Swiss watchmakers are waiting for China to wake up again
The major luxury watch brands are counting on the reopening of China to ensure their growth in 2023 without declaring victory too quickly because the return of Chinese tourists to Europe is long overdue.
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In Lucerne, the first tourist destination in Switzerland, the tourist office hopes for a return of Chinese tourists “during the summer or the end of spring”.
AFP
China is a key market for watchmakers – gathered this week in Geneva – but watch exports there contracted by 13.6% in 2022 with the zero-Covid policy and the surge in infections at the end of the year. In February, however, they began to rebound, recovering by 8.2% year on year, according to statistics from the watchmaking federation.
“China will regain a positive dynamic”, predicts Jean-Daniel Pasche, the president of this federation, during an interview with AFP at the salon Watches & Wonders which brings together 48 brands, including Rolex and patek philippe.
With China reopening, many financial analysts have sharply raised their growth forecasts for the luxury sector in 2023. amount of “6600 billion renminbis” (883 billion euros) of savings accumulated “during the last three years”.
Short-term evolution difficult to predict
Morgan Stanley analysts expect Chinese consumer spending on luxury goods to increase by 20% in 2023. According to their estimates, luxury goods enthusiasts in China have contributed about 60% of the sector’s growth. between 2000 and 2019. Nearly three-quarters of their spending was then done abroad, representing a financial windfall for luxury boutiques in Europe, even if they have become more used to buying directly from China since then. the Covid-19 pandemic.
The leaders of the Swiss luxury giant Richemont remain cautious, however. “We see people returning to stores with an appetite for purchase”, notes Cyrille Vigneron, the boss of Cartier, the group’s flagship brand, noting that “when such a large market changes trajectory, it has an impact on the whole market. ‘Asia”. But the evolution of the market in the short term remains difficult to predict, warns the financial director of Richemont, Burkhart Grund, even if he remains “optimistic on China in the medium term”.
He observes a “good level of activity during the Chinese New Year” in China but also in Hong Kong and Macao, an upturn which extends to “Thailand, Japan and Australia” and “first signs” return of Chinese tourists to Dubai. “But in Europe, we don’t see it yet,” he says.
Lack of air links
At Hermès, one of the directors of the leather goods house has no doubt that the desire “to return to France and Europe is there”. But “flights in particular to France are still limited”, he underlines. For the time being, Hermès’ two priorities remain “to enlarge the average size” of the stores and “to gradually increase our presence in China” by opening a store “generally in a new city per year”, details- he.
In Lucerne, the first tourist destination in Switzerland, the tourist office hopes for a return of Chinese tourists “during the summer or the end of spring” according to “the availability of visas and flight capacities to Switzerland”, told AFP the spokesperson for this city where visiting watch shops is one of the essential steps. “At first, we will rather see a wealthy clientele arriving from China,” said the director of the watch division of Bulgari (LVMH) “because plane tickets are quite expensive”.
Jon Cox, analyst at Kepler Cheuvreux, expects “a very strong year” for brands that “have a distribution network in China,” he told AFP. “But I will not be as confident for those who depend on the return of the Chinese to Europe”, he adds, because it will take “some time” before returning to pre-pandemic attendance.
(AFP)