Swiss made watches industry


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This is a thesis defense PPT created by my classmate Caroline and me. We are passionate in Swiss-made watch making industry and willing to help all the luxury and fashion watches brands develop in Mainland China.

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Swiss made watches industry

  1. 1. Among Swiss-made Watch Industry HowDo Luxury Houses Compete With SwissHeritage Brands In Mainland China  Tutor : Audrey KablaStudents: WANG Shijian (Caroline), CHEN Yingyi (Erona)contact:
  2. 2. 1 INTRODUCTION  contact:
  3. 3. Background:•  Swiss-made watch is the synonym of the high-end luxury watch both in aesthetic aspect and functional aspect for the exclusivity in the world.•  In 2011, the export value of Swiss watch is 19.3 billion francs, increased nearly 80% from 2000 (with 19.2% increase from 2010).•  A visible phenomenon since 2000s is many famous luxury houses extended watch lines and compete with the original heritage brands in Swiss-made watch industry.•  In 2011,China broke up all records before with the growth rate of nearly 50%. With 25% global market share, the third export market in the worldcontact:
  4. 4. Objective :among the Swiss-made watch how do luxuryhouses compete with the heritage brands in the mostpotential market —China ? Hong Kong, Singapore andJapanese markets are the reference region and countries.Structure:1 Introduction2 Swiss-made watch industry overview3 Main differences between heritage brands and luxuryhouse brands4 Strengthen Luxury houses competence in China5 Conclusion6 Referencecontact:
  6. 6. 2.1 THE HERITAGE WATCH BRANDS   Born in 16th 17th 18th 19th The Distribution ofMaîtres des Horologers Watchmaking in Jura Mountainde Geneva Vacheron Constantin contact:
  7. 7. 2.1 THE HERITAGE WATCH BRANDS  Chart 1 Richemont Group Watch Brands Chart 3 LVMH Group Watch Brands Chart 4 Rolex SA Watch Brands Chart 2 Swatch Group Watch Brands Chart 5 PPR Group Watch Brands Chart 6 Private Watch Brandscontact:
  8. 8. 2.2 KEY SUCCESSFUL FACTORS2.2.1 BRAND’S HERITAGE  Every prestigious watch brand’s story is its unique heritageA combination of ingenuity, experience and passionVacheron ConstantinPatek PhilippeFound in 1835 ,owning a Patek Philippe is “an entry into a familybusiness ,from father to son, each generation is dedicated to perpetuating aunique heritage”contact:
  9. 9. 2.2 KEY SUCCESSFUL FACTORS2.2.2 TIMELESS INNOVATION   From 18th to 19thTwo Crisis1st American mass standard manufacture crisisMultifunctional innovation and design2nd Japanese “Quartz Crisis” in 1970s SMH invented“Swatch”contact:
  10. 10. 2.2 KEY SUCCESSFUL FACTORS2.2.3 STRONGLY KNOW-HOW  Industrial rulesHeritage houses’ aspires are both in technicalaspect and aesthetic aspectPatek Philippe’s goal “to develop, manufacture the finestwatch in the world.”Jaeger LeCoultre needs more than 100 techniques tomanufacture a watch and 1,000 hours’ testcontact:
  11. 11. 2.2 KEY SUCCESSFUL FACTORS2.2.4 CRAFTSMANSHIP  “Genava Seven Crafts” Vacheron Constantin Dove Watch Engraving Enameling Gemsetting Guillochecontact:
  12. 12. 2.2 KEY SUCCESSFUL FACTORS2.2.5 INDUSTIAL CRITERIA  Swiss Made Rule80% of the production are finished in Swiss• Its movement is Swiss;• Its movement is cased up in Switzerland;• And the manufacturer carries out the final inspection inSwitzerland. The Identification Code of Swiss Made Movement Right Wrongcontact:
