In China – the first enclaves of the crisis: the prices of used luxury goods fell

Photo by Mike Clarke (AFP/Scanpix).

In recent months, prices for used luxury goods in China have plummeted, as even the wealthy trade in their leisure spending and sell luxury Rolex watches and Hermes handbags to raise cash.

More than a dozen popular luxury watches and wristwatches have lost between 20 and 50% of their value on the UK secondary market since China’s financial and commercial capital Ancai was put under a strict lockdown in March to contain the new outbreak of COVID-19.

Restrictions in China and other regions of China have hurt small business owners, many of whom had amassed large collections of luxury goods in better times. However, repeated quarantines due to China’s zero-covid-19 strategy have harmed its cash flows.

The used luxury watch industry portal Watcheco announced that the price of a used Rolex Submariner, a sought-after model by innovators and collectors, has dropped by 46% since March.

Luxury handbag retailers in Ancai and Hangzhou have slashed prices on classic handbags such as the Hermes Birkin by up to a fifth over the same period.

Pawn shops and other luxury goods resellers claim that there has been a significant increase in the number of customers who came to them due to a lack of money. According to experts, entrepreneurs are trying to attract capital in order to pay off their debts and keep their business afloat.

The rise time will end. “We are facing a correction period that could last a long time,” said James Wang, a luxury watch dealer in the eastern Chinese city of Nanjing.

Shaun Rein, a representative of the China Market Research consulting company based in Anjaj, noted in the Financial Times that the sudden increase in demand and the resulting decrease in the prices of second-hand luxury goods indicate very weak consumer confidence.

This is probably the weakest consumer confidence I have seen in my 25 years of working in China, he added.

Some investors in luxury goods say that the recent drop in prices was inevitable after prices had risen sharply until March. For example, the price of a used Rolex Submariner rose by 240% in the months leading up to the quarantine in Anjai.

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