Switzerland’s major luxury watch brands are cautiously optimistic that Chinese tourists will boost sales this year if they return to Europe in large numbers after the easing of domestic Covid restrictions.
Exports to China, a key market for watchmakers, contracted by 13.6 percent in 2022 due to Beijing’s zero-Covid policy and the surge in infections when it was lifted at the end of the year. However, exports began to rebound in February — up 8.2 percent year-on-year, according to the Federation of the Swiss Watch Industry.
“China will regain a positive dynamic,” the federation’s president Jean-Daniel Pasche, told AFP at the industry’s annual Watches and Wonders trade fair in Geneva, where 48 brands such as Rolex, Cartier and Patek Philippe were showing off their latest creations.
With China reopening, many financial analysts have sharply raised their growth forecasts for the luxury sector as a whole in 2023. Morgan Stanley analysts expect Chinese consumer spending on luxury goods to increase by 20 percent in 2023.
According to the US investment bank’s estimates, luxury goods lovers in China made up about 60 percent of the sector’s growth between 2000 and 2019. Nearly three-quarters of their spending was done abroad, representing a windfall for Europe’s luxury boutiques.
That said, Chinese luxury consumers have become more accustomed to buying domestically during the Covid-19 pandemic. The Swiss luxury goods giant Richemont sounded a note of caution.
“We see people going back to the stores with an appetite to buy and an appetite to travel,” said Cyrille Vigneron, chief executive of the group’s flagship brand Cartier.
“When a market so important is changing trajectory it has an impact” across the whole of Asia, he told a Watches and Wonders press conference.
But it is hard to predict how the Chinese market will evolve in the short term, said Richemont chief finance officer Burkhart Grund, even though he remains “optimistic for the mid-term development of China”.
“We’ve seen good business during the Chinese new year, but this has taken place not just in China,” he said, with outbound tourism returning to Asian countries including Thailand and Japan, and the first signs of Chinese tourists returning to Dubai.
Source: eNCA
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