Julie Laulusa, Mazars China Managing Partner and French Foreign Trade Advisor shared her insights on the far-reaching consequences of China’s anti-corruption and anti-extravagance campaign with Europa Star.
Her comments, extracted from the interview, were:
“The anti-corruption campaign began to have an impact on sales in mid-2012, … In 2013 things began to snowball, with the result that sales fell sharply, by around 30-40%. The luxury watch, a discreet and yet greatly appreciated gift, had become the symbol of corruption.”
However, “By 2014 the market had begun to stabilise, recording a drop of around 5%. At the same time, exports of Swiss watches to China increased in value by 15%.”
How to explain this paradox? “The consumer profile had changed so comprehensively that it had a considerable impact, in terms of both choice of models and price range…The watches that came in to replace the old stock were different; stylistically, they had no visible signs of extravagance,” stated Julie.
According to Julie, Chinese’s consumption idea on watches is gradually changing: “in the view of the Chinese, a Swiss made watch, should be made to last” and should be hand down to the next generation. Thus “engineering and functionality have increased in importance. As sales of watches intended as ‘gifts’ have dropped sharply, the customer profile has changed: clients are buying for themselves; they are investing, rather than spending. Little by little, the Chinese market is maturing.”
Julie also has one piece of advice to give to watchmakers: “invest in the mid-sized cities. In 2014, sales fell in the big cities, but they increased in the second- and third-tier cities, where tastes are still a little more ‘bling-bling’, more nouveau riche. It will take another five years or so for them to catch up. Moreover, outside the main centres, foreign travel visas are more difficult to obtain, so clients have fewer opportunities to make their purchases abroad; there is a more captive audience.”
For more details, please refer to the full interview: