Swiss Watchmaker Plans To Double Stores In China#
This week, the CEO of the LVMH-owned Swiss watchmaker Hublot told Bloomberg that his company plans to double its locations in China on the heels of massive growth it's seen since entering the market in 2009. Like many other high-end Swiss brands, Hublot has found the Chinese fixation on watches as a means of status communication, plus the increasing spending power of consumers, the perfect equation, and as such CEO Jean-Claude Biver thinks his company will see "at least 30 years of growth" in China.
From Bloomberg:
Hublot, owned by LVMH Moet Hennessy Louis Vuitton SA, aims to accelerate in China after focusing on Europe, the U.S. and Japan in past years, the CEO said.
“It’s such a huge country that I see no limit for luxury brands,” said 62-year-old Biver. “I might die in 30 years, so I see no limit. If I was now 10 years old, and I had the expectation to live to 100, eventually I could see a limit in 60 years. But for my lifetime, no limit.”
China and Hong Kong have become the biggest market for watches, and the combined wealth of millionaires in Asia may rise 8.8 percent annually through 2018, according to Capgemini and Merrill Lynch & Co. Wealthy Chinese consumers own 4.4 luxury watches on average, according to the Hurun Wealth Report.
Hublot, known for its Big Bang watches that started using unconventional materials such as natural rubber on gold watches, gets less than 1 percent of sales from China and about 8 percent from Asia, where it has six stores, Biver said.
While Biver seems extremely confident that watch demand in China will continue to grow seemingly unabated for decades, his confidence is likely a bit hasty. At the moment, potential luxury watch consumers in China are spoiled for choice, and in a crowded market -- even one that is growing quickly -- brands that are newer to the market, like Hublot, risk getting lost in the mix. Much like the wine market, where many uneducated Chinese consumers just buy brands they've heard of, can pronounce, or that are the most expensive rather than actually understanding the product or its history, many watch buyers (who often give these watches as "gifts") behave the same.
Luckily, Hublot has the backing of LVMH, a name that looms large in China. They're going to need LVMH's clout to break apart from the luxury watch pack.