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If you think it's tough to get a SS Rolex now, just wait!!

16K views 227 replies 76 participants last post by  Watchbreath 
#1 ·
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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#3 ·
...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...
 
#7 ·
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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#8 ·
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.
 
#23 ·
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.
This squared. Well said and absolutely true.
 
#13 ·
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
 
#10 ·
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 [emoji848]
 
#25 ·
You might be right about the grey market. I dunno. Time will tell how the GM shakes out when demand explodes and only so many watches to go around. Besides seeing GM prices go through the roof, I mean.
 
#11 ·
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.
 
#12 ·
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.
 
#14 ·
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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#27 ·
Is it really or is it an educated one based on numbers and fact. If half of this becomes reality, you could be easily looking at a 20% plus increase in demand.

What's more interesting are those in the upper class now in Asia who already own Rolex. Due to their cultural desire to show off their wealth and maintain "face", will they increasingly turn to higher end watch brands like AP and Patek to differentiate themselves?
 
#22 ·
I wonder if there is a further paradox in all this. Should Rolex start to drift from consciousness in the west - which would take years, but must inevitably happen eventually if it becomes inaccessible to non WIS - might that in turn affect its standing in China? I don’t know anything about Chinese culture, but if one element of Rolex appeal (and it may not be) is as an iconic western brand, there may be a long term vicious cycle dynamic if it drifts out of sight in the west itself.
 
#31 ·
I wonder if there is a further paradox in all this. Should Rolex start to drift from consciousness in the west - which would take years, but must inevitably happen eventually if it becomes inaccessible to non WIS - might that in turn affect its standing in China? I don't know anything about Chinese culture, but if one element of Rolex appeal (and it may not be) is as an iconic western brand, there may be a long term vicious cycle dynamic if it drifts out of sight in the west itself.
Interesting point... I would be curious to see what happens.

Oddly enough, many brands thrive in China as a premium brand although they are basically dead in other markets. Buick for example.

Chinese look to the west for luxury brands, but they often have a skewed perception of what actually constitutes a popular luxury brand given lack of Western Media influence (Facebook, Twitter, YouTube, Instagram, etc. all blocked).
 
#24 ·
Last week I went to a Rolex only AD, in an expensive part of town. When I entered the boutique, the first question I was asked was whether I was looking for men's or women`s watches. When I said men`s they immediately said that they were sorry, but did not have any men`s watches in stock. So then I asked for a small Oyster Perpetual, and then they told me that all women's watches they had were in precious metal, so I left. How do they keep their store open, if they literally don't have any watches in stock? Is the demand so huge that they sell each and every watch immediately after it arrives? I have a hard time believing that.
 
#28 ·
Just what exactly qualifies as "middle class" in China? I somehow doubt it's an income anywhere close to European or Western (US) middle class. There's a reason goods from China are still much less expensive than Western-manufactured goods. I suppose you could extend the observation of the Chinese businessman to include upper class demographics. That said, I live near Disney World and Universal Studios Orlando and there are a ton of Chinese tourists who spend lavishly on their vacations.
 
#29 ·
Humans and our linear thinking. Whenever I see a graph with a straight line (or the classic exponential or geometric curve) leading into "silly land", color me skeptical. Usually, something happens between now and then that changes things. Short term (next few years), Rolex ss will probably get harder to obtain, beyond that, my money is on "something changes".

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#30 ·
An interesting read. I can not imagine the demand being any higher. You have to give them huge credit for their marketing.
It will be interesting to see how their current business model will work long term. High prices and unavailability will continue world wide.
 
#52 ·
Speaking as someone with a TT white-dialed Daytona, I think it's attractive; but people seem to have this bugaboo about affluence signalling and showing wealth (read:gold).

As if wearing only a SS Daytona is a sign that one's not affluent. YMMV.

Regards,
Alysandir
 
#39 ·
Serious question...is it really that hard to buy a Rolex from an AD? Or certain models? They're way out of my price range so I've never tried to buy one. But I feel like every time I'm in an airport, there is a Rolex dealership with plenty of watches on display. I was in Govberg's Philadelphia store recently (I live and work a mile away) and they had plenty of Rolexes (Rolexi?) sitting around, as did a dealer in the King of Prussia Mall in PA. Go online and there seem to be millions for sale from dealers. As I said, I never tried to narrow it down to specific models, but can someone say a bit more about this SS Rolex shortage? Or the years-long waiting lists I hear about for certain models? It surprises me, I feel like they're for sale everywhere.
 
#45 ·
In my local AD it's knee deep in OPs & DJs but anything else - forget it. When I called in February to pick a Breitling up they had two YachtMasters and that was it. Mind you they are only the biggest Rolex AD in the region so it's perhaps a bit unfair to expect them to have a decent selection.
 
#40 ·
Rolex, Schmolex.....
 
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