  13. 13. 2.2 KEY SUCCESSFUL FACTORS2.2.5 INDUSTIAL CRITERIA  Geneva SealIn November 6, 1886 Geneva Seal was set up to avoid thecounterfeit and copied models. Now the official hallmark becameone of the most authoritative industrial standard for the mostexcellent timepieces12 criteria for movementcontact:
  14. 14. 2.2 KEY SUCCESSFUL FACTORS2.2.5 INDUSTIAL CRITERIA  Patek Philippe SealThe Patek Philippe Seal surpasses all standard for productionwhich taking all details as considerations to achieve the bestresults.The exterior elementsThe movement (7 rules)The international customer servicecontact:
  15. 15. 2.2 KEY SUCCESSFUL FACTORS2.2.6 COMMUNICATION  Social media6 languages versions Patek Philippe international magazineTag Heuer 3rd best luxury house in social mediaFacebook 490.000 fansVacheron Constantin , Breguet , Blancpain created Ipad programNon-Social communication Patek Philippe Museum Tag Heuer 360 Showroomcontact:
  16. 16. 2.2 KEY SUCCESSFUL FACTORS2.2.6 COMMUNICATION  •  EventIWC Dinner party in Plage Orange beach•  SponorshipOmega’sSeamaster Chrono NZL-32 for New Zealand team inAmerican Cup•  CharityOnly for Watch AuctionClub/MembershipVacheron Constantincontact:
  18. 18. 2.3 LUXURY HOUSE BRANDS  Luxury Houses: luxury brands have product ranges as HauteCouture, Luxury RTW, RTW, leather goods, accessories,fragrances and cosmetics excluding Haute Horlogerie andHaute JoaillerieBegin: 1920s (Hermès with Movado) with increasingpopularity of the wristwatchesPop-up: 1970s, assuming a relation with Quartz Crisis•  Increasing demand/ lower cost to manufacture (luxury houses)•  Searching for financial support (Swiss Heritage Watches Brands)contact:
  19. 19. 2.3 LUXURY HOUSE BRANDS   1972 1987 late 1980s 2000 2002 20091928 1975 1988 1990 early 2000s 2007 2012 contact:
  20. 20. 2.3 LUXURY HOUSE BRANDS  Three approaches:•  Cooperate with Swiss manufactures then purchaseex Gucci with Severin Montres•  Establish own workshops in Switzerlandex Chanel, Louis Vuitton•  Licensingex Burberry, Armani with Fossilcontact:
  21. 21. 2.4 BRIEF SUMMARY  Cases from Haute Joaillerie entered into Swiss watches industryCartier (first practical wristwatch 1904: “Santos”)•  Enter slowly, 50 years after the brand established. Movement from Jaeger-LeCoultre (exclusive supply).•  Embracing Art and charity: “l’Art de Cartier” exhibition 1989Tiffany & Co.•  Join venture with Swatch Group 2007 (20 years contract)•  2011 lawsuit to break the contract (unsatisfying sales, inadequate distribution and maintenance of brand image)contact:
  22. 22. 2.4 BRIEF SUMMARY  Cases from luxury houses (more difficult) entered into Swiss watchesindustryChanel•  Swiss workshop•  Première: Linkage of brand universe and Couture aesthetic aspect•  J12: its first unisex watch with innovative material, ceramic•  Joaillerie Watch: precious materials, high-end pricesHermès•  First luxury house entered cooperate with Movado•  Not able to gain legitimacy without creating an professional image at the beginningcontact:
  24. 24. 3.1 THE PRODUCT MIX3.1.1 PRODUCT  Usually, watch from heritage brands use more complicatedtechnique, even in the aesthetic aspect. However, luxurybrands watch are more fashionable and ornamentalFirstly, the traditional craftsmanship Enamel Jaeger LeCoultre Reverso à Eclipses Timepiececontact:
  25. 25. 3.1 THE PRODUCT MIX3.1.1 PRODUCT   Jewelry-encrusted Piaget Boucheron Skeleton Jaeger LeCoutre Master Minute Repeate Piaget Altiplanocontact:
