The Swiss luxury watchmaker Piaget said its sales on the mainland might grow less than 10 per cent this year, the slowest in eight years, as mainland consumers take advantage of the stronger yuan and travel overseas to buy premium goods.
Piaget, which makes the US$53,000 Altiplano Skeleton 1200S, is also tempering the pace of store openings in China, said Dimitri Gouten, the company's president for Asia Pacific. Sales may lag the double-digit growth rates since around 2005, he said. The watchmaker, which is owned by Financiere Richemont, has 20 boutiques on the mainland and 50 points of sale in total.
"In the past eight years, we've been opening new stores in China," Gouten said. "When you go from 20 point of sales to 30, 40, 50, very quickly, then the growth is very quick. Now you are in a more mature market, with fewer cities to open, of course growth won't be as fast."
Mainlanders are increasingly going abroad to make luxury purchases instead of buying at home, where they pay higher taxes. The mainland overtook the United States and Germany to become the world's largest source of tourists last year, spending US$102 billion in 83.2 million trips, according to the China Tourism Academy.
Exchange rates are more favorable for mainlanders venturing abroad, Gouten said. The yuan traded at a 19-year high against the dollar this month, supported by economic growth and a government seeking to boost domestic consumption.
A government crackdown on extravagant spending is having a limited effect on sales, as rising wealth supports demand, Gouten said. Sales growth of more expensive watches, between HK$400,000 and HK$800,000, was better than demand for watches costing about HK$100,000 this year, he said.
Total purchases by Chinese customers, regardless of location, will still grow more than 10 per cent in 2013, Gouten said.
Piaget plans to open boutiques in the southwestern cities of Chengdu and Nanning this year, along with three more points of sale on the mainland, Gouten said.
Piaget's chief executive, Philippe Leopold-Metzger, told reporters: "When I look at the profitability of the China operation itself, it doesn't really matter. You need to invest a lot in China in advertising, brand building and stores, because you will get the benefit of it in China, and everywhere else outside with the Chinese."