Is the Chinese gold rush over?

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It was on the headlines today - China rush is fading for makers of fine watches. – Basel Switzerland

Swiss exports decline as stores find themselves with excessive supply. After opening hundreds of stores in China in recent years, some watch companies are facing an inventory glut and cutting back their retailing presence there. The downsizing comes as shipments of timepieces to China from Switzerland, the world’s dominant watch production centre, have fallen below the levels of two years ago, after setting a record in 2012.

With a tax rate of up to 70 per cent on luxury goods acquired within Mainland China depending on product category, affluent and travel-hungry Chinese are increasingly buying overseas. As a result ’50 sq meters in paris could be much more meaningful now than having those same 50 sq meters in China.” said Francois-Henry Bennahmias, chief executive of Audemars Piguet, a Swiss watch company that is closing 6 of its 22 stores in china.

Despite warnings in January that the outlook in Asia was uncertain, Richemont announced this past week a rise of about 30percent in 2012 profit, and also LVMH Moet Hennessy Louis Vuitton reported an increase of 6 percent in first-quarter.

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Oh the Chinese...! In the luxury goods industry, we have a love hate relationship with them. Indeed they love to buy overseas, be it Europe, the US or Australia. They come by the busloads, demand a 70% discount on their $100,000 purchases, throw stacks of hundred dollar bills at you, and asks for a free ‘something’ from the store – because they are ‘good customers’.

I once negotiated a 2.00ct D - Colour, Internally Flawless – Clarity, diamond sale with a customer who decided since is was ‘so cheap’, that she would like two 2.00ct D-flawless diamonds. And of course did I add that she would like two for the price of one? Negotiations did drag and I could see she was dripping with wealth from her tacky cherry blossom Louis Vuitton ‘plastic’ bag to her screaming Burberry trench… she was going to remain seated at our desk till she bought something. I wonder whether it is the Indian customers or the Chinese that can wear us down faster, so we give in our simply invite them to leave.

It finally came down to a point where the sale needs to close and I threw in the line where I said, if you want it for the price, then pay me upfront right now in cash. The silence that follows is the thrill of every salesperson’s day to day… I often think to myself, whether that moment is what’s keeping me ‘alive’ and enjoying this job.

Of course she opened her tiny bag and pulled out pretty stacks of ‘gorillas’ (Australian slang for hundred dollar bills) and literally threw them down on the table right in front of me. The tug of war of power in negotiation. I won. But I did not quite expect her to fit six figure dollar amounts of real cash in her tiny cherry blossom LV. Counting the cash was torture for after much pain whilst chatting, the cash was missing one singular $100 bill even after my careful second count. She with her friend thus joined in the paper search and proved my diligence.

Joys of retail as life goes on, while I wonder if I could one day sit on the other side of the table and ‘deal’ and if the day comes, what price will I need to pay to have sit where she is? Do I really want to be there? Is having those ‘gorillas’ the an important part of my existence?