Swiss watch exports to China saw a bumper 49 percent rise in July from the same time last year, new industry figures reveal, in a remarkable return to growth after anti-graft measures imposed on the Chinese luxury goods market hit sales. The value of exports of Swiss watches hit 169 million Swiss francs ($185.14 million) in July, compared with 113.4 million Swiss francs in the same period in 2013, according to the Federation of the Swiss Watch Industry, marking the highest upturn in the past 30 months.
Sales of luxury goods in China, particularly at the high-end, have been hard hit by a raft of anti-graft measures carried out last year by the government designed to stop bribery and corruption amongst officials. This has seen many cognac makers warn on profit, while Swiss watch exports saw a 12 percent drop in 2013 from the year before.
The figure marks a turnaround for the industry, known for its prestigious brands such as Patek Philippe and Hublot. Analysts said that watches were one of the first luxury items to be hit after the Chinese government began its crackdown and are now the first ones to recover.
“Watches…are the classic thing to be given as a bribe or gift,” Rahul Sharma, managing director at Neev Capital told CNBC by phone. “Retailers have a lot of inventory on hand so when it comes back, you will see faster revival because retailers will want more watches and you’ll see underlying demand improve.”
Asia is by far the biggest market for Swiss watch exports accounting for 55 percent July shipments. But China’s neighbor Hong Kong saw exports fall 1.8 percent compared with July 2013. Europe also saw a 6.9 percent decline in Swiss watches imports, while Germany, Italy and France, all saw declines reflecting the struggling economies in those countries.
Total China luxury revival?
Despite an apparent revival of Swiss watches in China, analysts warned that this might not necessarily mean a recovery for the whole of the luxury sector.
“I would caution to say that this is turning around for all luxury, watches are different,” Winston Chesterfield, associate director at Ledbury Research, told CNBC in a phone interview. “People believe that when you buy a watch you buy a piece of jewelry, it has precious metals in it, and it holds its value. This is not the same for things like handbags and clothing.”