Shanghai's position as Mainland China's largest economic center became obvious after the extensive development in the city. Growing commerce has enriched the material life of consumers, and the increased tempo of reformation and globalization in the city has reduced its distance from the rest of the world.

Amidst the Asian economic turmoil and other factors in recent years, the watch retail market in Shanghai has remained relatively dim. Figures show a retail turnover of watches amounting to RMB550 million while sales volume was 1.5 million pieces, including 180,000 pieces of imported watches amounting to RMB250 million.

Recent years also reveal that the watch market in Shanghai has gradually changed from a saturated one to developing innovative, trendy and well-known brands. The function of watches as a timing device has faded and consumers are now willing to pay for brand names, good quality and innovative design. Hence, there is a significant difference among consumer groups with respect to income and consumption.

The first segment is comprised of students who demand mainly quartz watches with new and modern designs, emphasizing aesthetic appearances. Items are priced from RMB200 to RMB300.

Prime examples in recent years are Casio of Japan and Swatch of Switzerland, leading brands which use attractive appearances and colorful graphics to appeal to thousands of youngsters.

The second segment is comprised of the income earning group which demand watches which are durable, accurate and of traditional design. These items are usually priced between RMB100/200 to RMB500. Common pieces in this segment are watches produced by locally-owned and joint-venture firms.

The third segment is comprised of the new rich and high-income level group, consisting mainly of white collar workers, enterprise leaders and sole proprietors. For this group, watches are not simply a timing device and their buying decision is based on a preference for brand names. Watches also serve as fashion accessories, a watch for different occasions, each priced at about RMB700/800 to RMB5,000/6,000. This group are typical buyers of imported watches.

The fourth segment is the highest expenditure group, comprised mainly of few self-made entrepreneurs who own properties, top management in investment firms and sports/arts celebrities.

In this group, watches are considered symbols of prosperity and professional success. Items are mostly of collection pieces with preservation value. Typical brands are Rolex and Omega.

The segmentation in Shanghai's watch market is very obvious. Typical watch companies and department stores target middle to upper class buyers as the main market for imported watches. Sales of watches produced by locally-owned and joint-venture firms have gradually dropped, specifically in larger watch shops and department stores such as Hengdeli, Hengdali, Shanghai Watch and Clock, Dai Kwong Ming, Oriental and Friendship Store where 96 percent of turnover comes from imported watches.

Foreign-owned watch shops carry only imported watches. General watch stores stock 50 percent imported as well as locally-made and joint-venture products.

Medium and large size department stores have a sales ratio of 70/30 percent in favor or locally-made and joint-venture produced models over imported versions.

The average price of an imported brand in Shanghai is about RMB1,400. In larger watch stores, the average price is about RMB2.500 but may reach as high as RMB5,000. Department stores generally charge about RMB1,200.

In terms of quantity, Enicar is the bestselling imported brand which consists about 10% of total imported watches. In terms of sales, Omega comprises about 20% of total turnover. Bestselling Omega watches are priced between RMB15,000 to RMB24, 000. Other brands such as Lonnie, Tissue, Encore and Seiko sell for about RMB1,500 to RMB6,000.

Sales data revealed that 20 to 25 percent of total retail turnover comes from high-priced imported watches, while around 60 percent comes from medium-priced imported watches and high-end local watches. The balance of 15 to 20 percent is occupied by low-end local watches.

Trend of demand

People are searching for and buying traditional mechanical watches which has led to its popularity in Shanghai's watch market. The heat of watch collecting outside of mainland China is increasing. Conventional mechanical watches, especially automatic units, are considered collector's items for their mechanical composition and antique design.

Sales projections for 1999 to 2000 are optimistic as the local consumer market is expected to prosper, and the retail turnover recovers amidst the Asian economic turmoil.

Increasing public income will lead to growth in domestic demand, and combined with the benefits of reformation such as joining the WTO, Shanghai will be abreast in world watch trends. Makers expect the turnover in watches and clocks to improve since the last two years. Projection on retailing is optimistic and the consumer behavior will become more personalized.