What does a watch actually mean?

Zhang Xiaoyu

Professor of Economics

Executive Vice President of the China Association of International Multinational Corporations

Rational investment in luxury goods can effectively hedge against financial risks.

What is your opinion on the current state of the luxury goods market?

Personally, I believe the luxury market is primarily geared towards the 20% of the market who may control 80% of the market's resources and possess the wealth of 80% of the population. In other words, they have disposable income, which is why they purchase luxury goods. China's new wealthy class is gradually expanding, and many luxury goods are relatively value-preserving, thus they also serve a savings function. Many luxury items are bespoke, or even tailored specifically for an individual, such as watches. In Switzerland, if you want to order a fine watch, you might need to book it a year or two in advance, and some are custom-made according to personal preferences and requirements.

Do luxury goods have the potential for relative value preservation and appreciation?

Yes. Since ancient times, the watchmaking industry has formed a culture, and this culture must inevitably extend to a question of time—as time passes, the object itself gains the potential for a certain degree of value preservation and appreciation.

Relatively speaking, when people temporarily lose confidence in investment, how can existing funds be preserved or even increased? I believe buying luxury goods is a way to hedge against financial risks. From a consumption perspective, the value does not shrink after purchase, and once the market rebounds, there is even room for appreciation. Therefore, luxury goods have a certain forward-looking nature for the entire economic market. I have not studied luxury goods myself, but I believe that for a country or a nation, luxury goods play a navigational role in the economy to a certain extent. If a country's luxury consumption is high, it indicates that the national economic figures are also at a relatively high level.