“Boom time over”: Rolex prices crash in China
China’s second-hand luxury goods market crashed in the last two months amid economic turmoil that has curbed discretionary spending among wealthy folks.
Financial Times said prices for some of the most popular brands of luxury watches and designer handbags (such as Rolex watches and Hermès bags) on secondary markets have plunged between 20% to 50% since Shanghai imposed strict Covid lockdowns earlier this year.
China’s deflating property bubble and President Xi Jinping’s controversial zero-Covid policy in Shanghai and dozens of other regions have sent the economy into a tailspin, denting consumer sentiment.
With China’s economy decelerating, Watcheco, an industry portal for used luxury watches, said the price of second-hand Rolex Submariners has crashed by 46% since March. Luxury bag shops in Shanghai and Hangzhou have slashed the prices of Hermès Birkin bags by 20% over the same period.
FT noted luxury goods resellers and pawnshops report business owners who accumulated large inventories of luxury goods, expecting boom times, are now liquidating those items to raise cash to pay down debt and fund operations. This is just more evidence of the terminal phase of the so-called ‘bullwhip’ effect.
“The boom time is over: We are entering a correction period that could last for a long time,” James Wang, a seller of second-hand luxury watches in the eastern city of Nanjing, warned.
Wang said in just the last month, he bought six Patek Philippe and 29 Rolex Submariner watches from distressed shop owners, compared with no Patek Philippes and five Rolex Submariners in 1Q22.
Shaun Rein at China Market Research, a Shanghai-based consultancy, said there is “very weak consumer confidence, probably the weakest I’ve seen in my 25 years in China.”
Both official and independent data show that China’s economy deteriorated further in July and is set for more turmoil in the months ahead as the real estate sector downturn intensifies.
The Rolex bubble in China on the second-hand market for Submariners jumped 240% in the six months leading up to Shanghai’s lockdown earlier this year — now prices are reversing.
Besides China, second-hand luxury watch prices are cooling worldwide, as we noted in June: Investors’ Clock Out’ Of Rolex Bull Market As Demand Cools.
