While countries across the globe are opening their borders and economies after braving the pandemic, China is employing draconian measures to keep up with its ‘zero-Covid tolerance’ policy. Consequently, the economy has taken a tumble and another side effect has emerged; one that is affecting the second-hand market for high-end luxury goods.
Reportedly, more and more Chinese individuals are selling their prized possessions such as Rolex watches and Hermès bags. The rationale is to make money, but according to experts, the prices of these goods have fallen so rapidly in recent times that it is a loss-making trade for the panicked sellers.
Read More: China’s economic growth drops to 0.4 per cent amid draconian lockdown measures and severe heatwave
According to a Financial Times report, the price of second-hand Rolex Submariners, a must-have ‘watch’ on every collector’s list, has seen its price tumble by almost 46 per cent since March this year.
Meanwhile, classic bags such as Hermès Birkin have seen their market value dip by up to a fifth in the same period. This drop seems even grimmer when one notes that six months prior to the lockdown in Shanghai, the price of the aforementioned Rolex watch had risen by almost 240 per cent.
“The boom time is over. We are entering a correction period that could last for a long time,” a seller of second-hand luxury watches in China was quoted as saying by SCMP.
Why the drops in prices?
As reported extensively by WION, China’s ‘zero-Covid tolerance’ strategy has been one of the primary reasons why it has lagged in economic recovery.
For months, the tough lockdown measures imposed by the Communist Party of China (CCP) led to a dip in manufacturing as factories and offices remained closed for prolonged periods.
It hasn’t helped China’s cause that the country is facing one of the most severe bouts of heatwave in recent memory. The intense heat has caused the Yangtze river to run dry while the electric grid faces the excruciating task of meeting growing power consumption demand.
Read more: China: Yangtze river shrinks; factories shut as drought hits hydropower
Earlier this week, Goldman Sachs cut China’s growth forecast by 0.3 per cent from 3.3 per cent to 3 per cent. Meanwhile, Nomura lowered its projections from 3.3 per cent to 2.8 per cent.
The downgrade comes on the heels of the Chinese economy growing by a tiny 0.4 per cent in the quarter while the Politburo giving up on the 5.5 per cent economic growth rate by the year-end.
Read More: Dark clouds for China: Goldman Sachs and Nomura slash China’s GDP outlook
Add these factors and it becomes clearer why the second-hand luxury goods market in China has seen a reversal in its fortunes.
(With inputs from agencies)
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