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Watch and Clock Market: Cautiously Optimistic Outlook for 2017

The 2016 Hong Kong Watch & Clock Fair Survey

The HKTDC Hong Kong Watch & Clock Fair is the largest event of its kind in the world. During the 2016 Fair, face-to-face interviews were conducted with 502 buyers and 332 exhibitors  in order to gauge industry views on the latest market prospects, product trends and e-tailing developments.

The results of this survey show that industry players were slightly optimistic with regard to anticipated sales over the next year. Of the assorted watch types currently on the market, both buyers and exhibitors expected smart watches to become the most popular item in 2017.

 

Photo: Watch and Clock Market: Cautiously Optimistic Outlook for 2017
Photo: Watch and Clock Market: Cautiously Optimistic Outlook for 2017

 

Cautious optimism for 2017

In general, both buyers (88%) and exhibitors (84%) were cautiously optimistic about the sales outlook for 2017. Overall, the majority of the buyers and exhibitors expected the retail price/FOB selling price and sourcing price/production cost of the product would remain unchanged in 2017.

 

Chart: Market outlook for 2017
Chart: Market outlook for 2017

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Amongst the assembled buyers, 65% expected that the retail price of their products in 2017 would remain unchanged, while 24% of them expected an increase in the retail price. Only 11% of buyers expected the retail price of their products would actually decrease.

Meanwhile, 65% of all exhibitors expected the FOB selling price of the product in 2017 would remain unchanged, while 17% of them expected an increase in the FOB selling price. However, 18% of exhibitors expected a decrease in the FOB selling price.

Opinions differed more widely in relation to sourcing price and production costs. 56% of buyers expected that their sourcing price would remain unchanged, while 36% of them anticipated an increase. Only 8% expected a decrease. Meanwhile, 46% of exhibitors expected the production cost of the product would remain unchanged. More than half of the exhibitors (53%) anticipated an increase in their production cost and just 2% of exhibitors foresee a decrease.

Most popular watch category: smart watch

Aside from traditional watches, the smart watch has become one of the most popular items in the marketplace. Overall, 31% of respondents expected that smart watch would become the industry’s single most popular item in 2017. This is the second time in an HKTDC survey indicated that smart watch overtook other type of watches to become the most popular items in the watch category.

 

Chart: Most popular watch category
Chart: Most popular watch category

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The survey results revealed that 44% of all respondents believed that fashion watches offer the largest growth potential for 2017, with an expected retail price of HK$1,715. Perhaps due to economic uncertainties, the forecast growth rate of luxury/jewellery watches was only 8%.

 

Chart: Largest growth potential by product type
Chart: Largest growth potential by product type

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In terms of product development strategy, both buyers and exhibitors indicated that ‘going smart – having the facility to interact with smart devices’ would represent the most significant area of product development in 2017.

For buyers, following on after this ‘going smart’ strategy, the next most important strategies were ‘collections that align with current season’s fashion trends’ (45%) and ‘mix and match watches with changeable parts to match clothing’ (28%).

Exhibitors tended to hold a slightly different view. While ‘collections that align with current season’s fashion trends’ (31%) was the next most preferred strategy, it was followed by ‘brand licensing watches’ (26%).

 

Chart: Top five product development strategies
Chart: Top five product development strategies

Download excel

 

Increasing importance of e-tailing

Online trading has become a significant sales channel in the watches and clocks industry. According to this year’s survey results, about 48% of buyers and exhibitors make use of e-tailing to sell their products directly, compared to the 35% who sold via e-tailing last year. Among those companies not engaged in e-tailing, 16% of them indicated they have plans to start such an operation over the next two years. Amongst those companies currently engaged in the e-tailing business or else planning to do so, 50% of them would sell leisure watches, followed by fashion watches (47%), sport watches (25%) and smart watches (25%).

For companies currently engaged in e-tailing business, 60% used the Alibaba platform for sourcing, followed by eBay (48%) and eBuyer (41%). On average, e-tailing accounted for 17% of their total sales revenue. These companies indicated that they expected the proportion of e-tailing business to grow by 10% over the next two years.

 

Chart: Online trading platform used
Chart: Online trading platform used

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Market potential of the Chinese mainland

Amongst the respondents, 60% of buyers and 74% of exhibitors sell to the Chinese mainland at present. Overall, buyers were slightly more optimistic than exhibitors about the prospects for the Chinese mainland market. In total, 35% of buyers expected positive growth in the coming year, while only 20% of exhibitors shared that view.

 

Chart: Growth prospects for the Chinese mainland market
Chart: Growth prospects for the Chinese mainland market

Download excel

 

Stronger market demand (82% of buyers and 65% of exhibitors) was given as the key reason for expecting an increasing volume of sales. Amongst those companies expecting a decrease in sales volume in the mainland market, the key factors for this were cited as intensifying competition (59%) and decreasing demand (44%).

 

Photo: Watch and Clock Market: Cautiously Optimistic Outlook for 2017
Photo: Watch and Clock Market: Cautiously Optimistic Outlook for 2017

 

Development strategies for the Mainland market

Both buyers and exhibitors have taken similar approaches in terms of strengthening their presence on the mainland. Overall, setting up retailing/wholesaling network on the Chinese mainland was seen as the key market development strategy.

 

Chart: Development strategy on the Chinese mainland
Chart: Development strategy on the Chinese mainland

Download excel

 

Profile of respondents

502 buyers: 50% were based in Hong Kong, 12% on the Chinese mainland and 38% in other regions.

332 exhibitors: 52% were from Hong Kong, 39% on the Chinese mainland and 9% in other regions.

 


[1]  The 2016 HKTDC Hong Kong Watch and Clock Fair was held from 6-11 September.

Content provided by Picture: Alice Tsang
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