BEIJING — On Aug. 26, a long distance bus crashed into a tanker on a Western Chinese highway; 36 were reported dead.

And this incident might result in a decline of luxury watch sales in China in the next quarter.

This story first appeared in the September 5, 2012 issue of WWD. Subscribe Today.

Here is what happened:

As the tragedy developed, the Chinese public focused on a particular photo of the crash site that included in the frame a smiling, pot-bellied man.

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The man is a Mr. Yang, director of Provincial Quality Inspection Bureau. At first, people were outraged by his smiling expression, which demonstrated a clear lack of concern for the victims of the accident. People immediately identified him as a government official and, shortly after, dozens of photos of Mr. Yang showed up on the Internet. There was Mr. Yang at a meeting; Mr. Yang accompanying a big boss from Beijing for inspections, etc. A clever watch-savvy person focused on all these various photos and discovered that Mr. Yang was wearing five different luxury watches. Not only were the individual brands of the watches identified but also the retail price in China — a significant notch above a government official’s pay grade. There were two Omegas spotted, a Rado, a Constantine and, of course, a Rolex.

The watch news was released on Weibo, the Chinese social network site. It went viral immediately. An official, smiling at a traffic accident which killed 36 people, wearing expensive watches, in different photographs, on numerous occasions. A similar incident happened about a year ago when a Nanking police chief was identified with an expensive wristwatch. That one ended with the police chief’s resignation. This time, due to his fancy wristwatches, Mr. Yang is now under investigation of the Anti-Corruption Commission.

In order to clear himself, Mr. Yang actually started a Weibo account and apologized for his smile and confessed his love for watches. He claimed that all five watches are owned by him and they were acquired by “proper” income. One was a gift from his wife for his birthday.

A few hours after Mr. Yang declared his innocence of any wrongdoing, another posting came out on Weibo with photos of him wearing more luxury watches than the original five. Mr. Yang has since remained silent.

This sudden, unwelcome spotlight on luxury watches is now serious and no doubt will have an effect on the sales of luxury in general in China, and, in particular, watches. Gifting has been an important contributor to the high sales growth of luxury watches here.

The fact that a local quality control inspector has so many expensive watches is not a surprise to the average Chinese. With food safety issues, drug safety issues, construction safety issues, the level of corruption in various government inspection agencies is an open secret here. The difference in Mr. Yang’s case is that this time the State-owned media got involved in questioning his integrity as well. The massively influential CCTV broadcast a 10-minute commentary by a famous anchor about Mr. Yang’s watches. This is a clear sign that the central government is no longer willing to help in the cover-up of wrongdoing among low-ranking officials. It will no longer ban media stories about such officials, and that will definitely have an adverse effect on sales.

As one TV reporter noted on his Weibo, “As my camera rolled towards the man in the front row of the ceremony, we caught him discreetly pulling his shirt sleeves to cover his watch.” Now the question is: If you cannot flaunt it, will people still want it?