By Daniel Malins
All watch brands are looking to the Far East, and as such most houses are focusing all their attention on producing editions for the region. Daniel Malins asks whether this obsession is leaving Europeans out in the cold in the design stakes?
In case no-one had mentioned, China is absolutely vast. One in every five humans on the planet is Chinese, and this huge population – 1,347,350,000 as of December 2011 – is only going to grow in the next few years.
This numerical clout represents a massive market for watch brands around the world to tap in to, especially with the number of millionaires in China ballooning at the same time. Suddenly, there is a whole new group of affluent consumers with money to spend on luxury Western goods, and the battle is afoot to see which brand (or brands) benefits the most from this emerging and sizeable pool of wealthy individuals.
Swiss watchmaking exports to China increased sharply in 2010 and the trend is set to continue, against the background of a rise in the country’s rich. Of the CHF16.2 billion (£10.88bn) of total Swiss watchmaking exports last year, China accounted for nearly CHF1.1 billion (£738.3m).
As exciting and lucrative as this growing Chinese market undoubtedly is, does there lie a cloud beneath the silver lining? For all the financial rewards that Western watch brands are reaping and will continue to reap from such an overpoweringly influential country, there is a danger that all of a given watch company’s innovation, time and money will be dedicated to the Far East and that historically important markets, like the UK, will be ignored.
It is undeniably the case that watch brands, especially at the higher end of the market, have put significant effort into utilising wealthy Chinese consumers. This can be seen, not only from the increase in, and targeted nature of, marketing activity in China, but also from the actual timepieces that watch houses are producing. More and more brands are making models specifically with the Chinese in mind. This can mean anything from a watch that is associated with and launched in China, through to watches that explicitly use Chinese symbolism and art in their design.
There’s no end of luxury watch brands that can be used as examples of companies embracing and courting the Chinese market. One on the endless list is Hublot, which seems to have taken every opportunity to associate itself with anything Chinese in recent times. If we cast our minds back to June 2012, then we will remember Hublot launching the Big Bang Ferrari Magic Gold Watch China Limited Edition in Shanghai – a model created in collaboration with Ferrari and unveiled in China.
In 2012 Hublot also effectively partnered with one of the biggest brands in China, Manchester United Football Club, on its summer tour to China. Not only did it get some of the team’s stars to officially open Hublot’s second Shanghai boutique, but it also collaborated with the football team to showcase a collection of iconic Hublot timepieces on a purpose-built fashion catwalk in Shanghai. Throw into the equation gifting of watches to the Chinese badminton team after the Olympics and the opening of more and more boutiques across the country, and a fairly clear picture gets painted: the Chinese market is increasingly integral to Hublot’s business model.
By merely scratching the surface of similar examples elsewhere in the industry, we can find Chopard, Piaget, Blancpain, Jaquet Droz, Vacheron Constantin, Breitling and Panerai all using various methods at their disposal to make sure they’re getting their fair share of the Chinese market too. Some have gone down the same road as Hublot and actually produced a model (or models) tailored specifically for the Chinese or set up their own stores in China. Others have at least gone to the lengths of translating websites into Chinese and crafting bespoke marketing strategies and campaigns for the Far East.
Whatever the specific method, there’s not enough paper in the world to write down all the different ways in which watch brands have tried to ensure that they’re not missing out on China’s huge watch market.
Piaget has gone so far as to describe China as “essential to a brand like ours” due to its status as the fastest-growing market for luxury goods. But despite cultivating this market for some time, developing the brand “hugely” there, the Swiss house says that it does not spend too much of its research and development team’s time on creating timepieces specific only to this market, but rather tinkers with existing designs to tailor them for China.
“We did not want to alter the brand’s DNA by designing product specifically for Asia,” says a Piaget UK brand manager Nicolas Mohs. “There is a risk if it is done [too much focus placed on China] and this is why we are pursuing our efforts in Europe as well, specially by continuing our retail opening strategy and media focus.”
