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Heard some data and projections that stunned me today and it has a direct impact on the demand for luxury products such as Rolex. I think it's pretty well-established that Rolex is the most dominant aspirational luxury product in China right now and unless that mindset totally disappears, what I heard today makes me conclude the demand for Rolexes is going to go through the roof!

Background: I was attending a conference and the keynote speaker threw out some data. He's a co-founder of one of China's most prominent e-commerce firms and opined on what the future holds for that company.

He was specifically asked whether the company would try to expand beyond their current China-only footprint. He said (and I'm totally paraphrasing here) "No. We think there's plenty of opportunity left in China. China has 1.3 billion people and it's only recently that we've developed a sizeable middle class here. There are currently 350 million people in our middle class. That in itself is already roughly the population of the United States.

But more importantly, we believe another 500 million people will join the middle class in the next 10-15 years."

Holy crap!! REALLY???

WIS are already complaining about how difficult it is to get a SS Rolex at an AD these days. It's the direct result of the explosive growth in global wealth (notably China and soon to be followed by other emerging economies...); I do not believe in the conspiracy theory that Rolex is holding back production/supply to jack prices up. ADs are simply unable to keep any inventory. (Yes, some watches will always be squirreled away by the ADs for their VIPs but that's not the dominant factor at play here...)

It will be damn interesting to see how Rolex responds to this expected surge in demand. That will be the $64 billion dollar question. My guess: I seriously doubt Rolex will make the commitment required to meet this demand.

TL:DR: Here's the punchline. If you think it's tough or impossible to get a SS Rolex without going through the grey market now, just wait. The worst is yet to come. It won't fully materialize in the next year or two but it is coming and now will be fondly remembered as the good ol' days. You heard it here first.

I'm still stunned when I think about the numbers... Just absolutely mind-boggling.
 

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So glad I tasted all the Rolex models I wanted to experience . . . .
 
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...But more importantly, we believe another 500 million people will join the middle class in the next 10-15 years."

Holy crap!! REALLY???
... Just absolutely mind-boggling.
Speculation is just that--speculation--if you want to run with that, feel free--doesn't concern me in the least, but one thing I am sure of, whatever numbers emerge into the Chinese "middle class", they won't ALL be buying Rolexes...
 

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Speculation is just that--speculation--if you want to run with that, feel free--doesn't concern me in the least, but one thing I am sure of, whatever numbers emerge into the Chinese "middle class", they won't ALL be buying Rolexes...
You Sherlock. And no, it is not just speculation. China, India, Asian countries, even Africa is booming. Hundreds of millions of people have been lifted from poverty.
 

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Speculation is just that--speculation--if you want to run with that, feel free--doesn't concern me in the least, but one thing I am sure of, whatever numbers emerge into the Chinese "middle class", they won't ALL be buying Rolexes...
No not all of them will be buying Rolex that's for sure.

Now answer me this...how many percent of the population in the USA own one or multiple Rolex. Sure we probably don't have any concrete figures, but let's just say 0.1% shall we?

The population of the USA in the year 2018 is just under 330 million. And 0.1% of that is about 330,000. Sounds about right?

Now according to the forecast 500 million new middle class will emerge. Let's say they are wrong and only 50% of that figure pans out. That's still 250 million.

Say 0.1% of them are interested in owning a Rolex again? 250,000 right there.

That's 1/4 of the annual production of Rolex.

Whether these figures are correct or not it doesn't change the fact that the demand for luxury goods will only get higher. And we all know what happens when demand is higher than supply don't we?

brother of OoO
 

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As someone mentioned earlier, the assumption is continued growth on the Asian continent. At some point a recession is expected, and that will be the time when demand will cool off. Also, do you think Rolex is not looking at expanding while other luxury brands will?


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Lived in China for the last three years. Worked in Asia for much longer.

There is a marked difference between Asian consumers and American/Western consumers in terms of affinity for luxury products. Asian consumers, especially Chinese, have a strong desire to show off and to show "face." They want to appear successful and wealthy to their inner circle as well as to the general public. Part of this exercise includes purchasing and wearing brands that are easily recognizable as expensive. Hence why the items from luxury brands that sell best in China have huge logos vs. perhaps a subtler logo.

Look at the evolution of Gucci as an example. Previously, sophisticated and restrained. Now, casual with big logos on everything. Chinese are gobbling it up and part of why they are changing is Chinese preference. Chinese also operate with a herd mentality and once something becomes popular, everyone wants it.

Rolex is an icon watch and easily recognizable with the cyclops. Chinese love Rolex and they will spend more than other cultures for luxury goods.

