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China’s Drastic Tax Increases On Luxury Watches Bought Outside Of China

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

New tax/duty/customs regulations imposed by China that took effect on April 8, 2016, will have a drastic effect on luxury watch sales around the globe. As part of a larger move to improve the consumer economy inside of China, new taxes will apply to not only items purchased online then shipped to China from elsewhere, but also to goods purchased by Chinese tourists while traveling abroad and then brought back into the country.

China’s complex tax system is difficult to untangle and the particular duties imposed vary given how items are purchased, the value of items, and the items themselves. While the new tax regulations apply to a broad range of goods, I’d like to examine the luxury watch duties as well as how these regulations will affect the global watch market.

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

China’s government is known to rapidly change monetary policies from time to time, sometimes seemingly in contradiction of earlier decisions. The nature of the Chinese government system allows it to make sweeping changes without seeking the public’s consent, which is one of the reasons why tracking Chinese monetary policy is quite interesting. Part of the context of this new round of regulations set forth by the “Cai Guan Shui [2016] No. 18” circular is to allow the government to capture more income with increased import duties, as well as to aid China’s domestic manufacturing economy by increasing the final consumer price of foreign goods.

Most reports on the April 2016 import duty increases focused on the fact that it was the first time that the Chinese government clamped down on e-commerce within China. However, the regulations are not merely about consumer items purchased online and shipped into China from elsewhere, but also to purchases made outside of China and then brought in by Chinese residents back home.

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

Import duties on luxury goods have been particularly beefed up (along with corresponding penalties for failing to claim goods upon entering China) because it is likely that the Chinese government feels the wealthier element of its population are going to be less sensitive to price increases. As such, the increased duties for items with a retail price of RMB 2,000 (about $300) or more will be those for which the new duties are the most severe. Moreover (and depending on the form of transaction), foreign items coming into China will have a host of fees levied on them including an import tariff, a VAT (value-added tax), and a consumption tax. You can be sure that when it comes to luxury watches, all three of these fees will apply.

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China’s Finance Ministry has created three tax categories when it comes to just the import tariff which are 15%, 30%, and 60%. Luxury watches (along with many other luxury goods) fall in to Category 3 which has a 60% import tariff applied to it. For reference, this is double the previous import tariff applied to luxury watches, which prior to April 8, 2016, was 30%.

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

In addition to the new import tariff of 60% for luxury watches, there is the standard VAT of 17% which applies to foreign goods, as well as the 20% consumption tax on most luxury watches. The combination of various taxes on items like foreign-made luxury watches means that buying them within China as of Q2 2016 means consumers need to spend around 97% over the base retail price. This effectively means that luxury watches in China cost double retail – making watch prices similar to those in Brazil the last time I checked.

High prices for luxury watches in China isn’t anything new. Watches are a popular gift and status symbol in China, and luxury watch sales have been increasing (at various rates) since the 1990s. Recent global economic slowdowns have leveled off wild growth, of course, but the fact the remains that the Chinese are extremely important consumers of luxury watches both inside and outside of China.

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

Now, here is where things are likely to be the worst for the luxury watch industry. Even though import tariffs are now higher for watches purchased in China, they have always been high. The solution to this problem (as is the case with many other luxury goods) is/was for Chinese people to simply travel abroad and purchase luxury goods like watches at lower prices and them bring them back home. There are even individuals known as daigou who are essentially smugglers that travel overseas and attempt to bring luxury goods back into China for later resale. In fact, according to some survey data I looked at, one of the primary reasons cited by Chinese tourists for leaving China was to purchase luxury goods.

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

Consumers who bring goods back into China and declare them will be responsible for the import taxes – but of course, not all travelers choose to declare their goods. My understanding is that the current penalties for not declaring goods that would require import duties and other taxes is five times what the otherwise valid tax would be. Moreover, China has reportedly stepped up the activities of its customs officers at airports and is said to be catching more false declarations than ever. This creates a huge disincentive for consumers to not declare goods out of fear of the penalties. The result will likely mean a huge reduction in the number of watches Chinese people buy elsewhere and bring back to China with them.