And it would seem that Piaget is not the only brand to worry about diverting too much attention East. Romain Jerome chief executive Manuel Emch believes that it is foolhardy to ignore classic European and Western styles, as a lot of Chinese consumers will actually be willing to buy classic Western watches, straight from source (i.e. Europe). In other words, they actually like their watches to be authentic and not made especially for their perceived tastes. “Some brands are maybe a little bit too focused on China and they sometimes forget that Chinese customers are actually also buying European luxury,” he comments.
This is a view shared by Mark Hearn, managing director of Patek Philippe UK. “You find a lot of customers in the UK have actually come over from China, because they want that authenticity and extra quality,” he says. “Those individuals often become customers for life, and they’ll happily come back time and time again, whether it’s to buy a new watch or to service their old one.”
One of the reasons why watch brands may (and often still do) continue to keep their fingers on the pulse of the UK watch market is not because of the money that UK consumers bring to the table, but instead the extra value that the UK market can add to the Chinese one. A representative of one well-known luxury brand recently told WatchPro that the money it takes in one day at one of its flagship boutiques in China is equivalent to the business they’d receive from across the whole of the UK, where it is widely represented. In other words, the UK represents, in crude, monetary terms, just another store for many brands, and you wouldn’t expect a company to produce a bespoke model purely for the benefit of one store.
Instead, what continues to draw some watch brands back to the UK market is the prestige that is placed on UK trends by countries around the world, not least China. Because many Chinese consumers still put the UK watch industry on something of a pedestal, it means that they will copy a lot of the consumer behaviour of the UK market. Working backwards, one can see how watch brands can increase their perceived value to Chinese consumers by putting a strong emphasis on the UK. Put in a rudimentary way: if a watch is popular over here, then it stands a good chance of being popular in China, which is where the serious rewards lie.
It is far from certain, however, that this premium that’s placed on trends from the UK watch market by Chinese consumers will last indefinitely. As touched upon earlier, patterns of behaviour in the Chinese market are dynamic and liable to change. “The behaviour of Chinese customers will change as they become more informed,” says Hearn.
“China will remain the key market for the watch industry but consumption habits are likely to change a lot in the next 10 years” agrees Emch. “Chinese consumers will become more demanding and further interested in specific products that are different; not only watches that have been especially designed for the Asian market.”
As the Chinese luxury market becomes more developed, and as consumers find their own unique tastes rather than copying Western trends, a couple of issues will rise. Firstly, will it be the final nail in the coffin – assuming this nail hasn’t already been hammered home – for the UK watch consumer, in terms of watch brands dedicating their time, money and passion to them?
Secondly, how will companies adapt to the changing face of wealthy Chinese consumers? Hearn believes that “the strategies brands are using in China now may be totally redundant in five years’ time”. If this is true, then brands are going to have to be as open-minded and flexible as their consumer counterparts if they are to continue striking gold in China.
What we can irrefutably conclude from all of the above is that the Chinese market is the increasingly dominant one in the world of watches. Whether it’s through the creation of timepieces specifically for China, or new purpose-built boutiques in the country, or endorsements and sponsorships of various Chinese entities, the evidence of watch brands’ huge push in China is stark and indisputable.
What is less clear, and still up for debate, is how the Chinese horological landscape is going to change in the next few years. British watchmaking and the Made in Britain tag could continue its current mini renaissance in the British watch industry, which would affect the attitudes and behaviour of other watch brands in favour of UK consumers. Even if this micro-revolution doesn’t unfold, then there’s still the distinct possibility that the UK will still be used as a yardstick for the Far East. If Britain’s high street activity has been followed so closely by China and other countries for so many decades, then how likely is it that this pattern will irreversibly end in the next few years? Whatever the ultimate outcome, don’t be surprised if you see a few more lucky 8s and dragons on your watch in the near future.
This article was taken from the January 2013 issue of WatchPro. To read the magazine online, click here.