  26. 26. 3.1 THE PRODUCT MIX3.1.1 PRODUCT  Movement The Main Luxury Brands Watch Movement Supplycontact:
  27. 27. 3.1 THE PRODUCT MIX3.1.1 PRODUCT  ComplicationBrand Share of Tourbillon in market Hermes Cape Coq Moon PhraseMaterialsCase and straps FX Piagetcontact:
  28. 28. 3.1.1 ICONIC PRODUCT/COLLECTION  Jaeger LeCoultre ReversoBack in 1931, in a dusty vortex and to the accompaniment ofhorses’ hooves hammering, an idea was born: a watch with adial that could protect itself from shocks, with a personalizedbackgroundcontact:
  29. 29. 3.1.1 ICONIC PRODUCT/COLLECTION  Breguet Reine de Naples CollectionBreguets Reine de Naples collection is inspired by an earlybracelet watch A. -L. Breguet created for Bonapartes sisterCaroline, Queen of Naplescontact:
  30. 30. 3.1.1 ICONIC PRODUCT/COLLECTION  Cartier TankCartier Tank collection was created by Louis Cartier in 1917,which inspired by the new Renault tanks which Cartier saw inuse on the Western Front,so the collection are similar tothose of tanks found on First World War on the
  31. 31. 3.1.1 ICONIC PRODUCT/COLLECTION  Chanel J12In 2000 Chanel launched the initial model of the uniqueChanel watch line; the Chanel J12. But the important stage ofthe Chanel J12 occurred in 2005the first unisex watchthe first watch in high-tech non-scratch ceramic materialcontact:
  32. 32. 3.1.1 ICONIC PRODUCT/COLLECTION  Hermes HSince its first launch in 1996,Hermes H watch enjoys itspopularity to attract female.As the name implies, the casestands for Hermes "H" is a bold design in the motif and thethin lines emitted radially in character
  33. 33. 3.1.1 ICONIC PRODUCT/COLLECTION  Louis Vuitton TambourIn 2002,Louis Vuitton launched the first watch collection-Tambour, the word that evokes both the cylinder of a clock,the ancestor of the western watch, and a musical instrumentassociated with
  34. 34. ASIAN IMPRESSION  As the consumption rapidly increased in Asia, more andmore brands applied Asian elements in their design to targetthe customers.Piaget Dragon & Phoenix Collection TAG Heuer Yin Yangcontact:
  35. 35. ASIAN IMPRESSION  Some brands use colour code to attract Asian customer, asred is the lucky colour for Southeast Asia. Chanel J12 Gucci 1921 Pendant Versioncontact:
  36. 36. 3.1.2 PRICE   Luxury Watch Pyramidcontact:
  37. 37. 3.1.2 PRICE   The Selected Prestige Watch Price Range (regular models) Hermes price range Entry level watch brandscontact:
  38. 38. 3.1.3 PLACE3.1.3.1 GLOBAL DISTRIBUTION  Swiss Heritage Watches Brands:•  Selective distribution: Trade show, boutiques, POS•  Exclusive distribution: VIP sales, Auction (Limited edition)Luxury houses:•  Selective distribution•  Exclusive distribution+ Licensingcontact:
  39. 39. 3.1.3 PLACE3.1.3.2 ASIAN DISTRIBUTION   Chart 14 Swiss Made Watches Geographical Distribution (in CHF million) Asian region experiencing nearly 100%
  40. 40. 3.1.3 PLACE3.1.3.2 ASIAN DISTRIBUTION  Chart 15 Percentages of Swiss Made Watches Exported to Different Continents 2007-2011 (100% in Total Each Year)contact:
  41. 41. 3.1.3 PLACE ASIAN DISTRIBUTION – SWISS HERITAGE WATCHES BRANDS   Case: Rolex, which has entered Chinese market for nearly 100 years 25 authorized retailers 25 authorized retailerscontact: More than 230 authorized retailers in China, distributors of Mainland China mainly locate in Shanghai.
  42. 42. 3.1.3 PLACE ASIAN DISTRIBUTION – SWISS HERITAGE WATCHES BRANDS   One in every 23.46 square milecontact: Total area of Tokyo: 844.66 sq. mi. with 36 retailers & boutiques.