Thus, the new high import tariffs not only affect luxury timepiece sales within China, but also the sale of watches to Chinese consumers outside of China. To add insult to injury for luxury watch buyers seeking lower prices, the state-supported UnionPay payment cards that many Chinese tourists use to purchase goods will reportedly now have an annual withdrawal limit of RMB 100,000 (just over $15,000) at foreign ATM machines. This doesn’t seem to cap spending at points of purchase, but the idea is to discourage using cash to make “off-the-record” purchases of watches or other big-ticket items.

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

How much of an industry impact will there be as a result of these new policies against China’s consumers buying foreign goods? The main places that Chinese tourists travel to in order to purchase luxury goods is the United States, Europe, Japan, Hong Kong, and Korea. Each of these places tend to have much lower-priced goods than in China. In fact, so many watches are sold to Chinese tourists, that major watch-shopping locations in these places are often primarily set up to service Chinese consumers, or at least heavily depend on Chinese shoppers. In Switzerland, for example, entire tour groups for Chinese tourists are regularly set up almost exclusively in order to facilitate the purchase of timepieces.

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

As mentioned, China’s new policies on foreign goods aren’t just meant to capture more tax income, but to encourage the purchase of domestically-produced items, especially high-end goods. China is looking for ways to stimulate its domestic economy, and a major way to do that is to make domestic products less expensive by taxing foreign products. In the United States and elsewhere, such policies are labeled as “protectionist,” because they seek to protect local economies at the expense of a free-trade, global economy. It might not be incorrect to characterize China’s move as this.

China's Drastic Tax Increases On Luxury Watches Bought Outside Of China Featured Articles

China does not produce a large volume of luxury products – at least not those that seem to enjoy global demand. China does produce watches, and at least some luxury watches. Most of these products and brands display their goods at the annual Hong Kong Watch & Clock Fair (aBlogtoWatch coverage here). It will be interesting to see – assuming these new import tariff policies stay in effect for a long time – how this new economic policy affects internal demand for high-end watches produced in China. With that said, the Chinese consumer has typically been noted to prefer foreign-made goods, especially luxury goods given the widely held belief (which is often true) that foreign-made goods of many types are of a higher quality, as well as safer.

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Comments

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  • word-merchant

    I expect a profit warning announcement from Hublot any week now.

    • mtnsicl

      You blow Hublot!

  • IanE

    ‘now might be the time to make your purchases – you know, as a way of
    giving back to the industry during this potential time of need.’

    Yes, because the industry has been so very restrained in its price increases over the last decade in its efforts to avoid any hurt to its customers!

  • G Street
  • Chris BSomething

    And how will Chinese customs know you bought the watch rather than you wore it out of the country and back in again? I’m picturing Chinese tourists ignoring this and mailing their boxes home.

    • ZBT71

      China may start doing what US customs does, ask that a traveler register their expensive watches with them prior to leaving. Then there is a record that the watch wasn’t recently bought overseas.

      • SadTearsNoLies

        Note “expensive”. I don’t see the market of watches priced below Rolex/Omega a major setback for Chinese customers.

      • Willy Chu

        So you register your replica Rolex or JLC on the way out. Then return with a real one. As long as you get the fake one past the customs officer on the way out, you’re home free.

        • ZBT71

          But that would be wrong, right? Laws are only for the law abiding anyway.

          • Willy Chu

            A few bills placed behind your filled out registration form wouldn’t hurt. Ha! When there’s a will, there’s a way.

          • Boogur T. Wang

            Hongbao

          • Ah yes, happy new year dear customs agent.

        • Chris BSomething

          I was going to say that myself, the problem is they probably register the serial number. Then you’ve got to arrange to find out the serial number of the watch you’ve going to buy ahead of time, and arrange a fake with the same serial. Pretty darned hard, but not impossible.

          • imageWIS

            How do they at the airport check out the serial number on a watch with a solid caseback? What, they are going to have a watchmaker with tools to open every conceivable watch to ensure the serial numbers is the same??

        • Boogur T. Wang

          There is always a way.
          And that way will be found.

