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China’s Watch Shoppers: Brand Awareness and Price Premiums

According to the findings of a consumer survey conducted recently by HKTDC Research[1] in major mainland cities, middle-class consumers in China have an acute awareness about the value of watches and acceptable price levels for timepieces of different grades. They have also developed their own impressions of watches produced in different places, with Hong Kong and foreign brands enjoying price premiums over domestic brands. This article discusses what mainland consumers consider to be acceptable prices for watches of different grades and origins, and their impressions of Hong Kong timepieces.

Acceptable Price Levels for Watches of Different Grades

China’s middle-class consumers have a definite acceptable price level for watches of different grades, which generally can be divided into brands that are mass-market, trendy, and famous. According to respondents in the HKTDC survey, the average acceptable starting price level is RMB1,124 and RMB3,064 for mass-market and trendy brands, respectively, and upwards of RMB11,955 for famous brands. Among the ten cites, the highest acceptable price level is given in Beijing for mass-market brands (RMB2,308), Shanghai for trendy brands (RMB5,676), and Wuhan for famous watch brands (RMB17,879).

 

Table: Acceptable Price Levels for Different Grades of Watches
Table: Acceptable Price Levels for Different Grades of Watches

 

The higher a respondent’s household income, the higher the average acceptable price level for mass-market and trendy brands. Respondents with a monthly household income of RMB40,000 or above have a higher than average acceptable price level for all three grades of watches.

 

Table: Acceptable Price Levels for Watch Brands of Different Grades
Table: Acceptable Price Levels for Watch Brands of Different Grades

 

Image of Hong Kong Watch Brands

Middle-class consumers in China have a positive impression of Hong Kong brands. Overall, 49% of respondents classify Hong Kong watches as trendy brands and agree that “Hong Kong is a fashion capital; its watches are trendy in style and design and make a perfect accessory for any occasion”. Another 21% of respondents see Hong Kong watches as designer brands, and that “Hong Kong watches are good and creative in design and distinctive in style”. Only 4% of respondents say they have “no particular feel” for Hong Kong watches. In one focus group, some respondents said they would not deliberately look for “Hong Kong brands” or “made in Hong Kong” watches, but would buy them if they found the style or price to be agreeable. A Hong Kong watch manufacturer said in an interview that “made in Hong Kong” products attracted attention on the mainland because consumers had confidence in products made in the city, giving Hong Kong-made goods a definite edge.

 

Table: Impression of Hong Kong Watch Brands
Table: Impression of Hong Kong Watch Brands

 

Among respondents with a monthly household income of RMB40,000 or above, 51% agree that Hong Kong watches are trendy brands, a higher percentage than for other income groups. However, 8% of the respondents in this group have “no particular feel” for Hong Kong brands, also higher than for other income groups. On the other hand, among respondents with a monthly household income of RMB12,000-20,000, 20% agree that Hong Kong watches are “excellent in quality and value for money”.

 

Table: Impression of Hong Kong Watch Brands
Table: Impression of Hong Kong Watch Brands

 

Price Premiums of Watches of Different Origins over Domestic Brands

Mainland consumers have formed certain impressions of watches made in different regions. The general consensus of respondents participating in the focus-group discussions is that: “Swiss-made watches are known for their high quality and professional image; other European and American watches come in a diversity of styles, with German watches offering outstanding craftsmanship; watches made in Japan have high price-performance ratios, while those made in China are inferior to imported watches when it comes to craftsmanship and style and design.” Hong Kong and other foreign brands have definite price premiums over mainland brands.

Rather than paying RMB1,000 for a mainland brand watch, the respondents are willing to pay a premium for a timepiece of similar style and function made in other regions. Overall, they are willing to pay the highest premium (162.1%) for a Swiss-made watch, followed by other European and American brands (117.9%), Japanese brands (76.5%) and Hong Kong brands (58.6%). In different cities, respondents in Wuhan are willing to pay the highest price premium (78.6%) for Hong Kong brands, while respondents in Guangzhou give the lowest price premium (45.4%).

 

Table: Price Premiums of Watches of Different Origins over Domestic Brands
Table: Price Premiums of Watches of Different Origins over Domestic Brands

 

Respondents with a monthly household income of below RMB12,000 are willing to pay a higher than average price premium for Hong Kong brands. Respondents with a monthly household income of RMB20,000 or above are willing to pay a higher than average price premium for Swiss brands.

 

Table: Price Premiums of Watches of Different Origins over Domestic Brands
Table: Price Premiums of Watches of Different Origins over Domestic Brands

 

How to Attract Consumers to Buy a New Brand?

