In luxury, what Chinese want counts as sales in the rest of the world fall – witness watch brand’s launch of models with smaller dials

When a single pop-up store in a southern Chinese province made up nearly half the sales lost to falling custom in Hong Kong, Officine Panerai took note

Not only is the Italian watchmaker expanding there, it is tailoring lines to Chinese tastes as the luxury industry’s centre of gravity shifts east from Europe

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An Officine Panerai watch with a 44mm dial. Luxury goods makers are focusing on China to revive their flagging sales, and Panerai’s dial sizes have shrunk by a third to cater to the preference of Chinese customers for more discreet watches. Photo: Shutterstock

Published: 5:15am, 16 Sep 2020Updated: 7:19pm, 17 Sep 2020

Luxury-watch maker Officine Panerai is known for its big and bulky timepieces. But its bestsellers are becoming smaller and smaller, largely due to Chinese buyers.

Its original military watches had 60 millimetre dials, yet the Italian brand now sells models as small as 38mm in China because of the preference there for more discreet products.

The watchmaker’s pivot to making smaller modes is an example of how luxury goods makers are retooling to suit Chinese tastes. This process is being accelerated by the nation’s economic rebound as the rest of the world continues to reel from the impact of the coronavirus pandemic.

“China, for the first time in the history of the brand, will become our No 1 country this year,” said Jean-Marc Pontroué, chief executive officer of Panerai, a unit of Swiss luxury group Richemont. “Now that we have a clear view of how big China is for the brand, how much even bigger it could be in the future, we know where to focus our investments.”

Panerai CEO Jean-Marc Pontroué says a single pop-up store in Hainan, China is making up 30 per cent to 50 per cent of revenue lost in Hong Kong.

China has become a lifeline for the luxury industry amid Covid-19. Driven by a pent-up desire to spend after months of social distancing and unable to travel overseas, Chinese consumers are spending heavily at home. Luxury demand there may surge 10 per cent this year, even as it plunges 45 per cent globally, Boston Consulting Group estimated in June.