Hong Kong is a tax-free port. That’s high-end watch sales catnip. The discounts are fabulous — and that’s before haggling.
For example, a Texan paying 8.25% sales tax on a watch at home saves $8k on a $100k watch. Britain’s Value Added Tax — an Orwellian name if ever there was one — is 20%. What Brit wouldn’t fly to Hong Kong to save $20k on a watch?
Buyers are supposed to declare the purchase upon return to your local taxman’s territory, but do they? Anyway, HK is where a big chunk of the really expensive Swiss luxury watch action is.
Make that was. Sherman, set the way-back machine for January 2018, via scmp.com:
“Hong Kong has long prided itself on being the world’s leading market for luxury watches, and despite tough competition from China and the United States, the city still accounts for 13 per cent of Swiss watch sales, according to the latest monthly figures from industry body the Federation of the Swiss Watch Industry (FH).”
Even during its most recent ebb, HK’s Swiss watch biz put $2b per year into Swiss watchmakers’ pockets. Thanks to the locals’ dissatisfaction with an imminent Communist takeover, boom! Gone.
The sudden, precipitous loss of Hong Kong’s high end watch biz isn’t cataclysmic; there’s enough pent-up demand elsewhere in the world to soak-up the supply of Swiss wrist candy. Yes, but for how long?
Europe’s economy is in the doldrums. Brexit is giving Britons the heebie-jeebies. Russia and the former Soviet Union’s oligarchs maybe still be two-legged money trees, but there are only so many of them and they can only own so many bejeweled blingeries.
America’s economy’s going great guns, but there’s talk of recession — talk that dampens demand for high-end goods, including watches. Unless it’s smart watches, whose acceptance by all segments of society is an increasing threat to luxury watch sales.
In the video at the top of this post, Eric Rivera, VP of Miami’s CRM Jewelers, announces “We just saw prices on Pateks 5980s and the 5711s drop ten to twenty thousand dollars in the process of two weeks.”
The question: are sales of pre-owned watches made of unobtanium the canary in the luxury watch coal mine?
I’m thinking yes.
Not to be debbie downer, but I can see a day coming when you can walk into a dealer and buy a Rolex Daytona, Patek Philippe Aquanaut, Audemars Piguet Royal Oak or other top timepiece — just like that. And used values will fall back below retail.
So, not a good time to be paying over the odds for a rare bird? As always, you pays your money, you takes your chances.
[Product pics courtesy of crmjewelers.com]
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