  • TrevorXM

    If the Chinese government really wanted to tax their wealthy slave factory owners, they would figure out some way to get a hold of taxes for foreign property investments. That’s where the Chinese government is losing most of its potential tax revenue through money laundering and other forms of evasion. Here in the Vancouver area the problem is completely out of control. Watches are small potatoes next to that problem.

    • cg

      Yes it’s amazing how much money the Chinese are poring into Vancouver via property acquisition. Last time I was there I saw no less than 15 Ferrari/Lamborghini/Maserati parked in front of my hotel all being driven by YOUNG Chinese or Russians.

      • Nateb123

        Can confirm. Used to work at a high end dealership. Made a lot of contacts with people whose clientele were almost entirely Chinese and had a number of ways they could help people get their cars back to China while avoiding duties and taxes. And it’s almost guaranteed that if you see an exotic sports car, it’s got a new driver symbol on it. The influx of Russians and Emiratis is new though.

    • spiceballs

      Not only Vancouver or even Canada. Any relatively “free” country which is open to foreign investment and acquistion of passport/citizenship (these generally go together) have been and are targets for cashed-up (often from illicit sources) mmm – travellers.

    • CHENspeed

      The government already knows about this “problem” but in actuality it’s not a problem because they all indulge in it up to the very tippy top. How do you think Wanda Groups can buy AMC…and all those Chinese businesses can purchase western businesses so easily and at such inflated costs? Because it’s laundering money at a large scale. Hell, they could case less if it is a good investment. Their ROI is whatever in the future they can sell those companies for because it wasn’t a penny of their own money invested. Same with housing purchases…

  • Marius

    Wonderful news! I hope that the watch industry will experience a situation of extreme and utter hardship. You might accuse me of Schadenfreude; however, keep in mind that this situation will force brands to dramatically reduce prices. We have already witnessed a few important price reductions such as IWC (25% on their pilot`s watches), or Lange (Saxonia ultra thin for under $15,000), but this might be just the start of the disaster. If a few brands dissapear, even better. After all, during the Quartz Crisis there were some unbelievable deals to be had on high-end watches — even highly complicated watches could be bought for a very fair price.

  • maxiumburn

    What a huge blunder by the Chinese. The Swiss politicians need to get with some Chinese officials to tell them about this. No wonder the Swiss watch business is down. Now let’s see ..China has a huge counterfeit market in China and that will probably be bolstered.

    • TrevorXM

      “China has a huge counterfeit market in China and that will probably be bolstered.”

      So hardly a blunder by the Chinese government, then.

  • So then they’ll fly to Hong Kong, buy them there, and ship them back through their shell companies in Guangzhou. Or pay cash in Macau pawnshops.

  • BNABOD

    This whole thing might just reduce the prices for us all which I am all about. While ridiculous tax practices are being imposed on lux goods, the rampant corruption over in China is what is preventing reasonable tax revenues but I surely doubt super rich buying 250k watches will be affected They will snick in the pieces, keep them at their third home in Switzerland and be done w it

  • Greg Dutton

    This is another piece of bad news to add to the somewhat dire situation the Swiss find themselves in right now. I would hold on to your bucks and see how things go – I expect more price drops, more aggressive competition, and more blowouts on the grey market. All good for the consumer.

  • John William Salevurakis

    More downward pressure on prices! 🙂

  • Omegaboy

    I was in Tianjin last week, and high end watch boutiques abound, as do BMWs, SUVs, and I even saw a new Rolls. You can bet that wealthy Chinese will either pay the taxes, or, probably more likely, will find a way around them.

    • Kuroji

      Smurfs. They pay people to do smuggling for them.

  • cg

    A boost to Chinese knockoffs inside China! Most of the world wouldn’t even consider them for purchase. Doesn’t bother me one bit that China watch industry wants to isolate itself in country. You could give me a Chinese watch but I’d never buy one. Red Chinese are very good at isolation, slavery and suppression.

  • commentator bob

    It will be interesting to see how this impacts ‘Swiss Made’, plenty of ‘Geman’ cars are made in China to avoid import taxes. Caring about the country of manufacture, not just the country of design and brand ownership, is an anomaly in the watch industry. It will be interesting to see if that anomaly continues, or if the big Swiss conglomerates start doing final manufacturing in China (as opposed as much as possible to still be called ‘Swiss Made’), at least for the Chinese market.

