Heading For The Top Spot: Hong Kong Is Now The Second Biggest Market for Watch Exports
Recording an unprecedented demand for luxury timepieces over the last three months, Hong Kong seems to be back in business and how
The world’s number one market for Swiss watches between 2015 and 2018, Hong Kong became a drag on global watch exports over the last three years. Ravaged by violent protests and political unrest in 2019, the city was pushed into recession with two years’ of rolling lock downs and the zero COVID policy. As tourism plummeted, annual watch exports to Hong Kong plunged from CHF 3 Billion in 2015 to CHF 2 Billion in 2020.
While the US continues to be the most important market for the Swiss watch industry for the third year in a row, taking in the highest share of exported watches, Hong Kong seems to be getting back on its feet with a surprising performance. In March, watch shipments to Hong Kong increased by nearly 61.9 percent. According to the latest report by the Federation of the Swiss Watch Industry (FH) exports climbed by 13.8 percent last month to a total value of CHF 2.4 billion. The reported increase of 11.8 percent in the first quarter as compared to last year has been largely attributed to Hong Kong’s growing appetite for luxury watches.
As per the FH report, all the top six markets —the US, Hong Kong, China, Singapore, Japan and the UK—reported a surge in export numbers in March but Hong Kong took the biggest leap, making it the second most valuable region for Swiss watches after a long time.
These signs of recovery are extremely significant for Hong Kong, which has been a luxury shopping haven with no sales tax and countless boutiques, drawing shoppers from all over the world. While the COVID lockdown forced Mainland spenders to shop within China over the last two years, the end of pandemic restrictions over the last two months have bolstered luxury shopping in Hong Kong. “This city is the Mecca of watchmaking. It’s a very mature market and we have a growing community of Moser fans here,” said Edouard Meylan, CEO of H. Moser & Cie. “We decided to open our first flagship boutique in Hong Kong because we wanted to make a statement. This is going to be a benchmark for all our future boutiques.”
With a population of nearly 7.5 million people, Hong Kong punches way above its weight with an abundance of luxury boutiques across the city. According to a Geneva School of Business Administration Study, in 2015 Hong Kong had at least 60 authorized dealers for Rolex and at least 52 for Omega. This tiny city along with mainland China had propelled Swiss watch sales to the record highs of 2011 and 2012. No wonder, it’s still the most preferred destination for luxury brands, who have been undeterred by the economic slowdown over the past few years. Last month, Phillips opened its new 52,000 sq ft headquarters in West Kowloon. The auction house launched its first Asian operations in Hong Kong in 2015. Over the last five years, it reported spectacular sales in Asia, especially in 2021, which was reportedly the most significant year for sales at Phillips.
Hong Kong’s positioning as a gateway to the collectors in mainland China is one of the primary reasons for global auction houses to have their headquarters in the city. Starting next year, Sotheby’s and Christie’s will be hosting their auctions in brand new facilities where they will run year-round sales, just as they do in their New York and London headquarters. Located at Landmark Chater in the Central district, Sotheby’s 24,000 sq ft (2,230 square meter) space will be at street level and accessible to the public, and will include an exhibition space, collectibles for instant purchase, live auctions and a cafe.
According to Christie’s, the South Asian market has been fundamental to their growth story. In the first half of 2022, buyers from Southeast Asia in particular, tripled their purchases in international auctions and the appetite for luxury watches and art has only been growing ever since the COVID lockdown.
Over the past four decades, Hong Kong and the U.S. have been neck and neck in scoring the top position for Swiss watch exports. Since 1988, the two regions have swapped spots about every 10 years. Going by the current performance of Hong Kong, it won't be long before it regains its position as the number one market for luxury watches. As per the latest report from FH, “the increase in watch exports to the United States (+7.8%), which has been constant for the last 27 months, continued to lose momentum, from a very high base,” while Hong Kong clearly benefited from the reopening of the market, recording a sharp acceleration during the first quarter. Singapore (+19.0%) maintained a steady pace, while Japan (+1.5%) again underperformed.
After these milestones in the first quarter, it will be interesting to see how Hong Kong performs over the next few months. The Swiss watch industry is definitely hopeful of a record year in Greater China.