With that said, I am interested to see how the retail landscape works. Chinese are generally not trusting, and I think the lack of inventory at an AD would be more limiting than in Western markets. In addition, there is a huge consumption of fake goods in China which may increase in demand given difficulty obtaining authentic.

Rolex watches are also much more expensive in China due to the import tax. Chinese often buy in HK, USA, or other markets as well, which may skew the purchasing data.
 

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TL:DR: Here's the punchline. If you think it's tough or impossible to get a SS Rolex without going through the grey market now, just wait. The worst is yet to come.
But isn't one of the pertinent points right there in your TLDR punchline? You can still buy them, but just from the grey market. If so, where did they come from? I'm not saying demand would be sated by that supply line if it was shut down, but it would satisfy some, and some of the demand might dissipate if there wasn't a profit to be made on the flip. Based on what I am seeing in some closed Facebook selling groups, quite a bit of that stock is being bought in Asian countries, and then funnelled into my local market. I suspect the same is true for your local market too. Maybe these entrepreneurial wannabe Rolex owners don't want to be owners at all, but just want the icing on the cake
 

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I'll keep my response simple, make more money, and you can get more Rolexes :)

More and more people in the world are making money and that's a good thing. The ones making and spending money on watches will establish better relations with the watch stores and get the most sought after watches. Other than that, some can hope for a recession... While the AD shortage is annoying for the mass consumer base, it doesn't seem to bother Rolex enough to address it with more supply.
 

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I think the OP makes a very compelling point.
Rolex SS models have dried up, and its unlikely because of less production or Rolex withholding to hike prices etc but more likely demand from emerging hungry Asia markets. The significant rise in a Chinese middle class who desire tokens of their new wealth has & will cause the SS models to be even rarer. Circumstantially, my AD has just built at great expense a new large Rolex show room (now taking over 50% of his premise space) - a whole new 15ft shop front just for Rolex and the new displays that actually display next to no watches. A whole shop front 15ft wide with only about 12 proudly presented dressy DJs. He has paid a considerable amount to be able to display less watches.
 

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I just got back from Shanghai. In one stretch on Nanjing Lu, probably no more than a mile, I walked past like 3 Rolex ADs.
Nanjing Xi Lu... 2 boutiques about 1 block from each other, but the inventory is terrible. They had a Root Beer GMT and a Blue Dial Sky Dweller. Retail price was the same as grey market in the USA, and the refused to sell it unless you paid 30-45k RMB for an ugly as sin Tudor.

Besides those, they had this:

Room Door handle Ceiling
 

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How much of Rolex shortage is their poor planning skills and how much is them deliberately keeping supply tight? Maybe Rolex is ramping capacity to deal with this, then there'll be a recession and you'll be able to get 30% discount, who knows. In any case, until I can walk into a dealer and buy a Rolex, I've stopped thinking about this brand. Much more interesting brands anyway.

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How much of Rolex shortage is their poor planning skills and how much is them deliberately keeping supply tight? Maybe Rolex is ramping capacity to deal with this, then there'll be a recession and you'll be able to get 30% discount, who knows. In any case, until I can walk into a dealer and buy a Rolex, I've stopped thinking about this brand. Much more interesting brands anyway.

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It's not just Rolex but their ADs who are hoarding. They have a short list of AAA clients who they keep a stash of the most popular models for.

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It's not just Rolex but their ADs who are hoarding. They have a short list of AAA clients who they keep a stash of the most popular models for.

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You can't hoard unless there is an actual shortage.

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I just got back from Shanghai. In one stretch on Nanjing Lu, probably no more than a mile, I walked past like 3 Rolex ADs.
Singapore has 7 Rolex ADs in 1/2 mile on Orchard Road, all bereft of SS sport models.

It's not poor planning on Rolex's side, because they sell 100% of their manufactured products.

The ADs will face the challenge to shift the non-sport models.

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Discussion Starter · #19 ·
Speculation is just that--speculation--if you want to run with that, feel free--doesn't concern me in the least, but one thing I am sure of, whatever numbers emerge into the Chinese "middle class", they won't ALL be buying Rolexes...
Yes, it's speculation but I think it's informed speculation. You are free to believe otherwise.

I wonder if you really understand the magnitude of the numbers we're talking about. When production capacity is already constrained (my belief) it doesn't take much to throw the entire system out of whack. It won't take another 500 million people knocking on their door to massively disrupt things; hell, it wouldn't even take 1 million to do that. You are free to believe otherwise.
 
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