    • Sevenmack

      Pretty much. Plenty of German and “import” (read: Japanese) cars are made in the United States to avoid tariffs and to take advantage of lower-cost American labor. The public understands this and is fine with the state of affairs. Why should watches be any different? As long as the watch is of high quality, does it matter that a “Swiss Made” watch is actually made in Shanghai or suburban Philly?

      • BTW – “Swiss Made” is a trademarked label. The Swiss government (with input from industry of course) control what that means. So any given Swiss watch brand can’t make a watch in China and label it as “Swiss Made” without running afoul of their own government. Sure they could produce the same watch but label it “China Made”, but any guess how well that would sell?

  • Raymond Wilkie

    I wonder if he bought a seat for his watch winder.

  • Benjamin Ramos

    It may be interesting to reach out to the two Upscale watch retailers in the San Gabriel Valley. They catered to primarily Chinese tourists. There would be tourist buses out side their shops on the weekends, no longer I fear. The square footage was cut in half recently at the shop on Valley Blvd in San Gabriel. .Might this be an effect on the above mentioned Chinese tax policy?
    My bet is yes

  • Garrett Hu

    For the super rich, no impact as they will continue to buy even more because now it’s even a greater status symbol. Let’s face it, how many really know what they bought or even care about the craftsmanship, as long as it’s expensive it must be good and the more expensive the better. What this will hurt are the middle class which has been growing to appreciate watches.

    In Hong Kong, cars have long been virtually 100% taxed for many years, I don’t see less cars there. Because for the Chinese “face” is very important and having expensive things is the only way to prove that. I was reading a report on wealthy kids driving exotic cars and wearing uber watches, one of them said its how their parents allow them to “live better”. But how is having a Patek and a Lamborghini living better? You need to be educated to live better, you have to know how to why you appreciate something nice to live better…not just because it’s expensive.

    Oh well…apparently they are the future. Sigh.

    • CHENspeed

      too much corruption, not enough education and actual parenting. I work all over China 75% of the year and everybody knows the extent of corruption. Running joke of what RenMinBi is…the people’s money. Government officials, cronies start businesses with the people’s money and pretty much launder the money. The way those newly rich “businessmen” spend their money, you can see that it wasn’t earned with hard work, business acumen, blood, sweat and tears. I have love and sympathy for the regular and poor, downtrodden Chinese people. I just hope that the hardworking middle class gets large enough and smart enough to revolt against what they already know is a corrupt, unfair system.

      • John

        Could not agree more. I also live in China (90% of the year), and can confirm that it is a system designed to enrich the inner circle at the expense of the masses.

        It’s ludicrous how the elite skirt all of the laws, dodge taxes, dump their ill gotten wealth in foreign real estate and “businesses” and seem to incur zero repercussions. Vancouver, Australia, Jeju, California, etc. are all being economically colonized by a group of elite Chinese who believe the are biologically better than everyone else, are prone to screwing over others for their own benefit, and could not care less about anyone but themselves and their $$.

        In terms of the whole watch issue, try going through customs in China and you will see how easy it is to bring anything in. They very rarely stop anyone. This will have a minor impact, but not much.

  • Short term this could drive down watch prices. But longer term it may reduce the number of new designs offered. Sure you could get a deal on a mechanical watch when the quartz crisis hit, but after the brands died off or cut back on mechanicals there were few new and exciting watches with ticking guts. This is bad news for the watch industry and therefore also bad for consumers in terms of depth of offerings in the years to come (from the major brand anyway – independents who are not reliant on China perhaps could care less).

    • commentator bob

      It could go a number of ways. The Swiss contract, the Swiss move production to China to get around the tariffs or the Chinese industry becomes established. The latter two possibilities mean more offerings for consumers.

      • But the 64 million dollar (or yuan) question is, would the Chinese buy a locally made Rolex or Omega? Given their preference for European watches and mistrust for Chinese quality, they might not buy much even if the large Swiss houses would go for it (and I don’t think they would). Swatch brands in particular would not produce in another country. I know this is unlike the automotive scene, but I don’t think Chinese Patek Phillipe would see well at the same retail price (but avoiding heavy taxes).And if the price was less, then the inference is that the quality is less, so PP and all of the others would not want to tarnish their names or diminish the “Swiss-ness” of their products and basically crap on their reputations. It would be interesting to see, but I seriously doubt it will happen.

