solidified in the year 2020, hit by the pandemic, as mainland China first became the world’s leading consumer market for Swiss luxury watches. According to According to the latest figures released by the Federation of the Swiss Watch Industry, exports of Swiss watches to mainland China reached 2.1 billion Swiss francs ($ 2.39 billion) between January and November 2020, an increase by more than 17% compared to the same period a year earlier. From January to July 2021, Swiss exports to mainland China remained stable at $ 2.3 billion, widely surpassing once-dominant Hong Kong, which only reached $ 1.7 billion in Swiss watch imports, placing it in third place after the United States ($ 2.2 billion).
So who will benefit most from this luxury boom? A natural winner would have to be Richemont – the owner of brands like Cartier, IWC Schaffhausen, Jaeger-LeCoultre, Vacheron Constantin and Montblanc – who has skillfully wooed novice collectors as well as seasoned and sophisticated collectors through a smart online and offline strategy. Richemont grew rapidly online, launching a strategic partnership with the Alibaba Group in 2019, which saw the launch of a flagship of NET-A-PORTER on the Tmall luxury pavilion which stocked all of Richemont’s watch brands. In response to the COVID-19 pandemic, Richemont also quickly strengthened the online shopping experience of its portfolio brands, with IWC Schaffhausen launching its first virtual store in May 2020, followed shortly after by Piaget, which offered a (virtually) immersive experience. shopping experience to consumers around the world.
Not to be outdone, Richemont’s rival LVMH is also striving to reach young consumers, particularly through its portfolio of luxury brands. In July, Swiss watchmaker Zenith belonging to LVMH announcement the very popular Chinese singer and millennial actor Xiao Zhan (born 1991), who has nearly 30 million followers on Weibo, as his last ambassador. Last year, LVMH-owned Hublot also opened a virtual sales department for customers in the United States and China, with dedicated sales assistants serving customers in real time.
The only question mark hanging over hard luxury in China in 2022 is the impact that China has macro-repression in progress – which has trapped everyone from tech giants to celebrities to streamers – could have luxury demand and shopping, especially for big-ticket items like leather goods, jewelry, and watches most wanted. Unlike more âpublicâ purchases like homes and automobiles, what the hard luxury segment has going for it – and a crucial reason the segment has rebounded quickly from the blow it took. Xi Jinping’s Anti-Corruption Campaign in 2013 – it’s portability and discretion. A major investor in rare or hard-to-obtain watches does not need to display this collection or even wear the watches in public. Like other wearable asset classes like works of art or wine, luxury jewelry and watch brands tend to rebound quickly after any targeted industry crackdowns, meaning that 2022 is expected to – at fewer unforeseen dramatic events – seeing these brands remain relatively unscathed, even in the midst of more strained media, marketing, and advertising as the 20th National Convention approaches next fall.