  43. 43. 3.1.3 PLACE3.1.3.2 ASIAN DISTRIBUTION –LUXURY HOUSES  Less aggressive•  They generally distribute watches by themselves or parent company.•  No watch boutiques only boutiques for both watch and jewelry.ex Hermès in Wangfujingdepartment store, Beijing/Ralph Lauren, a new 320 m2boutique for watch & jewelryat Hong Kong’s PeninsulaHotelcontact:
  44. 44. 3.1.4 PROMOTIONSELECTIVE ADVERTISING  Patek Philippe•  2010 “Heritage” campaign also communicate to female target “Something truly precious holds its beauty forever.” on high- end magazines.•  Digital campaign form of themed microsites (English & German in UK, Germany, US and a selection of international media sites)contact:
  45. 45. 3.1.4 PROMOTIONSELECTIVE ADVERTISING  Chanel•  communicate J12 in Japanese female market in 2011•  Kiko Mizuhara (Norwegian Wood) in attractive and special emotional expressionscontact:
  46. 46. Image 293.1.4 PROMOTIONENDORSEMENTS  2005, Audemars Piguetchose Michelle Yeoh to bethe 1st Chinesespokeswoman2012, Gucci has chosen LIBingbingcontact: Image 30
  47. 47. Image 31 Jaeger-LeCoultre Reverso 80th Anniversary Exhibitions 3.1.4 PROMOTION PUBLIC RELATIONS   Exhibitions Event •  Sports Touring from Shenyang, Dalian, Shenzhen, Hangzhou, •  Charitable Shanghai and Ningbo six important cities Private Clubs Image 32 Omega for London 2012 Limited Edition Seamaster 1948 Audemars Piguet + ThePuristS, Cocktail party in Singapore introducing Jules Audemars Handwound High-Beat Chronometer to watches collectors. 2010 Olympic games for 80 years since the 1932 Los Angeles Olympic Gamescontact:
  48. 48. 3.1.4 PROMOTIONPUBLIC RELATIONS   Image 33 Louis Vuitton Tambour for America’s CupExhibitionsEvent•  Sports•  CharitablePrivate Clubs Image 34 Gucci support the China Soong Ching Ling FoundationChanel 2012 BaselWorld Exhibitioncontact:
  49. 49. 3.1.5 PEOPLE  Case: TAG Heuer with for its corporate training (Chanel)contact:
  50. 50. 3.1.5 PEOPLE  Luxury houses retail training for all segmentations, Chanel (NY)Training Film Series "WRAP YOURSELF IN LUXURY" for its retailtraining by Rockville’s (Movado).contact:
  51. 51. 3.1.6 PROCESS  Main differences:•  Security (Security guard, locked door, ex Place Vendôme)•  Sales team: knowledge of Haute Horlogerie•  After sales services: Customer service centers (ex Rolex China)contact:
  52. 52. 3.1.7 PHYSICAL EVIDENCE  Image 36 Piaget Boutique at Marina Bay Sands in Singaporecontact:
  53. 53. 3.1.7 PHYSICAL EVIDENCE  Image 38 Hermès Watch and Jewelry Boutique in Beijing Chinacontact:
  54. 54. 3.2 COMPETITION  Chart 19 Simplified Swiss-made Watch Brands Segmentation Mapping (Eurostaf Research published 2011) contact:
  55. 55. 3.3 LUXURY HOUSESBRANDS LESSON LEARNT  •  Swiss Manufacture•  Respecting Brand Universe•  Innovation•  Selective Distribution and Communication•  Well-Trained Service Teamcontact:
  56. 56. 3.4 CONSUMER BEHAVIOR ON SWISS- MADE WATCHES   Demographic 2011 Swiss Made Watch DistributionCustomers : between 30-55,among them 55%male and 45%female contact:
  57. 57. 3.4 CONSUMER BEHAVIOR ON SWISS-MADE WATCHES   Chart 21 Consumer Perceptive (Eurostaf Research published 2008)Firstly, respecting the authority of “Swiss made”.Secondly, a wise way of investment.Thirdly, a Swiss made watch is a symbol of social status.Fourthly, women became an important purchased force in luxurywatch
  59. 59. 4.1 ANALYSIS IN MAIN REFERENCE COUNTRIES AND REGION 4.1.1 JAPAN   •  Revolution during Quartz Crisis 1970s •  Key players: Seiko, Citizen and Casio •  Shrinking market sizeChart 22 Swiss made watches imports of Japan and Hong Chart 23 Japanese Watch Market SizeKong 2007-2011 (Federation of the Swiss Watch Industry (Yano Research Institute Ltd.) FH, unit: Billion Dollars) contact:
