Freelance journalist Tim Barber  gives PRCo the low-down on the current state of the luxury watch industry.

A story. A Chinese man walks into a London watch shop, as part of a tour party. He asks to see a very specific watch, worth £8,000. The Mandarin-speaking retail assistant shows it to him (it’s a stainless steel piece), and says if he likes it perhaps he’d like to see the gold version. That’s £24,000. He takes a look at it, and the assistant says if he likes that, perhaps he’d like to see the diamond-encrusted version. That’s £68,000. He looks at it, has a quick conflab with his wife, and buys it there and then. With that, he’s away again with his tour party.

That’s a true story I was told about by a London retailer, and shows just where the power is in the watch industry at the moment. Moneyed Chinese tourists are splashing the cash around Bond street and Knightsbridge’s luxury boutiques with wild abandon, and will quite easily up their spend from a few thousand pounds to tens of thousands on a spontaneous whim. I’ve even heard of Chinese tour guides receiving as much as 10% commission from certain boutiques to bring in groups.

To some extent it’s affecting the way watches are being designed as well. Over the past ten years very large watches came to dominate the luxury watch market, but some brands are now downsizing their watches again. That’s partly due to simple market trends – big watches matched the exuberance of the boom years, and there’s now a rather more sober aesthetic around – but it’s also a response to the fact that Chinese people generally have slimmer wrists. And this being the Year of the Dragon, there’s a lot of top-end jewellery watches with dragon decorations.

Much of the watch industry is falling over itself to tap the Chinese wealth, but the clever brands are the ones who can exploit it without coming to rely on it completely. Staying in touch with your roots ­– and that includes your traditional consumers – is crucial for the integrity of a luxury brand of any kind, but particularly so in an industry so steeped in history.

Timothy Barber is the editor of the luxury watch magazine 00/24 WatchWorld, and a freelance writer on watches, travel, style and luxury. Read his regular musings on watches at his blog on www.0024watchworld.com