        • commentator bob

          Patek is more at the Rolls-Royce level. And despite all the Audis, BMWs and Mercedes being stamped out in China every day, Rolls are still only made in England.

          Rolex and the Swatch Group are proud Swiss companies and highly automated. The German robots are not going to work any more efficiently in China than in Switzerland. The only reason to move to China would be to avoid tariffs, and they probably are not ready to do that.

          The fashion companies on the other hand, Louis Vuitton Moët Hennessy (TAG Heuer, Bulgari, Hublot, Zenith, Louis Vuitton, Dior, Fred, Chaumet) and Richemont (Vacheron Constantin, A. Lange & Söhne, Jaeger-LeCoultre, Roger Dubuis, Piaget, IWC Schaffhausen, Officine Panerai, Ralph Lauren, Baume & Mercier, Cartier, Van Cleef & Arpels, Montblanc, Dunhill) already make a TON of stuff in China.
          Moving watch manufacturing to China is not going to take a change in corporate philosophy at LVMH or Richemont (especially LVMH), as it would at Rolex or Swatch Group. It is just going to take market research saying that Chinese people will still buy a Tag Heuer or Panerai that does not say ‘Swiss Made’. Chinese people already buy a ton of ‘German’ cars, European clothes and purses and iPhones that are made locally.

          • PeteNice

            Asians seem to gravitate towards pieces specifically because they’re oversized.

    • Timestandsstill

      I agree, long term it may not be such a good thing

      • commentator bob

        Tag Heuer has already been willing to compromise on ‘Swiss Made’ with the Connected, which could not meet ‘Swiss Made’ standards with its Intel chipset.
        I bet Biver is looking at Chinese factory locations right now.

        • imageWIS

          “Designed in Switzerland. Made in China” ?

          • PeteNice

            Today’s ideal would be “designed in Italy, made in Japan.”

          • Marcos Caetano

            manufacturing in italy isn’t that expensive, just about 10% more than hungary or slovenia the two main countries for european manufactured goods, most german brands like miele and bosch actually have their factories in hungary, just the raw materials originate in germany making the brands able to pass the goods off as german, for anyone who believes that italy’s manufacture industries are luxury cars, motorcycles and boats, you are solely mistaken, italy has manufactures great quality industrial goods and aeroplane parts.

    • Marius

      I`m sorry, but the new design argument doesn`t really convince me. Firstly, watch brands have such a high profit margin that even if they considerably lowered the prices, they would still make a good profit. For instance, Lange lowered the price of the Saxonia ultra-thin from $25,000 to under $15,000 and is still making a profit. IWC reduced the price for some of the Pilot`s watches by over 30% and is still making a profit. Furthermore, most of these brands are in operation for many yeras, so their machinery and equippement are already amortized.

      Secondly, where are the exciting new designs? With the exception of some independent brands (that charge exorbitant prices), the prestigious brands rely on the same old same old Submariner, Datejust, Reverso, Royal Oak, Calatrava, Portugieser, Type XX, Navitimer, etc. All these watches were designed 40-50 years ago. How many of them received a new design lately? Practically none.

      Lastly, if the crisis means that I can buy a Lange or JLC for a great price then that`s fantastic news. At the end of the day, watches are not like cars: you don`t buy a new watch every three years. As a result, I don`t care a bit about the future of the watch industry. When business was boomig, the brands increased their prices to ridiculous levels showing no respect for their customers. So should I now care about their future? I don`t think so. As far as I`m concerned, they can all crash and burn.

      • iamcalledryan

        I agree with you on your first and last points – but I have no idea where you have been if you haven’t seen any exciting new designs! There are bag loads of exciting designs and technological developments of note for every one of those old pillars you listed!

