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French

ID: <

10670/1.9at4o1

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Sales internationalization of Swiss luxury watchmakers in China and Hong Kong

Abstract

The Swiss luxury watch industry has been the market leader since the 1990’s. From the beginning of the 21st century they have enjoyed a tremendous increase in exports worldwide. Recently, starting 2014, the market has been dropping. Decreasing sales in China and Hong Kong and mostly to Chinese consumers are to blame. The slowdown of the Chinese economic growth, increasing taxes imposed on luxury products are some of the few reasons for this slowdown. My first step for this research was to analyze the Chinese market in order to verify if this downward trend is lasting or if there is growth potential in the country. This meant identifying the current challenges Swiss watchmakers are facing and whether there are still potential customers in China. My findings showed that Chinese are still very eager to purchase Swiss brand name watches. They also showed that large groups of Chinese consumers have been left out by brands whose stores do not yet reach them. These groups are the new middle class and upper-middle class citizens that are rapidly growing in Tier 2 and 3 cities all across China. Watchmakers have indeed focused almost all their presence in China’s major cities but have remained absent in smaller ones. To note there are currently over 100 cities in China with over 1 million citizens. My second step was to find the most effective way for watch brands to reach this spread out population of potential customers. In the slowing watch market, investing in physical presence and stores is a risky and financially heavy decision for brands. The alternative is to develop online advertisement and sales. China is an extremely well developed ecommerce country which has embraced online purchasing. Online platforms such as Tmall and WeChat have largely surpassed the western Amazon and Facebook and user accounts often exceed half a billion. They offer companies varied services for online sales and advertising. While partnering with these companies’, Swiss watch brands will be able to access their current sales and distribution systems as well as benefiting from their vast knowledge of consumer behavior in China. I have therefore concluded that although there are threats to selling online, such as counterfeiting, there is a concrete opportunity for Swiss watchmakers to increase their sales once again. Many watch producers still argue today that the internet is no such place for sales of luxury watches. Nevertheless, the evidence is compelling that ecommerce is a very effective and promising way to reach Chinese consumers. They must decide if they want to follow this market evolution and hop on board the “E-wagon”.

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