China has become the world’s largest manufacturer and exporter of watches. There are six major production areas in the country – the Pearl River Delta region, Fujian, Zhejiang, Jiangsu, Shandong and Tianjin, each with its own fairly complete processing chain. The Guiding Opinions on Accelerating the Promotion of Own Brand Building in China’s Watch Industry published in early 2015 stated that Tianjin, Guangdong (Shenzhen) and Shandong (Yantai) will be designated as major areas for brand-building and serve as models in influencing other areas.
The Chinese high-end watch and clock market is now dominated by Swiss, Japanese and German brands, while the low-end market is mainly the domain of domestic brands. Mainland enterprises can enter the high-end market through researching and developing their own products or acquiring an overseas brand. In recent years, for instance, there has been a mid-range company which has acquired a Swiss brand and moved into the high-end market.
Some domestic brands have done quite well in securing market share in spite of strong competition from foreign rivals. Leading domestic brands include Rossini, Ebohr, Tian Wang and Fiyta. In 2018, the China Horologe Association endorsed the establishment of the Chinese Tourbillon Manufacturing (Dandong) Base in the city of Dandong. Moreover, a Chinese brand watch movement was certified as a ‘chronometer’ by the Glashutte Observatory in Germany, signifying that China’s production technology and craftsmanship in mechanical watches have gained international recognition.
Watches have become fashion accessories and changes in consumption patterns have also broadened the market for fashionable timepieces. This is as true for specialist brands as it is for general brands. The former includes Casio, Swatch and Tissot while the latter include Armani, Louis Vuitton and Gucci. The marketing strategy of fashionable watches is to launch a few hundred new models each year as fashion accessories for different seasons.
Currently, slightly more males than females buy high-end watches. As more women are buying luxury watches thanks to the growing opportunities for women to move up the corporate ladder, there is considerable market potential for ladies' watches in China.
Another China watch industry report pointed out that as the pace of urbanisation quickens, people in places other than the big cities have quickly amassed wealth. Possibly as a result, consumption of high-end watches is expanding from first-tier cities to second- and third-tier cities. Meanwhile, the principal consumers of high-end watches in first-tier cities are no longer locals, but people arriving from second- and third-tier cities. High-net-worth individuals in first-tier cities tend to make such purchases outside the mainland.
Imported brands usually work with mainland companies to market their products. By setting up dedicated counters in department stores and high-end malls, they can make full use of existing sales channels to expand. This is the principal means adopted by most mid-range and high-end brands.
Opening specialty stores to attract new franchisees is another major sales channel for imported brands, as well as a strategy for achieving diversification in marketing. This can also provide consumers with more products to choose from and with better after-sales service.
Low-end watches have basically been relegated to small shopping centres and wholesale markets. For example, there are many wholesale watch markets in the vicinity of the Guangzhou Railway Station West Road, Guangzhou Railway Station South Road and Huanshi West Road. The Shenzhen Watch and Clock Components Market is a major supply base for Chinese watch and clock enterprises.
The internet has become an important channel for the sale and marketing of watches. Consumers can buy watches that are great value for money through C2C online stores and B2C e-commerce platforms like flagship stores on Tmall and official brand websites. Merchants can establish and promote their brands using the B2C mode. Vertical (industry-specific) B2C websites have also gained popularity in recent years. Consumers can shop online at websites such as Wbiao. As e-commerce platforms are becoming more mature on the mainland, industry experts addressing the 12th China Watch & Clock Summit Forum have called on mainland watchmakers to capitalise on the internet to expand sales.
Physical stores (department stores, large shopping malls and specialty stores, etc) are the main watch buying channels for consumers. According to the HKTDC survey, 84% of consumers said they would buy watches in physical stores. The main reasons cited are ‘genuine products guaranteed’, ‘trying on in person’ and ‘after-sales service guaranteed’. However, of the respondents who had bought watches via physical channels, 79% indicated that they would shop online if they found a watch to their liking; and the survey found that the price range they were willing to pay was RMB4,000-6,999. Only 21% of respondents said they had reservations about buying watches online and probably wouldn’t give it a try. Of respondents who had bought watches online, the main reasons for doing so were: ‘more choices in brand/style’, ‘low prices’ and ‘convenient/delivery available’.
The Guiding Opinions on Accelerating the Promotion of Own Brand Building in China’s Watch Industry stressed the need to continuously expand the market for multi-tier consumption and gradually implement the strategy of internationalising the watch industry. Steps will be taken to develop e-commerce and other new models of sales and foster and spread the watch culture through the establishment of watch museums and collections, the development of watch industry tourism and other means.
Import and Trade Regulations
In a move to further liberalise the market and meet consumer demand, as of 1 July 2018, the State Council lowered the most-favoured-nation (MFN) tariff rate on 1,449 imported consumer goods for daily use, including watches, garments, shoes, headgear and household electrical appliances.
The import tariffs of selected watch products:
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