      • Timestandsstill

        I think the crash and burn sentiment is a little shortsighted if one really loves high horology. Also I think Commentator Bob made a valid point about luxury and Veblen goods.
        If prices were slashed and a $30k Lange was $15k and a $20k JLC was now $10k it’s likely many of the same people complaining about high prices now would be still be piqued if they could not now get a further 35% discount from “new” retail if only to distinguish themselves from “not-in-the-know run of the mill” consumers. Whether many want to admit it or not, WIS and luxury goods consumers alike depend on the perceived value and unavailability to the common consumer of luxury goods to maintain the desirability of these goods.
        Also, I’m not saying that prices of high end watches haven’t outpaced inflation or that brands haven’t unfairly raised prices in recent years. I’ll also allow that there exists a very small fraction of true horophiles who would appreciate the magical art and science of extreme haute horlogerie at a fraction of their current prices, regardless of their status as luxury/Veblen goods.

      • imageWIS

        “so their machinery and equipment are already amortized”

        Yes, 100 years ago lol. AP (and there is nothing wrong about this) uses a 100+ year old Rose Engine to make the dials on Royal Oaks.

    • Chris BSomething

      I don’t think the world is very short on watch designs.

    • Kuroji

      Maybe prices for gold models will drop to something close to sanity.

      • A problem with gold is its gets marked up each times it passes through another set of hands (watch brand, distributor, retailer, etc.) While the cost (and mark-up) on other watch parts is largely unknown to the comsumer, the price of gold is well known so the mark-up can pretty easily be calculated – and it is usually considerable.

        • imageWIS

          Yes… however on a ‘luxury’ watch, you are paying of course for the marketing / brand name, but also paying for the finishing which often can cost far in excess of the sum of the raw materials.

  • CHENspeed

    Giving back to the industry at their time of need? I purchase my fair share of luxury watches but in my point of view, the industry has been raping the consumer ever since the Chinese craze. The corrupt money that was able to purchase these luxury watches giving a boom for the Swiss industry has made them more greedy than ever. Many of these brands sell their the goods at a disgustingly inflated price all thanks to the surge in sales by the Chinese. Now that the government has cracked down on this in China, we see the wane in sales and now this greedy industry is scrambling with too much inventory. You know what other industries do when they have more supply than demand? Drop the damn prices, basic economics. I personally only purchase in Taiwan due to the favorable currency rate in terms of USD, regular basic 20% discount off the bat, another 5% or more discount when paying cash, and the VAT tax return when I leave the country. (I’ve been getting JLC and other brands at a 35% discount off US retail when you factor in the depreciation of the Taiwan Dollar). Basically buy a watch at its market depreciated value so I don’t lose a dime in value. I love high-end timepieces for their art, style, complications etc. But in my mind, I’d like to say to the Swiss watch industry. F*ck You, pricks.

    • Boogur T. Wang

      Well said.
      And 2nded.

    • commentator bob

      Seiko and Citizen make a number of top notch mechanical watches for people that want something interesting and mechanical for well under $1,000. Even with sapphire crystals, stainless solid bracelets including solid endlinks, and hacking / handwind. The Chinese make mechanical watches cheap enough for basically anyone to learn watchmaking by trial and error. Swatch Group currently makes the Sistem51 and still has some ‘Right Track’ sapphire crystal Lemania 5100 based automatic mechanical chronographs for sale for under $400 if you can find them.

      The point: Nobody ‘needs’ to get a $5,000 – $10,000 watch. Even to have a nice mechanical watch. That is why watches in that range are luxury goods. Complaining about the price of luxury goods misses the point.

      “You know what other industries do when they have more supply than demand? Drop the damn prices, basic economics.” That is not basic economics when a company is selling a Veblen good.

      Despite the small watch community that has interest in cutting edge horology, most people buying high end watches are doing so just to show other people they can afford high end watches (whoreology?). If the watches go down in price then they will no longer have that impact, and the vast majority of buyers will say ‘screw it’, go no watch or smart watch, and start looking for a new wealth indicator. And then companies will no longer invest in making high-end mechanical watches.

      • CHENspeed

        Yea Bob, we all know about citizen and seiko, but my whole point is about The Swiss industry, as is this article. So I’m not sure what you’re trying to point out here, other than the obvious. Your point of pointing out that nobody needs a 5000-10000 dollar watch holds no water because in essence nobody needs a 400 dollar watch either. My GShock and Timex tell time perfectly fine. .

        If you really can’t see how inflated the prices of these luxury goods are because of the Asian boom, then not really sure what else to say. My father is a collector, aficionado of fine time pieces with things from daytonas to the zeitwerk. I asked him why he stopped purchasing watches and his response pretty much sums it up. Overpriced across the board. This is a man who spent 7 figures on his collection, knows watches very well, but even he’s complaining about the prices and hasn’t purchased for years. It’s not because he can’t afford the inflated costs, it’s because he understands that purchasing these luxury goods nowadays is not worth what you’re getting.

        Personally, I have a tight budget, I purchase only when I can and after tons of thought. I’d never sell my watches, so I’m not looking to make money. I’m purchasing a depreciating item that I will enjoy and it’s clear to me. However, i, like many others don’t like to be taken for idiots. If you feel that the prices are fine where they are then don’t look for the best prices and don’t ask for discounts. Go shower the Swiss with your hard earned money and continue to defend their greed. I for one am glad to see their sales slump and I hope to see it go down further. It’s much deserved. It’ll just help me negotiate steeper discounts from my dealers when I visit Taiwan 🙂

        • commentator bob

          “However, i, like many others don’t like to be taken for idiots.”

          Wow, I wonder how an industry that sees people line up to pay premiums on an already $13,000 mediocre chronograph because John Mayer tells them to and it now comes with a slightly different bezel (but still the ugly register rings instead of proper panda and reverse panda dials), while Longines and Seiko have impeccable column wheel chronographs that can be bought for $1,500, would mistake its customers for idiots.

          • imageWIS

            I liked your post, but I have some quibbles with it:

            1) The Daytona and it’s in-house movement is rock solid, in terms of ownership and as investment piece… people were buying Daytona’s long before Mayer started calling himself ‘a Rolex expert’ (he isn’t).

            2) Hublot and Panerai is far more to do with the design of the watch than what is inside, and honestly, I personally happen to really like Panerai’s version of the cushion-shaped case. Would I buy one at full retail? Never. But you can get almost every ‘normal’ model at a decent discount.

            3) People will ALWAYS purchase luxury goods to show off, always. It’s inherit in human nature.

          • commentator bob

            The Daytona is a nice workhorse chronograph, especially for maintaing its modest dimensions, but not that much better than a Seiko or Longines. Even an El Primero is less than half the cost. But everyone is wetting their pants that they are not as connected as John Mayer, instead of buying Seikos for $1,500 and being happy (by the way, check out the date at exactly 4:30 with a number that is perfectly upright, $70,000 Swiss chronographs don’t manage that). Why do watch companies take people for idiots? Because they are.

            The Rolex cushion case that Panerai uses, dating back to when Rolex provided Panerai cases, is nicely proportioned, but a number of companies offer it including Parnis (with sterile dials) and Citizen.

            With regard to point 3 that is my point, people are whining about how much the stuff they want to buy to show off costs when that cost *is* the reason it has show-off value.

          • PeteNice

            Actually, it’s because they see shyte like the above and instantly think “jewelry counter at Macy’s.” Not compelling at all.

            Sometimes things have inherent value because of what they are not.

      • Chris BSomething

        I think you’re describing a stereotypical and yet imaginary and non existent beast. Watch lovers like watches and they don’t generally buy them to impress others.

        • imageWIS

          Not only that, but 99.99999999999% of the world wouldn’t know how much it costs or why a say, Patek 2499 is except that it says Patek on the dial.

  • maxiumburn

    How about the $5000 quartz watch who’s name brand starts with a B… Bullshit.

  • Phil

    Does anyone know how China plans to enforce the tariff on watches purchased outside the country? It seems that watches are one of those things that would be easy enough to simply wear while through customs without attracting too much attention.

  • PeteNice

    With any luck, this will make it harder for future authentic pieces to make it into the country for them to dupe.

    Hahahaha, no, sorry even I don’t buy that

    • George Yang

      Yeah that’s not happening. As if those working on replicas are importing pieces via channels that would fall under the auspices of this new import tax.

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