The Chief Editor was invited by Chronos Japan to write an opinion piece on his views of the state of the Singapore Luxury Watch Market. This was published in Chronos May issue (vol.76). We reproduce the text of his submission in the original English text.
Singapore remains the 7th largest watch market in the world, according to the Federation of the Swiss Watch Industry, behind Hong Kong, US, China, UK, Japan and Italy. The figure for the year closing 2017 was CHF 1.099 Billion compared to 2016’s CHF 1.013 an increase of 8.5% year on year. This is on the back of the industry year to year growth of 2.7% to CHF 19.9 Billion. Hong Kong rose 6%, while China was up 18.8% over the same period.
So how has this small island country, with a population of only 5.6 million (2015 Singapore Government, Dept of Statistics data) be such a big player, not only in the volume of watches bought, but also in terms of thought leadership.
We propose the following:
Perhaps we start our exploration with the GDP per capita. In 2016, World Bank data shows that Singapore’s GDP per capita was US$52,960 (No 9 in the world). This compares to be quite close to USA which is US$57,466, and higher than Japan’s US$38,894. This high income rate is combined with a low tax regime. The current income tax in Singapore for individuals range from 0% to 22%.
The cost of big ticket items like cars, and housing is very high compared to other global metropolis. Take the example of the very high cost of ownership of cars. Singapore is perhaps the most expensive places in the world to own a car. Import duties and special duties amount from 140% to 180% of the Open Market Value of cars. Plus the government has a policy where the ownership of cars are controlled by limiting to an arbitrary number of new cars each year. The government does this by requiring permits for each new car registered. The available permits are open for competitive bidding. As the numbers are limited, the competition can sometimes be very fierce. Winning bids often add S$50,000 to S$80,000 to the cost of the car. All these add up, and typically a car in Singapore costs about triple the cost of the same vehicle in Germany.
As a result many of the well heeled only own one car, and most of the general public do not own cars. Singapore takes the 95th position in the world with 149 cars per 1000 people. When compared to 9th on GDP per capita, the number of cars owned by the population is relatively low. Furthermore, the need to own cars is negated by a good public transport which is reasonably reliable, relatively efficient and fairly inexpensive. Also, as Singapore is a small island, commutes tend to be short, typically less than 1 hour each way.
This unique combination of high wages, low taxes, and the lower need for big ticket items like cars, translate to the fact that the average wage earner has a large disposable income. Often this disposable income is spent on travel, hobbies and luxury goods & services. One major channel is watches.
High visitor traffic and thus sales to them
Until the introduction of GST in 1994, watches were tax free for local residents. The current GST is 7%, and for visitors, the entire amount is eligible for tax refund. The country’s only airport records a 62 million passenger movements for the year 2017.
Much of the watch sales go to these visitors. We have reasons to believe that visitors may account for up to 50% of the volumes transacted in Singapore. This is largely due to the availability of many brands and models in the country, as well as the sophisticated domestic community who have become thought leaders worldwide.
Birth of the watch community
The community is an important asset to brand building and the spread of information and knowledge about collecting watches. A strong community is robust and intense mechanism which feeds on itself. Members are able to discuss, debate, inform and encourage each other along their collection journey. The outcome is a community which feeds on its own energy and grows on the strength of its members. The growth not only manifests itself in purchases, but also in the individual’s grasp of technicalities and sophistication in taste.
Singapore had a natural advantage for two reasons. First, English is the first language for most Singaporeans. With manufacturers being mainly in Switzerland, Germany or Japan natively speaking French, German or Japanese, the lingua franca for global communication defaults to English. Markets like Singapore has the edge, while markets like Thailand, for example, have a distinct disadvantage as proficiency in English is poor, even among the upper class. While the Thai market, especially in the high end remain strong, the technical ability of most collectors tend to be lower as access to information is relatively poorer.
Second, it was one of the first markets to embrace the internet as a means of spreading information and passion. Singaporeans are also early adopters of other technology like mobile communications as well. This means that access to information and exchange of data and discussions are easy and accessible. And fast. The spread of the internet as a tool for disseminating information and its ability to swiftly build and nurture a community for lively debate and discussions is extremely important to the development of the collector market.
The world’s first internet forum on watches, Timezone.com began its life in Singapore, circa 1994/95. Timezone moved its base to the US after its purchase by American retailer Paris 1925, and from there grew to be the largest web forum on watches in the world. Arising out of Timezone.com, was The Purist178 who later evolved into Purist Pro. Purist Pro also became a major force in the industry in the early 2000. And as both had their roots in Singapore, contributors and experts groomed on a steady diet of horological mania also hailed from within.
One of the world’s leading print publications on watches: Revolution also began life in Singapore in 2005, where they still maintain an large operational base. One of the world’s largest English speaking Watch specialty website Deployant.com also arose from the Singapore base, and grew phenomenally from its founding in 2014.
Brand building retailers
In addition to the internet as a key learning ground, Singapore also have had the advantage of strong retailers who are committed to brand building and education. This is largely due to the efforts of retailers like The Hour Glass, Sincere Fine Watches, Cortina (the big 3) and even Yafiro (now defunct), who were very good at spotting great brands in the early years. And had the commitment and guts to bring them into Singapore. As examples, relatively new brands in the early to mid 1990s like Franck Muller (Sincere circa 1992), Panerai relaunch by Vendome (now Richemont) in 1993, A. Lange & Sohne (Sincere circa 1996), and Independents like Greubel Forsey (Yafiro, now GF is with Sincere), MB&F (The Hour Glass), Kari Voutilainen (The Hour Glass), Urwerk (The Hour Glass), took a foothold in Singapore and found fertile growing ground. Due to their efforts, these brands took a stronghold in Singapore. As an example, Lange’s early cheerleaders were based in Singapore, with the establishment of the Lange Owners Group in 1998. The LOG began and remain a collectors’ group and currently boasts of members from all over the world.
These retailers were earnest in their efforts in promoting the brands with expertise, events, and other avenues to educate the Singapore public.
While the retailers were building brand equity among the new brands they have brought in, they also did not neglect to continue building on the existing brands like Rolex, Omega, Cartier, Longines, Jaeger LeCoultre, IWC, Chopard, Patek Philippe, Vacheron Constantin, Hublot and the like. These traditional brands continue to grow strongly. Both in terms of sales volume as well as in brand image and equity.
Thought leadership in the region and beyond
With these factors playing key roles in the development of Singapore as a key watch market, the community in the country began to garner a reputation for having good technical grasp, and sophistication in taste.
Neighbouring countries like Indonesia, Malaysia and Thailand began to look up to the collectors in Singapore as leaders to model their own collections and tastes to. Even collectors in China have a healthy respect for the Singapore collectors. This thought leadership and respect does not stop in the region, but the knowledge and taste of Singapore collectors have spread to even mature markets like USA, Italy, Germany and Japan.