Industry insiders say it is just a matter of time before sales rebound, which they say will happen soon - and that the Chinese will remain the most important customers for the Swiss watchmakers.

 

Pablo Mauron, general manager of Digital Luxury Group's China office, a research and marketing firm that focuses on luxury brands and digital marketing services, says that despite the lull, "we can't realistically forecast a significant market decrease in the long run as the fast-growing middle-class, quick wealth creation from tier two and three cities as well as increasingly important travel spending are strong drivers that are here to stay".

 

Some experts say there is nothing abnormal about lower sales of luxury watches in recent months and believe the prospects for Swiss watchmakers in China are bright, given that the rapid increase in incomes has generated huge purchasing power.

 

William Bai, editor-in-chief of Horlogerie Culture Center of China, says in DLG's 2013 World Luxury Index China, an analysis of Chinese interest for more than 400 luxury brands: "The unleashing of purchasing power promises future growth for the Chinese luxury watch market. Personally I think it will maintain its rapid growth rate, although it might drop to a stable rate compared with previous years, just as China's GDP needs to slow down. This is a result of the growing maturity of buyers, selection range expansion and dispersed purchase channels."

 

Facing the slump in orders from China, the confidence of Swiss watchmakers seems to be undiminished. They hope the decline in sales figures is just a blip and are showing no intention of stepping on the brake in China.

 

"China and its people have shown themselves to be resourceful and resilient," says Stephen Urquhart, president of Omega SA, whose watches have kept time at the Olympic Games since 1932 and been worn on the moon.

 

"We strongly believe that the economy is being managed with a long-term view in mind," Urquhart says. "The fact that Omega continues to add new boutiques in China makes it clear that we still see enormous potential there."

 

Omega opened its first store on the Chinese mainland in the early 1990s. It has since opened more than 100 monobrand boutiques and plans to continue to locate them at all the best retail addresses in the country.

 

"Omega is constantly working on opening these 'houses of Omega' around the world. There are plans to celebrate the opening of a new Omega Boutique in Beijing later this year," Urquhart says.

 

"China remains a very important market for us. Last year marked a successful year for Omega in China, where we upheld our leadership position in the market while consolidating our retail strategy. We are confident that this trend will continue as we expand our network of monobrand boutiques."

 

Urquhart says that like most luxury brands, Omega will continue to exploit the Chinese market by moving into smaller cities where there are considerable business opportunities.

 

The company has also consolidated its online presence in the country, both with its website and mobile sites, which Urquhart says have become important parts of its marketing.

 

"Omega has experienced continued success in China. This is something we intend to maintain in the future."

 

While Swiss watch groups have been grappling with weak demand for upmarket timepieces in China, the sales of their mid-range watches have been growing strongly, especially those priced between 10,000 CNY (1,639 USD) and 35,000 CNY.

 

China's General Administration of Customs says that nearly 4 million watches were imported in the first four months of this year, 43 percent more than in the corresponding period last year. But the total sales value of those watches fell significantly, to about 608 million USD, 22.6 percent less than last year.

 

Helped by lower prices, Longines, a 180-year-old Swiss watch brand, says it sees no sign of a slowdown in the Chinese mainland even if people are becoming more conservative in their spending.

 

"Mid-priced brands have continued to sell well in China as people look to more moderately priced luxury brands in a slowing economy," says Li Li, vice-president of Longines China.

 

Longines draws more than half of its revenue from China. Its sales in the mainland have maintained double-digit growth in recent years.

 

"Longines watches are priced between 10,000 yuan and 30,000 yuan in China, which is affordable for the Chinese middle class, making it a good choice for those who want to get a time-honored Swiss watch brand at a good price," Li says.

 

In addition to relatively low prices, Li says, design is also a key to Longines' success in China.

 

"The Chinese appreciate watches with classic, elegant and timeless styling, unlike sports watches and chronographs, which are more popular with Western customers."

 

In July, China and Switzerland signed a free trade agreement, the first of its kind between China and a major Western economy.

 

Under the agreement, tariffs on Swiss watches imported to China will be reduced by 60 percent over 10 years. For many prospective buyers in the mainland, that holds out the hope of falling prices and of buying up-market watches locally instead of overseas, where, at present, luxury watches are much cheaper.

 

However, while some hail falling tariffs as a stimulus for China's high-end watch market, others doubt that they will have a significant impact on the retail prices of Swiss watches on the mainland.

 

"The 60 percent tax reduction does not necessarily imply a corresponding reduction in retail price," Li of Longines says, adding that he expects the impact of the tariff cuts on the local market to be limited.

 

At the moment China imposes an 11 percent import tariff and a 17 percent value-added tax on imported watches, plus an extra 20 percent consumption tax will be imposed on a watch priced above 10,000 yuan, he says. But only the import tariff will be cut. The free trade agreement does not affect the other two.

 

"The import tariff accounts for the smallest part of the duties on Swiss watches, so the retail price of Swiss watches will not fall significantly in China under the new policy."

 

Even if that is the case, watchmakers can still benefit from the free trade deal.

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