YAN’AN, China — When a local official showed up at the scene of a horrific traffic accident here last month, his out-of-place grin grabbed the attention of the Chinese Internet.
The expensive watch on his wrist led to a cascade of criticism and his ultimate downfall. With 36 people dead in the collision on a busy roadway, China’s eagle-eyed Internet detectives honed in on what they saw as evidence of a corrupt government officials.
The official, Yang Dacai, head of the Shaanxi provincial Work Safety Bureau, since became known online as “Brother Watch,” after Chinese Internet users unearthed photos of him in different work situations wearing at least 11 different luxury watches worth tens of thousands of dollars — impossible purchases on a government salary. Yang’s downfall, mainly due to a large, expensive watch collection, underscores just how potent a symbol this particular high-end item has become in the world’s fastest-growing luxury market.
While China has been the savior and driver of the luxury watch business for the past few years, the watches themselves have come to symbolize much more in the eyes of the Chinese public. While many consider it a taboo to discuss the issue, watches are convenient yet expensive gifts, making them especially prone to being used as tools of corruption.
“It’s actually quite difficult to give an official $10,000 in cash, but easy to give someone a watch,” said Paul French, China market strategist for Mintel Access Asia.
That fact, French explained, has led to a high return rate on watches in high-end China. Though the industry has not released figures on returns of luxury watches in China, French said it is not uncommon for people to bring gift watches back to retail shops and exchange them for cash.
Yang’s downfall has been high profile, but this kind of backlash is not entirely unique. China’s eagle-eyed micro-bloggers have increasingly honed in on luxury goods as a sign of potential corruption among government officials.
Watches are an especially potent symbol. And yet, analysts say, the whiff of corruption is likely to have very little dampening on thedrive of regular consumers in China to buy expensive watches. Like many other luxury products, the symbolism of wealth and power is strong.
Of course, not everyone buying luxury watches in China is a corrupt government official. The timepieces are popular with businessmen and watches for women are growing in popularity as well.
Take Alex Qi, for instance. He started to think about investing in luxury products a few years back, he didn’t go first for a fancy car or expensive bottles of French wine. Topping his list instead? A tasteful yet noticeable high-end watch that would show he had made it.
Qi, a 35-year-old Beijing entrepreneur, now owns threepremium brand watches, each worth at least $8,000.
“I felt they will be a good investment in the long-term, as well as something I can wear every day,” Qi said.
It is no secret that China has been the bright spot for sales of luxury goods worldwide in the past few years. While the global economic downturn has taken a toll on retail sales in the U.S. and Europe, China luxury sales continue to power forward, keeping this the fastest-growing luxury market in the world. This remains true even though China’s luxury market isshowing signs of a slowdown.
Among that pool of items on offer, watches are one item that stand out. They have become major status symbols for men, who still hold the bulk of the political and economic power in China.
Zhou Ting, executive director of the Luxury Goods Research Center at a Beijing-based economics university, said the high-end watch market in China grew 22 percent last year with sales and imports into China of about 450,000 luxury watches. The exact dollar figure of their purchases is unavailable, but China is now believed by many analysts to be the world’s top luxury watch market.
Since 2007, the market has soared by more than 200 percent, Zhou noted, from almost nothing to a major moving factor in globalwatch sales and trends.
Even now, said Zhou, “Luxury watches are getting more popular among more people; they are not just for the elite anymore.”
The reasons for this lasting and growing boom are somewhat uniquely Chinese. First, Chinese consumers believe luxury watches like those made by Omega, Rolex, Piaget and a select few other brands are great investments vehicles. With little faith in the domestic stock markets and few outside investment opportunities, high-end watches have joined fine wine and other consumables as investment products.
“To really make it in China, a luxury item has to hit all the buttons,” said French. “It needs to show aspiration and wealth, and offer a speculative value, such as wine, certain cars that don’t lose their value and watches.”
Well-known Singaporean watch collector and moderator of online forums for the watch magazine Revolution, Ng Tjeng Jaw, said China’staste is also changing international styles. He didn’t name specific brands, but said there has been an “overall change to more classic and elegant designs in the past few years, Chinese themed products (just look at the number of dragon watches last year).” Those, plus Chinese calendar watches, are all specifically targeted at Chinese consumers.
China’s hunger for high-end watches is also changing the global market in more subtle ways. Chinese buyers, professor Zhou noted, differ from other nationalities because they prefer known brands rather than precision parts and legendary quality. This has opened the market wider to fashion houses like Dior, Chanel and others that already have wide name recognition in China.
French noted that although watches are being marketed as legacy items to be passed down for generations in Chinese families, the message doesn’t seem to have sunk in yet. He recalled a meeting with a watch brand in which he showed off his own family watch, which survived three wars, starting with his great-grandfather in World War I.
“It’s kind of like buying old houses. People don’t really get it yet,” said French. “They want something new, something bling-y.”