China’s economy, the world’s second-biggest, is yet to rebound according to one gauge: sales of the luxury watches that business people give to clients and officials to build commercial relationships.
Eleven of 13 shops and chains surveyed in Hong Kong by Bloomberg News reported no pick-up in July in purchases by mainland Chinese customers. Watch, clock and jewelry sales in the city gained 3.1 percent in June from a year earlier, down from a 59 percent increase in the same month in 2011, according to government data released yesterday.
The shop windows of retailers selling brands such as Rolex and Piaget are eyed as a guide to whether China’s economy is picking up pace, according to Frederic Neumann, Hong Kong-based co-head of Asian economics at HSBC Holdings Plc. If the most expensive watches are not on display, shops may be short of stock, indicating that the Chinese economy is humming.
“Most of the mainland customers are cutting their spending and businessmen don’t need as many luxury watches to give out as gifts as they did a year ago, due to a sharp decline in business activities in the mainland,” said Stanley Lau, managing director of Global Timepieces Ltd. which has six branches in districts such as Tsim Sha Tsui and Mong Kok. Lau is the deputy chairman of the Federation of Hong Kong Industries.
The Chinese government has hastened investment approvals to support the economy as a clampdown on real-estate speculation and weakness in export demand cool growth. The securities regulator yesterday announced a cut in transaction fees for equities trading after the Shanghai Composite Index slid 14 percent from this year’s high in March.
The Chinese economy grew 7.6 percent in the second quarter from a year earlier, the slowest pace since the global financial crisis.