Heard some data and projections that stunned me today and it has a direct impact on the demand for luxury products such as Rolex. I think it's pretty well-established that Rolex is the most dominant aspirational luxury product in China right now and unless that mindset totally disappears, what I heard today makes me conclude the demand for Rolexes is going to go through the roof!
Background: I was attending a conference and the keynote speaker threw out some data. He's a co-founder of one of China's most prominent e-commerce firms and opined on what the future holds for that company.
He was specifically asked whether the company would try to expand beyond their current China-only footprint. He said (and I'm totally paraphrasing here) "No. We think there's plenty of opportunity left in China. China has 1.3 billion people and it's only recently that we've developed a sizeable middle class here. There are currently 350 million people in our middle class. That in itself is already roughly the population of the United States.
But more importantly, we believe another 500 million people will join the middle class in the next 10-15 years."
Holy crap!! REALLY???
WIS are already complaining about how difficult it is to get a SS Rolex at an AD these days. It's the direct result of the explosive growth in global wealth (notably China and soon to be followed by other emerging economies...); I do not believe in the conspiracy theory that Rolex is holding back production/supply to jack prices up. ADs are simply unable to keep any inventory. (Yes, some watches will always be squirreled away by the ADs for their VIPs but that's not the dominant factor at play here...)
It will be damn interesting to see how Rolex responds to this expected surge in demand. That will be the $64 billion dollar question. My guess: I seriously doubt Rolex will make the commitment required to meet this demand.
TL:DR: Here's the punchline. If you think it's tough or impossible to get a SS Rolex without going through the grey market now, just wait. The worst is yet to come. It won't fully materialize in the next year or two but it is coming and now will be fondly remembered as the good ol' days. You heard it here first.
I'm still stunned when I think about the numbers... Just absolutely mind-boggling.