Do you love buying wristwatches to reward yourself or your partner? Have you ever considered buying a smart watch? Do you know a brand that makes great watches and think they might have a shot in China? Read on to find out more.
We’ve compiled an overview of China’s watch market, including some relevant trends and considerations when introducing and presenting watch brands and watches to local consumers.
This is the latest part in AgencyChina’s “Quick Take” series, which provides our perspective a few of our team’s favorite product categories. You can find previous “Quick Takes” on kidswear, skiwear and lipsticks.
First, a quick review of China’s watch market.
China’s importance to the luxury and entry-level luxury watch markets is unquestioned. As early as 2012, China became the world’s largest watch market. China’s appetite for luxury watches was dampened after anti-corruption crackdowns, but over the last two years, sales volumes have normalized and shown healthy growth.
In 2017, China overtook the US to become the world’s largest market smart matches and wearable tech. Euromonitor, a market intelligence agency, reports that smart wearables are expected to record double-digit annual growth between 2017 and 2022, as Chinese consumers strengthen their uptake of smartwatches and trade up across electronic products.
With that in mind, let’s move to relevant trends and considerations.
1. WATCH CASUALIZATION
Male and female consumers have different appetite for watch varieties. Presently, China’s top-selling male watch category is business, and the top-selling female watch category is casual fashion.
This may change in the not-to-distant future. We’ve observed that China’s recent male graduates and mid-tier professionals are changing their watch preferences. There’s now a greater appetite for male consumers to own well-designed casual timepieces which can reflect personal style.
Linguistic analysis of male watch reviews on Little Red Book reveals a greater focus on design and exclusivity, rather than country of origin. Analysis of Tmall and JD sales data also shows a noticeable double-digit uptick in male casual watch sales across first and second-tier cities.
2. SMARTWATCH BOOM
Leading tech companies and tech-obsessed consumers are driving a sharp spike in smartwatches. China’s Xiaomi has overtaken Apple to become the world’s largest maker and seller of smartwatches. Mintel, a market research firm, reported in 2017 that 43 per cent of urban Chinese consumers would purchase their own wearable device, and the percentage is closer to half among 20- to 24-year-olds. Both smartwatches and smart wristbands are popular, with nearly 70 per cent of Chinese smartwatch owners also owning a wristband, according to the report.
In addition to ‘smart functions’ like health tracking, social media notifications and contactless payment, smartwatches are highly customizable. Faces and straps can be personalized with minimal effort. It’s the combination of these features that have earned loyal male and female customers.
One exciting growth area is children’s smartwatches. The majority of products in this category have contactless payment and telephone functions. Local smart watch brands have responded promptly to this trend, and have snapped up most market share. There is opportunity to Western brands to ‘Copy From China’ and establish leading positions in their home markets.
3. ONLINE WORK ACROSS ALL PRICE POINTS
Online channels are giving consumers new ways to discover and learn about watches. Little Red Book, for instance, has become a go-to for consumers in this category. One of our previous audits found even niche luxury watch brands can boast thousands of reviews and mentions. However online channels don’t necessarily provide healthy sales growth. Casual and business watches over RMB2000 have a visible drop off in sales conversion rates. This shows consumers may be hesitant to splash cash on watches they haven’t (or can’t) try in-store.
4. NAMING’S IMPORTANCE
One often-overlooked factor is brand and product names. Much of Omega’s success in China is credited to its well-considered naming strategy. Omega’s DeVille is China’s best-selling luxury watch, and the DeVille’s elegant Chinese name is a key reason behind this.
On the other hand, some watch brands made it big in China prior to the brand’s official entry. This put naming in the Daigou’s hands. And some of these names aren’t the classiest. For instance, Rolex’s Oyster Perpetual Submariner was given the name of ‘water monster’ (水鬼), and black and green variations named ‘black water monster’ and ‘green water monster’ respectively.
Wresting control back from Daigou’s ‘pet names’ can prove tricky. Not changing the name risks trivializing the brand and reduced brand equity. However, changing a name without appropriate communications creates leads to copycat fears. Brands in this delicate position must tread carefully.
That wraps up our “Quick Take” on China’s watch market. Keep updated on through our Market Updates.