he clock of the Wako department store, owned by Seiko, an icon of the Ginza district, has ticked away imperturbably for nearly a century. Just a stone’s throw away, the Japanese watch giant has recently opened a concept store that has a digital reproduction of the famous clock.

In the store, and in the neighbourhood generally, a good proportion of buyers are Chinese. Japan is becoming a favourite destination in Asia, with the increase in low-cost flights from China and South Korea. So much so that in Kyoto, the sacred heart of Japan, local residents are increasingly complaining about the nuisance caused by tourism. The city welcomed 55 million visitors last year.

A district of Osaka, where there are many second-hand watch stores, symbolises in a very concrete way the shift of the luxury centre from Japan to China. “Japanese who bought Rolex in the 1980s are now selling their timepieces to second-hand boutiques frequented by… young Chinese customers,” explains Pierre-Yves Donzé, Professor of Business History at Osaka University.

“Japanese who bought Rolex in the 1980s are now selling their timepieces to second-hand boutiques frequented by… young Chinese customers.”

To experience a more typically Japanese atmosphere, where two-storey houses replace skyscrapers and there are numerous green spaces along the river banks, you should visit Daikanyama, a trendy new district in Tokyo.

This is where Tissot decided to open its first own-brand store in Tokyo this year. Between coffee shops and designer stores, the Swiss brand has reproduced the atmosphere of a Swiss chalet: natural materials, refined design and large photographs of icy peaks, which fit in well with the general aesthetics of this Japanese “SoHo”.

“In Japan, the concept of quality at a good price is not enough as an argument,” says Martin Gordian, Tissot’s manager for the country. With its focus on beautiful mechanics, the brand wants to attract new Japanese consumers.

“In Japan, the concept of quality at a good price is not enough as an argument.”

A critical view of consumption

This new generation is indeed very different from the one that preceded it, which enjoyed the heyday of European-style luxury in Asia in the 1980s. This was before the rise of China, the centre of all contemporary obsessions. Like its neighbour now, back then, Japan was driven by strong manufacturing momentum in the electronics and automotive industries.

Caught in a deflationary spiral, since then the country has been on a downward economic slope.

“My father’s generation was very show-offy. The new Japanese generations are much less interested in consumption. Young people prefer to save because there is no longer any certainty of having a good pension. And if they spend, they would rather it was on experiences, like a good restaurant,” explains Ayako Nakano, representative of the Federation of the Swiss Watch Industry in Japan.

“Young people prefer to save because there is no longer any certainty of having a good pension.”

She continues: “The economic stimulus policy launched by Japanese Prime Minister Shinzo Abe, who’s been in power since 2012 – the famous Abenomics – is creating even more income inequality. The middle classes are suffering, and hence the affordable luxury segment. Today, luxury purchases in Japan are mainly from two categories of consumers: Chinese tourists, and the wealthy Japanese class that benefits from the current economic policy.”

As a result, Swiss watch exports to Japan have stagnated at around $1 billion since 2005 – sometimes more, sometimes less, but with no strong signs of growth.

Embryonic e-commerce

Nevertheless, the country still has a high concentration of watch collectors. Specialised media still has a dominant place in Japan. As for e-commerce, it is not yet a major phenomenon for the watch industry there.

Wilhelm Schmid, the CEO of A. Lange & Söhne, whom we met in Tokyo at the launch of the new Lange 1 Tourbillon Perpetual Calendar, agrees. “Japan is one of the most important markets in the world for us. Japanese collectors are very demanding but loyal. Some countries have a particular interest in precision, perfection and craftsmanship. Japan is definitely one of them.”

While there is less concern for sales of high-end timepieces, driven by Chinese tourism and the beneficiaries of Abenomics, the entry-level and mid-range are a cause for concern in Japan. Indeed, this segment traditionally relies on the expenditure of younger generations and the middle classes, who today are rather cautious about their spending.