Why are rich Chinese consumers selling their Rolexes? Passing on your luxury watch or Hermès Birkin bag might get you cash quick in China’s struggling economy – but prices are dropping

Aug 17 , 2022

Cash is king in an unstable economy, and wealthier Chinese are selling their pre-owned luxury goods, such as Rolex watches, to make a quick buck. Photo: AFP

As much of China’s urban population continues to face strict and sporadic Covid-19 lockdowns, the Chinese watch world finds itself affected too. The second-hand market for high end goods has been one of the hardest hit as a result of Beijing’s strict adherence to zero-Covid. With little good news on the horizon for the country’s economy, the prices of second-hand luxury goods have fallen rapidly.

The cost of a Rolex Submariner watch was up 240 per cent in China in 2021 – what went wrong? Photo: SCMP Archive

It seems even the wealthy are exercising caution, cutting back on their discretionary spending and selling their Rolex watches and Hermès bags to raise cash. Whether a smart and strategic move or panic selling based on fear of the unknown, the outcome is the same.

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Shoppers line up to visit an Hermès store after it was closed for months due to Covid-19 restrictions in Shanghai, in 2022. Photo: AP

China’s affluent consumers seemed happy to spend on luxury goods at the beginning of the pandemic, particularly since international travel was restricted. However, since then, China’s increasingly strict zero-Covid policy – which saw a full lockdown of China’s financial and commercial capital, Shanghai, earlier this year – has meant even some of the country’s wealthiest citizens have seen their cash flow take a hit. Giving away their expensive niceties has therefore become a no-brainer for some.

A Rolex store in central Beijing’s Parkview Green shopping centre, where visitors must show a recent Covid-19 test to enter. Photo: LuxuryLaunches

The Financial Times recently reported that Watcheco, an industry portal for used luxury watches, had seen the price of second-hand Rolex Submariners, a watch on every watch-lovers wish list, fall 46 per cent since March. And it’s not just expensive watches: even luxury bag dealerships in Shanghai and Hangzhou have reportedly cut the price of classics such as Hermès Birkin bags by up to a fifth over the same period.

Girard Perregaux’s Chinese brand ambassador, the actor Chen Xiao: with revenues of US$10.3 billion in 2022 alone, China remains the biggest luxury watch market in the world, but prices are dropping. Photo: Girard-Perregaux

“The boom time is over,” says James Wang, a seller of second-hand luxury watches in the eastern city of Nanjing. “We are entering a correction period that could last for a long time.”

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Shopping malls like this one in Fujian have suffered as a result of Beijing’s ultra-strict zero-Covid policy, which often shuts down whole cities at short notice. Photo: Reuters

“Patek Philippe says you never actually own its watch but merely look after it for the next generation,” he continues. “That’s not the case in a business crisis. It’s probably the weakest I’ve seen in my 25 years in China.”

The reality is that businesses are playing a to and fro game of raising and slashing prices at the beck and call of Covid regulations. And who could have seen such a predicament coming when the cost of second-hand Rolex Submariners rose by 240 per cent just six months before Shanghai’s lockdown, the Financial Times pointed out.

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Fashion

Second-hand marketplaces in China have seen the price of Rolex Submariners drop by 46 per cent this year – which is shocking given that the same model was up 240 per cent in 2021
The price of a second-hand Hermès Birkin has also dropped by a fifth, according to luxury dealerships in Shanghai and Hangzhou – but how have China’s strict zero-Covid policies affected cash flows?