When the coronavirus pandemic first struck china in 2020, it tampered with its economy, that’s yet to be recovered. China is facing a weaker growth and government stimulus that would interfere with its recovery. Weeks after the country plans to reopen after lockdown; it’s faced with another Covid-19 outbreak hitting most parts of the country hard.
For China, the main story is they see lights at the end of the tunnel, and the most affected economic sectors, like the watch market, seem to be recovering during this time. However, the outbreak re-emerges in some cities ease social curbs that have been active for months to eliminate transmission.
The country’s tolerance approach leaves it stuck between reopening and shutdowns, aiming at lingering economic pain. Economic experts predict that china wouldn’t meet its annual growth target if the virus spreads to more cities. The country’s lockdown had already tampered with the global supply chain and affected the operation of most global giants like Tesla Inc, Sony Group Corp., and watch brands like Rolex.
The country’s top pandemic control official, Sun Chunlan, urges Beijing, one of the cities with re-emerging cases of Covid-19, to take control of the outbreak soon. He says the city should create a conducive and healthy condition for its residents to embark on their daily routine. Shanghai also lifted its lockdown in June but later shut down most of its operations to conduct mass testing.
The business conditions in china are worsening in every way, and it’s unlikely to get rid of its Covid-19 Zero approach soon as the country’s president, Xi Jinping, is expected to secure a third term as president. The president called upon his leaders to strictly adhere to his virus strategy and balance social stability and economic needs.
Market Overview
According to china economists, the sale and production of watches were reduced during the pandemic period. But as the country reopens after the lockdown, the watch market’s annual growth will rise to RMB108.1 billion, an annual growth of 12.2%.
As watch enthusiasts become more interested in discerning taste, they desire more from their watches. The evolution of watches has taken a new turn from traditional watches with sensible functions to unique timepieces offering the brand’s value. The popularity of smartwatches has grown, and watchmakers are inventing watches with exceptional functionality such as health monitoring, mobile payment, and voice calls. Based on recent research, china’s watch industry would rise to over RMB15billion after its reopening.
Slow-moving Recovery
China’s economy is recovering at a slow pace after the lockdown. This is also affecting the watch market globally. China is one of the global business countries, and a slow-moving economic recovery means it impacts all of its production and global supply chain. Domestic tourism spending also experienced a drop of 12% to $4 billion, but it indicated an improvement from May for the calendar year. The Manufacturing and Services business survey data in May indicated recovery from lows in April, but the Purchasing Managers’ index lingered in contraction territory.
Market Competition
China is one of the largest global exporters and manufacturers of watches. Over 270 watch manufacturing companies in China produced top-notch watches before the pandemic struck in 2020. The total output values of the watch industry that year reduced by 29.4%, while its sales revenue reduced by 21%. But as the country reopens after the lockdown, they expect the watch market to recover its losses and enhance its total output value.
The Chinese watch market is dominated by German, Swiss and Japanese brands, while the domestic brand dominates the low-end market. During the lockdown, the high-end watch brands couldn’t get into the Chinese markets as there were restrictions in the global supply chain. Still, as the country reopens, the high-end watches will secure a market share with domestic brands despite intense competition.
Sale Channels
As the pace of urbanization and people accumulate amassing wealth, the high-end watch consumption rate is also expanding in top-tier cities. The watches top-tier consumers focus are not local but from top-notch and renowned brands. Top tiers consumers tend to purchase their watches outside the mainland. The imported brands operate with mainland companies to sell their products.
Through dedicated department store counters and high-end mails, foreign watch manufacturers can utilize existing sales channels to grow. Top-notch brands can also open specialty stores to entice new franchises to create a sales channel for imported watches and get marketing diversification.
The internet became an excellent platform for marketing and selling watches during the lockdown. Consumers could buy great value watches through B2C e-commerce channels and C2C online stores like official brand websites and flagship stores. China economic experts report that selling luxury watch brands through the internet soared by 150% during lockdown compared to the sales made on the internet before the coronavirus pandemic struck.