  60. 60. 4.1 ANALYSIS IN MAIN REFERENCE COUNTRIES AND REGION 4.1.1 JAPAN   Chart 24 Wristwatch Consumer Awareness Survey 2012, Japan (Federation of the Swiss Watch Industry FH)•  Sophisticated development of both Swiss Heritage Watches Brands and Luxury houses.•  15/35 (43%) contact:
  61. 61. 4.1 ANALYSIS IN MAIN REFERENCECOUNTRIES AND REGION4.1.2 SINGAPORE  •  Swiss economic model•  Chinese culture influence (75% population)•  Hong Kong (retrocession)•  Security•  High taxes on vehicles•  English (official language) contact:
  62. 62. 4.1 ANALYSIS IN MAIN REFERENCECOUNTRIES AND REGION4.1.2 SINGAPORE  •  Independent contributors: passionate retailers, collectors•  A country of fine watches connoisseurs. Worldwatchreport 2011 contact:
  63. 63. 4.1 ANALYSIS IN MAIN REFERENCE COUNTRIES AND REGION 4.1.3 HONG KONG, CHINA   •  Import Swiss made watches the most •  Certain amount re-export (Preferential policy on taxes ) •  Mainland Chinese consumption more and more influential •  Mainly speak both English and Cantonese Left: Chart 25 Swiss Made Watches Import Value of Hong Kong (Federation of the Swiss Watch Industry FH, unit: Billion Dollard) Right: Chart 26 Watch Exporting value of Hong Kong (Federation of the Swiss Watch Industry FH, unit: Million Dollard)contact:
  64. 64. 4.2.CHINESE CONSUMER BEHAVIOR4.2.1 HISTORIC AND CULTURAL ASPECTS  According to Swiss watch industry report 2011 the wholevalue of the Chinese market in last year is over 1600 CHFmillion,while the increasing rate is 48.7% ,occupies 8.5% ofthe whole world Swiss watch
  65. 65. HISTORICAL REASON  Show offthe success people who obtained their wealth between1980s and 2010s show a strong demand to show their wealthby wearing the luxury goods. Asian Countries’ Stages of Luxury Evolutioncontact:
  66. 66. HISTORICAL REASON  •  The strong desire to show the social status by the influence of hierarchical social system which existing in China for thousands of years.•  The phenomenon of admiring the western culture and products.(The lost generation)contact:
  67. 67. DEMOGRAPHIC  80% of the wealthy people in China under 45 years old(concentrated on 25-45 years old) comparing with America’s30% and Japan’s 19%, the Chinese luxury clients are quiteyoung.While among these clients most of them are male, mainlythree types:governments,Bossesuniversity
  68. 68. DOMESTIC CONSUMPTION   30% of wealthy people lived in the four biggest cities in China, Beijing, Shanghai, Guangzhou and Shenzhen while 50% of wealthy household lived in the top ten cities comparingwith 25% of United States.Distribution of Chinese Wealthy Household Luxury Customers Distribution contact:
  69. 69. OVERSEAS CONSUMPTION  •  57% luxury purchasing occurred in foreign countries•  the top three are France, Italy and United States.•  To be clearly is that among the left 43% there are still 23%•  indirectly purchased from abroad by overseas purchase agency or individuals•  what is to say that 80% of Chinese luxury consumption in abroad due to the high import tax.•  luxury watch segment the Mainland China’s price is 45% higher than Hong Kong, 51% higher than them in United
  70. 70. NEEDS   Chinese Consumption in Swiss Made Watch Segment (Federation of Swiss Watch Industry) •  Hard luxury consumption increased steadily in China due to the Chinese people have the saving awareness. •  The belief in authority became a strong reason for luxury watch purchasing. In many occasions Chinese people like to be the “followers” mostly by the theory of
