SHANGHAI — After 15 years of strong growth in the Chinese market, Omega is in a “conservation” phase, according to company president Stephen Urquhart.
Although he acknowledged that the brand’s sales growth has slowed recently from the rates it was registering over the past 10 to 15 years, Urquhart claims Omega has been somewhat insulated from the Chinese government’s anti-corruption crusade due to the strength of its women’s market here.
“We launched the brand here through Cindy Crawford in the mid-90s with the Constellation watch – so for us over twenty years I would say our ladies market has been very strong, on a par with, if not slightly ahead of the men’s market,” he said, a day after the Swatch Group-owned brand hosted a gala dinner on Friday with George Clooney to promote its Aqua Terra collection.
“If you come back to the gift giving, maybe the men’s market is more affected by that — because it’s the businessmen and government officials,”said the executive, who voiced an optimistic long-term view on the Chinese market.
Though Urquhart declined to disclose specifics about sales figures and profits, he did say he foresees a continuation of the brand’s growth in China, including continued slow and steady expansion of Omega points of sale, which currently stand at 120.
“It’s obviously our biggest market in the world, so investment is heavy at every level,” he said. “The middle class continues to grow and I don’t think the slowdown is as serious as the media in the West are saying. The demographic signs are good here.”
The executive said the brand is “not pulling back” in terms of its China strategy. “The second and third-tier cities people are talking about — places like Hangzhou and Chengdu — where we have opened stores, and Chongqing, which has 30 million people, the Chinese market is still opening up.”
The Fédération de L’Industrie Horlogère Suisse’s 2013 annual report confirmed that exports to China were down 12.5 per cent on 2012, a drop which has been attributed in large part to the Chinese government’s crackdown on corruption and gift giving.
Chinese consumers appear to have a robust appetite for high end watch brands, even if they aren’t running out to buy them in record numbers in the current climate.
The recently released tenth annual World Watch Report, from Digital Luxury Group, showed searches for high-end watch brands up 59.4 percent in China, with Omega, Rolex and Cartier the most searched for brands among consumers here.
Urquhart said the brand’s digital strategy has been strong in China, though the ways in which Chinese consumers use the internet when it comes to luxury items is less about price comparison and online shopping than it is about information.
“People who are looking on the net are looking for education, to understand the culture and history of the brand, but I still think the experience of interacting with the consumer face-to-face is still very prominent here,”he said.
The other major factor to consider is traveling Chinese shoppers — with more than 100 million of them predicted to leave the mainland in 2014.
The price of a Swiss watch worth more than 10,000 renminbi, or $1,663, in China includes a 20 percent of consumption tax, 17 percent VAT and 15 to 20 percent of import duty, making the price tag at least 50 percent higher than its import price.
But the desire to buy luxury goods overseas is about more than simply price sensitivity. Buying Swiss watches in Switzerland, Chanel haute couture in Paris and Italian leather goods in Milan carries more cachet for some consumers than buying an Omega from Nanjing Road — one of Shanghai’s premier shopping streets.
“The Chinese today are very focused on the retail experience, there are fantastic stores here, but the Chinese want to go to Switzerland and buy a watch because the experience is more unique,”Urquhart said.
“It’s not as is they are hungry for products they can’t get here and are running out to get them, the stores are here, the selection is here, I think the current trend for buying overseas is part of the evolution [of the Chinese luxury consumer],”he said.