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Apple Watch Tests China’s Luxury Market


A woman holds the Apple Watch Edition during a demo following an Apple event Monday, March 9, 2015.

A woman holds the Apple Watch Edition during a demo following an Apple event Monday, March 9, 2015.

China is one of nine countries Apple has picked for the release of its new Apple Watch next month, and there is high anticipation over how the device will sell in a market that already comprises one-fifth of the company’s total sales.

The Shanghai-based China Market Research Group estimates that the Apple Watch will be a big success with China’s brand-conscious consumers.

“Apple Watch may add another dimension of people's view of luxury item,” John Fang, business analyst with CMRG told VOA.

But not all analysts are convinced Apple's watch will be an instant hit, especially its pricier models, given the country's ongoing anti-corruption drive and the likelihood that other domestic smart watches will be competing with Apple for market share.

The gold model of the Apple Watch is priced starting at $10,000, plus a 15% tax in China. The average salary of a private sector worker in China in 2012 was slightly less than $5000. But China has experienced a growing income gap, and the wealthiest Chinese have become key consumers of global luxury brands.

"As most affluent consumers in China still view luxury watches as a long term asset, many would be uneasy spending over $10,000 on a electronic device that will need to be upgraded within next 1-2 years. One example is Vertu phones, they are not really doing well in China," Fang said.

Luxury watches have been the subject of public controversy since 2012 as online whistle-blowers dug out information about government officials flaunting watches that cost many times their salaries. One such official was dubbed “Watch uncle” and turned into a subject of derision in Chinese social media. This is expected to affect sales of the Apple Watch.

“The controversies and anti-corruption drive has definitely affected the sale of luxury watches in China because many people are afraid,” said Michel Phan, editor in chief of Shanghai based Luxury Research Journal.

Some others like Fang think that a large number of people will go ahead and buy the watch despite possible vigils by anti-graft inspectors.

“The anti-corruption Campaign is still very intensive and would have a long term influence on luxury item sales. But demand for items of personal use is still there,” said Fang.

Apple’s new iPhones have sold well in China. Global financial firm UBS reported that 35 percent of iPhone shipments went to China, overtaking the U.S. market (29 percent) in the last quarter of 2014.

China is already one of the world’s major watch markets. Figures put out by the Federation of Swiss Watch Industry FH show that Hong Kong and Mainland China accounted for nearly one-fourth of the worldwide exports of Swiss watches in 2014, totaling more than $5 billion. That same year, the federation said the U.S. market was worth $2.3 billion.

At another level, the Apple Watch may hurt several Chinese companies engaged in custom making European and U.S. brands of watches because customers might ditch traditional watches for the new wearable.

“It might hurt the sales of middle range brands such as Swatch, Casio, Tissot as the price is comparable,” Fang said.

The Apple Watch goes on sale in China in late April.

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