  71. 71. GIFT GIVING  Gift giving is an important way to show the emotionalaffection to others.The Swiss made watch gift giving in China has two maintypes, between relatives or between social partners.Relatives :Permanent love or Good luck!Social partners Gift Giving Phenomenoncontact:
  72. 72. 4.2.2 THE SECOND-IER AND THIRD-IER CITIESCONSUMPTION  Second-tier cities and third-tier cities’ consumption powerincreased rapidly.Reasons:•  Less curious about luxury watch•  Strong purchase power(Gucci in Zhengzhou)•  First-tier citizens became wiser and having a better tasteLuxury houses strategy: Gucci opened 9 stores in China, 8 ofthem in second-tier cities or third-tier
  73. 73. 4.3 ACTION PLAN4.3.1 PRODUCT  •  Movement: more complex with complications in mechanic movements (female clientele)•  Design: not too fancy, not oversize, classic, special, unique, cultural (male), precious stones, elegance (female)•  Complications: a trend, Asian women love watches with complications (FT 2010) ex tourbillons, skeletons, GMT•  Aesthetic Aspect: preferable color, clean dial face, square shape, traditional aspectscontact:
  74. 74. 4.3 ACTION PLAN4.3.2 PRICE  •  Fashionable watches with lower price•  Fine watches as investment and a sign of social status with higher price•  Price isn’t the priority of decision makingex Swiss Heritage Watches Brands•  TAG Heuer Carrera Automatic $2,500•  Breguet Classique Grand Complication $103,100ex Luxury houses•  Chanel J12 Automatic 38mm ceramic $5,600•  Chanel J12 Automatic 38mm ceramic $37,700 (with diamonds)•  Chanel Grand Complications watches $150,000 (assumed)contact:
  75. 75. 4.3 ACTION PLAN4.3.3 PLACE  •  Beijing (capital)•  Shanghai (financial center)•  Guangzhou (import and export business)•  Shenzhen (strategic location between Hong Kong & Guangzhou)•  Chengdu, Chongqing, Shenyang, Hangzhou, Tianjin, Dalian, Wuhan, Suzhou and Nanjing (increasing demand)contact:
  76. 76. 4.3 ACTION PLAN4.3.4 PROMOTION  Media•  Magazine such as VOGUE, ELLE, Rayli, Vivi, W, Numéro etc.•  King-size billboards in CBD, airports•  Selective TV advertising•  Digital advertisingNon-media•  Endorsement•  Charitable supportscontact:
  77. 77. 4.3.5 PEOPLE  •  Firstly, to build the professional image of the luxury brands’ watch needs deeply understanding the information of their own brand and product•  Secondly, understand the Chinese customers. In some level the hierarchical system still influences in Chinese people’s thinking•  Brand code dresscontact:
  78. 78. 4.3.6 PROCESS  •  What expect of a customer go to a store is not only for the product but also for the excellent service !•  Greeting•  Don’t follow•  Asking what they want ,in Northern part no price related, contrary in South•  Different recommendations for male and female•  Accompany person is important•  Drinks and story telling depends•  Elaborately packaged•  “ Good bye” with accompany to the doorcontact:
  79. 79. 4.3.7 PHYSICAL EVIDENCE  •  Luxury needs spacious! The Interior of Patek Philippe Store in Shanghai•  Brand identity code•  Consultant table•  Saloncontact:
  80. 80. 4.3.8 BRAND QUALITY CONTROL  •  Brand quality control is not only about process of purchasing but also for after sale service.•  Service center in China•  Longer warranty period•  Counterfeit solutioncontact:
  81. 81. 5 CONCLUSION  contact:
  82. 82. •  Increasing purchasing power of Chinese residents•  Higher English level•  Development of Internet•  Oversea experience•  More knowledgeable in Swiss made watches industry•  Strong recognition of luxury houses (Trend setters)•  Customer loyalty of luxury houses CHINA COULD BECOME THE BIGGEST LUXURY HOUSES WATCHES MARKET  contact:
  83. 83. WANG Shijian (Caroline) & CHEN Yingyi (Erona)End  contact: