When the COVID-19 pandemic hit us, many countries followed various strategies to avoid the spread of the fatal virus. China came up with the Zero Covid Policy, which entails total control and maximal suppression of the virus’s eradication through the use of harsh public health measures such as contact tracing, social isolation, mass testing, and lockdowns. Due to this, the country’s economy was greatly affected. In April, China’s export growth was the lowest since June 2020, and imports were similarly flat for the month, owing to weak domestic demand. The drop in growth across industries is essentially the result of factory shutdowns in several cities under lockdown as part of the zero Covid programme. Multinational corporations also reported poorer business confidence in China as a result of the severe lockdowns, which are disrupting global supply chains. Initially, the zero Covid policy boosted the domestic Chinese economy since China was able to manage the virus by entirely isolating itself from the remainder of the world and becoming self-sufficient. But with recent domestic breakouts, however, the government has maintained a zero Covid policy, ordering lockdowns and stopping manufacturing and production in the country.
As much of China’s metropolitan populace remains subject to severe and occasional Covid-19 lockdowns, the Chinese watch world suffers as well. As a consequence of Beijing’s stringent devotion to zero-Covid, the second-hand market for high-end items has been one of the worst impacted. With no positive news on the road for the country’s economy, the cost of used luxury items have dropped precipitously. During the initial stages of the pandemic, Chinese consumers were more than happy to spend their money on expensive luxury goods, especially since international travel was put to a halt. But after the strict zero- Covid policy which took a hit on China’s commercial and financial capital, many consumers including some of the country’s wealthiest had to give away their Rolex watches and Hermes handbags as a result of low cash flow.
According to the Financial Times, Watcheco, an industry marketplace for used luxury timepieces, the price of second-hand Rolex Submariners, a watch on everyone’s wish list, has dropped 46% since March. It’s not only pricey watches but also luxury bag retailers in Shanghai and Hangzhou are said to have reduced the price of classics like Hermès Birkin bags by up to a fifth over the same time period. More than a dozen prominent luxury watch and bag brands have lost between 20% and 50% of their value on the secondary market. The limitations in Shanghai and dozens of other cities have been devastating to small company owners, many of whom had amassed enormous collections of luxury goods in previous years. However, the continuous lockdowns have harmed their financial flow. Luxury goods investors believed that the current price drops were unavoidable following an unsustainable price increase prior to March. Second-hand Rolex Submariners increased by 240 per cent in the six months leading up to Shanghai’s shutdown. The same bag dealerships in Shanghai and Hangzhou that recently reduced their asking prices had done so just months after boosting them at the start of the New Year. A watch investor, Sam Xue, who owns an electric heater business in Wuxi, China’s easternmost city, said “The weak economy can’t support a luxury boom.”