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From Geneva to China: keeping up to speed
Economy

From Geneva to China: keeping up to speed

Wednesday, 09 May 2012
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Pascal O. Ravessoud
Watch specialist and collector

“Luxury is the absence of constraints.”

“Watches, watches and more watches. Knowledge feeds on immersion and passion”.

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3 min read

We’ve heard and read a lot about China of late, the country every luxury name has in its sights – watch brands no less than any other – and the driving force for this economy worldwide (Chinese tourists account for 30% to 50% of sales in Europe and the US). The People’s Republic is on a spending spree that the gloomiest predictions of rocky roads and even ruin cannot curb.

Whenever I visit China, I’m taken aback by the speed at which the country develops. Faced with albeit wavering but still phenomenal demand, brands must source and train staff, open stores, and set up back offices and customer service on a quasi permanent basis. The wheels are turning and there is no time to think or plan ahead, just run to keep up. With the result that quality isn’t perfect yet.

Hold on though. Isn’t luxury the epitome of quality? Indeed it is, a fact which has escaped no-one here. Forget all that talk of ridiculous salaries and rock-bottom costs. Talent is scouted, disputed and lured, with executives earning as much as in neighbouring Hong Kong. In mainland China, brands fall over themselves to offer managers attractive career packages or else see them snapped up by the competition. After relying almost exclusively on imported talent from Europe, management is more and more locally sourced. It’s a new trend and, like everything else, one that’s growing fast, although it will still take time to develop skills at staff level, among watchmakers and on the sales floor.

Demand stifled by lack of supply?

“Concubines” are always under contract, a longstanding tradition in the region. They seek out the best opportunity and rather than aim for the ideal foreign “husband” now have their eye firmly on the local “market”. In addition to basic “services” which are strictly regulated in both quantity and duration, their contract provides for prestige watches, jewellery and a luxury car (with 145% import duty, a car is a “true luxury” in China). Which boosts sales of these products by as much. At the end of the day, China’s beloved high-end watches are doing well.

Exports, however, could turn the tables on a year that got off to a strong start with the Salon International de la Haute Horlogerie and Baselworld. The massive increase in production to keep pace with Asian growth brings its share of difficulties, as does the planned phasing-out of supplies by Swatch Group. And we all know that the chain of contractors to the Swiss watch industry is fragile indeed. Imagine a situation where demand is stifled by a lack of something to sell!

After-sales has become the bugbear of high-end watch brands everywhere.

Yet the biggest challenge remains after-sales service. Since the early 2000s and exponential growth in sales of fine watches, after-sales has become the bugbear of high-end watch brands everywhere. They need local watchmakers, local structures, parts and service, all resources for which the country resembles a bottomless well. There can be no losing face, no dented reputation. When something goes wrong, there is no second chance. Certain brands, whose after-sales service already falls short of impeccable in other parts of the world, would do well to take this situation seriously. It all happens fast in China, the rise as well as the fall…

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