Watches have replaced cosmetics and perfume as sales leaders among luxury products in the Chinese market, the consulting firm Bain & Co said on Thursday.
It is the first time watches have led the luxury market on the mainland, accounting for nearly 30 percent of sales, or 20 billion yuan ($3.15 billion) in 2010, according to Bain's figures.
"Globally, watches and jewelry, which are generally defined as 'hard luxury', account for about 20 percent in the luxury market, while in China, watches alone have surpassed that level," said Bruno Lannes, head of Bain's consumer products and retail practice in Greater China and lead author of the 2011 China Luxury Market Study.
In 2010, luxury goods sales in China achieved "very spectacular" 27 percent growth to hit 212 billion yuan, and almost 60 percent of the revenue has stemmed from overseas consumption, including Hong Kong and Macao.
In 2011, sales of luxury goods are estimated to have grown 25 to 30 percent, and more than 60 percent of the purchases have been made by new shoppers.
Expansion in store numbers, though slower this year than in 2010, remained the major force driving growth.
Among all products, watches led the growth with a 45-percent surge in 2010, compared with 12 percent in 2009. It's estimated that growth in watch sales this year will be about 40 percent.
Apart from the economic recovery and aggressive brand marketing, which have driven the domestic luxury market, Lannes said that the strong growth in watch sales was mostly due to male customers, who dominate the Chinese luxury market, and was partly related to business gift giving.
Gao Xiaofei, business development manager of Shanghai's Bund 18, a luxury gallery that houses famous watchmakers like Cartier and Patek Philippe, agreed that expensive watches were selling better than other luxury products like jade, mobile phones or menswear in the seven-floor store.
"Basically, there is a sales increase among all types of customers, young and old, new and regular, male and female," Gao said.
He suggested that more watch brands would be introduced to the store because of the boom.
The study by Bain, which is an adviser to the global luxury industry, also found that Omega, Cartier and Rolex were the top three watch brands for Chinese customers in 2011, and Omega and Cartier have risen in the rankings this year.
Brands that do not specialize in watches, such as Chanel, are also looking at the lucrative market, analysts said, as the price of a single luxury watch can often equal or exceed several bags or garments.