The survey shows that half of the respondents believe that apart from telling the time, a watch can project a person’s image and could even serve as a status symbol, which explains why some people prefer famous foreign brands that are easily recognisable. When a new brand enters the mainland market, the two factors that attract consumers the most are “unique style and design” (66% of respondents) and “new technology/function” (63%). A respondent in one of the focus groups said: “Some new brands of watches are designed like jewellery with crystal and precious stone, with the timepiece concealed. These are very special in that they look like bracelets at a distance and you only know they are watches when you look at them more closely.”

On the other hand, “brand origin” (43%) and “historical and cultural legacy” (33%) can also increase consumers’ interest in buying a new brand. A respondent in one of the focus groups said: “Some European watchmaking families of niche brands have a history of more than 100 years. When my friends ask me about my watch, I can tell them its brand history and distinctive features to show my good taste and improve my image.” This may explain why some niche brands with “historical legacy” are welcomed by mainland consumers.

 

Table: Factors Attracting Consumers to Buy a New Brand
Table: Factors Attracting Consumers to Buy a New Brand

 

“Right price” is also an important factor when considering whether or not to buy a new brand. More than half of those respondents with a monthly household income of less than RMB20,000 say “right price” is a factor attracting them to a new brand.

 

Table: Factors Attracting Consumers to Buy a New Brand
Table: Factors Attracting Consumers to Buy a New Brand

 

Attracting More Consumers to Watch Shops

A respondent in one of the focus groups said that displays in many watch shops were monotonous. Displaying watches in showcases and having salespeople stand behind counters creates a gap between products and customers. Consumers with no plans to buy would not normally walk into these shops as a result.

Another respondent said that if watch shops displayed and sold timepieces together with other products, then they would be more interested in visiting and might even make purchases. For example, shops might display mannequins wearing watches with complementary clothing, shoes, handbags and accessories. Some 56% of respondents in the survey agreed that “mixed display and sale with fashion brands” would increase their interest in visiting watch shops.

 

Table: Ways to Attract Consumers to Watch Shops
Table: Ways to Attract Consumers to Watch Shops

 

The survey shows that respondents with a monthly household income of RMB20,000 or above are the ones most likely to be tempted by “mixed display and sale with fashion brands”. Respondents with a monthly household income of RMB40,000 or above visited watch shops in the past year (6.35 times), higher than the overall average (5.36 times).

 

Table: Ways to Attract Consumers to Watch Shops
Table: Ways to Attract Consumers to Watch Shops

 

Suggestions for Hong Kong Companies

The survey shows that the most popular timepieces among mainland consumers are casual fashion watches, which most of the respondents own. They are also among the watch types that the respondents plan to buy next. On the other hand, more than 50% of the respondents own smart watches, and 27% say they plan to buy one next. Casual fashion watches and smart watches should continue to remain popular among mainland consumers.

Mainland consumers have a positive impression of Hong Kong watch brands, for which they are willing to pay a price premium of 59% over mainland brands. They believe Hong Kong watches are fashion brands and that their styles and designs are trendy and make perfect accessories for any occasion. When a new brand enters the mainland market, “unique style and design” and “new technology/function” are the main factors that attract customers. Hong Kong watch brands should underscore their style and design and build up the malleability of their brand personality.

Shops using traditional display methods have greater difficulty attracting shoppers with no plans to buy. Therefore, Hong Kong companies could consider co-operating with other product brands and market their goods through mixed display. For example, watch brands could co-operate with clothing or accessory brands to match timepieces with outfits and accessories. They could also attract people into their shops with the help of sales promoters.

While physical stores remain the main selling channel for watches, Hong Kong companies could consider expanding online sales. The survey shows that some mainland consumers already have experience in buying watches online. Among respondents who have bought watches through physical stores, 79% say they are willing to try online shopping if they see a timepiece they like. Of course, Hong Kong companies need to have clear brand positioning and formulate a suitable marketing strategy with the needs of their target consumer group in mind.

 

Appendix:

Table: Focus Group Discussions
Table: Focus Group Discussions

 

Table: Online Questionnaire Survey
Table: Online Questionnaire Survey

 

Table: Average Monthly Household Income of Respondents
Table: Average Monthly Household Income of Respondents

 


[1]  HKTDC Research conducted a survey of mainland watch consumers through a series of focus group discussions and an online questionnaire survey from February to May 2016 (see Appendix for details).

Content provided by Picture: Alice Tsang
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