Export data for March released by the Swiss Watch Federation fell 16% year-on-year.
All major markets are falling. The most exaggerated ones are China, which ranks second, and Hong Kong, which ranks third. Both have fallen by more than 40%, which is even greater than the decline last month.
Some people say that the decline in China and Hong Kong is due to the sharp depreciation of the yen, and many Chinese people went to Japan to buy watches. Japan's immigration statistics show that there were nearly 500,000 tourists from China in March and 1.32 million in the first quarter, a year-on-year increase of more than 800%. During this period, there were many news reports about Chinese tourists purchasing luxury goods. Chinese tourists seem to have returned to the era when they went to Japan to buy luxury goods ten years ago.
Looking at Swiss watch export data, Japan also fell, but only slightly by 3.5%, which was the smallest decline among the top five markets. Tourists really helped. Of course, not only tourists from mainland China, but also tourists from South Korea, Taiwan, and Hong Kong also helped. The Japanese yen exchange rate continues to hit new lows. It is now 160 yen to 1 U.S. dollar and 21 yen to 1 yuan...
So what do you think of the global crash?
An important factor is that the comparison base of Swiss watches in the same period last year is on the high side.
The global luxury goods market rebounded after the epidemic. In 2022 and 2023, not only Swiss watch exports continued to hit new highs, but the performance of major luxury goods groups also continued to set records. As a result, the boss of LVMH Group continued to sit on the throne of the world's richest man.
But the economy is cyclical, and a retaliatory rebound is followed by a slowdown or even a decline in growth. Swiss watch exports are now facing this decline. Although the export volume in March 2024 exceeded 2 billion Swiss francs, which is much higher than the 1.8 billion in 2019, it is indeed not high in front of 2023. Like Swiss watches, other luxury goods categories will also face decline in 2024. The performance of LVMH Group and Kering Group in the first quarter of 2024 also fell year-on-year.
Another major factor is the increasing global uncertainty. The Russia-Ukraine and Palestine-Israel wars have put pressure on people's psychology and economic entities. Global economic activities have entered a phase of cooling.
Of course, there is also the decline in the popularity of the secondary market for watches, which has caused some hot money that does not belong to this market to withdraw, and the market demand for watches has also returned to a more normal level.
If you pay attention to this market for a long time, you won't care too much about these ups and downs. We still remember that after the economic crisis in 2009, the watch market first rose sharply, then weakened, then fell, and returned to normal; then it encountered the impact of the epidemic, and then recovered...
The decline in 2024 will have different causes and situations than in the past, but the essence of luxury Swiss watches and the trend of spiral development have not changed. There are cyclical changes, so be patient.
What gives us confidence in the Chinese market is that the consumption power of the Chinese people is still growing, the Chinese economy is still developing at a relatively fast speed, and its position in the global market is also constantly improving. Of course, economic development has twists and turns and dangers, but it is also full of opportunities.
Comments