PARIS — Eager to tap into China’s wellspring of prosperity, high-end watchmakers are shifting their strategies to gain ground with new generations of Chinese consumers.
Demand for watches in China has helped pull Swiss watch exports out of a prolonged slump this year and inject optimism into a sector also struggling for relevance as the Apple Watch gains ground.
Chinese consumers are not only lifting the spirits of watchmakers, they are also driving deep changes in the industry.
“The first generation was buying like crazy, after getting rich practically overnight — spending and spending,” noted Julien Tornare, chief executive officer of Zenith, a brand belonging to French luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton.
Those days are over, partly due to the government’s publicized crackdown on corruption, and the industry’s growth is set to take place at a more tempered pace, prompting watchmakers to keep closer tabs on changes in Chinese consumption habits and adjust strategies to meet them.
Reflecting broader trends in luxury consumption in the country, watch buyers are keeping a closer eye on value for money and increasingly turning to digital avenues for their purchases.
“They go on the Internet, they travel around the world, they speak English, they’re very well-educated and they’re savvy,” added Tornare.
The weight of digital commerce with Chinese consumers has prompted a number of traditional, high-end watchmakers to start making moves toward doing business online, an important shift for an industry reluctant to change its avenues of interaction with customers.
Breguet, which belongs to Swatch Group, is one of the higher-end brands that has recently expressed interest in exploring e-commerce options.
The label has noted that its consumers in the country have become younger, and now average between 30 and 40 years old.
“China is the youngest market and open to novelties and change,” noted Piero Braga, who heads Gucci’s timepieces and jewelry division, which belongs to Kering.
Yet companies that are already well-positioned with Chinese consumers stand to gain the most in the coming months, analysts predict. A recent survey conducted by RBC Capital Markets with Chinese consumers showed the top brands will likely increase their leads compared to other brands. Rolex, which has the largest market share of luxury watch brands with 18.5 percent last year, according to Morgan Stanley, led the list of brands Chinese consumers flagged as a likely purchase in the coming months in the RBC survey. Longines, Omega, Cartier and Bulgari were next in line, in that order.
Longines, a brand that has been in the country for decades, conducted its first photo shoot with a Chinese brand ambassador, Qiu Ling, as early as 1998, according to Juan-Carlos Capelli, vice president and head of marketing for Swatch Group brand.
“We believed in the development of the market and we took on the necessary challenges in order to develop there,” noted Capelli. Longines places an emphasis on elegant and traditional watches in the Chinese market, he added.
Tag Heuer, an LVMH Moët Hennessy Louis Vuitton brand, meanwhile is playing catch-up, and is employing important means to do so. The brand struck a partnership with China’s space agency last year and is the official timekeeper of the country’s lunar exploration program. For Jean-Claude Biver, LVMH’s watch division head, marketing events are key.
The executive aims to increase turnover from China to 30 percent from a current level of around 3 percent — a level he terms as “just unacceptable.”
“We will take inspiration from what Hublot did — Tag will benefit from our big brother, that is a big asset for us” he said, referring to another LVMH brand and its popularity with Chinese consumers. At one stage earlier this year, Chinese buyers of Hublot watches overtook American buyers.
Ricardo Guadalupe, ceo of Hublot added that having a physical presence is another way to demonstrate a brand’s commitment to the market.
“When you have boutiques, you show the brand is powerful and ready to make investments to be present in the market,” he said, noting Hublot has eight directly owned stores in the country. The company has begun to explore marketing methods on digital platforms like We Chat.
“We believe it will be successful in the future, but we’re at the beginning of the process, I would say,” he added.
Chanel, another high-end brand, has a limited number of stores but harbors plans for expansion, according to Frédéric Grangié, president of the brand’s watches and fine-jewelry division. The label has its sights on young, wealthy Chinese women.
“You have a lot of young women, very successful, educated abroad, coming back to China, and which brand can they relate to most? Chanel is perfect for them.…I am very confident about our future in China,” he said, noting the brand’s core business is “about women.”