China has surpassed the United States to become the biggest market for the Austrian crystal producer Swarovski, CEO Robert Buchbauer told Chinese fashion media LADYMAX in an interview. Buchbauer also said that sales in China for the company’s goods reached RMB 1.7 billion ($247 million) in 2016, a 13 percent increase from the year before.
The brand has long placed great emphasis on Chinese consumers, according to Buchbauer, and has strategically grown and nurtured the market by focusing on three aspects: products, market distribution, and online sales.
In recent years, China has become a key playground for the brand to gauge consumer sentiment towards their new offerings. When Swarovski decided to launch a fine jewelry line in 2015, it chose China and the United States as its testing grounds. The CEO also mentioned that there is a Chinese team devoted to understanding the local culture and clients’ preferences for the products and designs.
Swarovski has made efforts to exploit business opportunities both online and offline in China, which has greatly contributed to its growth there. Apart from opening stores in major cities like Beijing and Shanghai, the brand is active in expanding to second- and third-tier cities like Ningbo and Suzhou by building networks of local agents. According to Chinese domestic media, Swarovski opened its first flagship store in 2010 at Peace Hotel, the iconic building on the Bund in Shanghai. However, the family-run brand, which was founded in Austria in 1895, made its first entry into Chinese markets much earlier, back in the 1970s.
Among the first wave of Western luxury brands taking advantage of China’s vibrant e-commerce market, Swarovski opened a flagship store on Alibaba’s Tmall in 2015. It is currently setting up a presence on JD.com, another key player in the market but has been met with some setbacks, like the sale of counterfeit merchandise.
In January this year, Alibaba sued two Tmall merchants for allegedly circulating fake Swarovski watches on the platform and claimed that it caused a loss of RMB 1.4 million. Counterfeit sales pose a potential loss to the reputation of the brand, making it imperative for Swarovski to cooperate with Alibaba to combat it. But, overall, Buchbauer sees the issue from a surprising perspective.
“Many brands in Europe think that fake products in China have caused a billion-dollar loss to their businesses,” Buchbauer said. “But I don’t think so. Those customers who purchase knock-off goods actually do not intend to buy the real ones, that’s why I will not call it a ‘real’ loss.”
Swarovski’s China expansion isn’t without its challenges. As Chinese luxury consumers have become more sophisticated and millennials are playing a much bigger role in the market, the brand has garnered a crop of rivals such as the Danish jeweler Pandora, which is winning the hearts of young Chinese consumers with its signature customizable charm bracelet.
Identifying the need to appeal to younger audiences, Swarovski has appointed the supermodel Karlie Kloss to be its ambassador with the hope of leveraging her popularity among millennials.
And of course, social media is on Buchbauer’s mind. “WeChat is everywhere in China,” he said. “We have to embrace it and make full use of it.”