Latecomer Breitling’s Bold and Speedy China Expansion

When Georges Kern assumed the role of chief executive officer at Breitling SA in mid-2017, tackling the booming Chinese market -- a significant region where the brand had surprisingly low exposure -- was a top priority. A little over a year later, Breitling’s aggressive Chinese expansion plan, which has featured everything from brand-ambassador deals with Brad Pitt and Daniel Wu to an online strategy geared for future Gen-Z buyers, has finally taken shape. Since November, the 135-year-old independent Swiss luxury watchmaker has unveiled a slew of online and offline initiatives to communicate Breitling’s century-old yet forward-looking brand image to the country’s affluent, young and digital-savvy consumers. Some highlights include the introduction of a new product line “Premier (璞雅)” -- a less-bulky sport watch series that theoretically fits Asians’ wrists better; a glamorous gala night in Beijing to introduce Breitling’s brand ambassador “Cinema Squad” to the market; a widespread ad push on major Chinese media channels such as Toutiao (今日头条), GQ, Hupu (虎扑), Pengpai (澎湃), and Huawei (华为), led by the French digital agency Fabernovel; as well as the launch of online stores on Alibaba’s Luxury Pavilion and Tencent’s WeChat, plus the upcoming official e-commerce site (to go live in the first quarter of 2019). An imperative and critical move Breitling’s entry into China is critical to making it a truly global luxury watch player with concrete strength. The brand has already prospered in three markets that are vital for any luxury watch brand, namely the United States, Germany, and Japan, which, according to Breitling, are currently its top source markets, respectively. And now comes the Greater China region, including the mainland and Hong Kong. Over the past several quarters, the region has constantly demonstrated an ever-increasing appetite for Swiss watches, as evidenced by monthly statistics released by the industry association Federation of the Swiss Watch Industry. In November 2018 alone (the latest available figures), the three regions that imported the largest value of Swiss watches were Hong Kong, the United States, and mainland China respectively. In particular, mainland China and the U.S. both reported double-digit import growth from the same period the previous year. In an era in which almost all Swiss luxury watchmakers set their sights on the Chinese market in the hope of recovery and/or growth, what’s special about Breitling is that the brand has a relatively low profile among consumers. That can be an advantage to a brand that hopes to craft zippy and consistent storytelling to set it apart from the previous old-fashioned and masculine image. And that gives Kern, a watch-industry veteran known for turning around IWC Schaffhausen, the best arena in which to execute his vision. A slow and steady process At first glance, Breitling’s recent moves in China seemed to be concentrated and dense, but a close look shows the brand approaches the market with thoughtful caution. The choice of brand ambassador, for example, is an exception among the majority of today’s luxury brands operating in China. The members of the “Cinema Squad” are actors Brad Pitt and Daniel Wu, Australian professional surfer Sally Fitzgibbons and German photographer Peter Lindbergh. Comparing these names to Lu Han (working with Audemars Piguet), Li Yifeng or Angelababy (working with Tag Heuer) and Papi Jiang (working with Jaeger LeCoultre), it is apparent that Breitling did not go for China’s fluffy online celebrities who are thirsty for luxury brand partnerships to enhance their career path. And lately, those online personas' ability to convey the right brand image and generate sales is in question. Breitling is also selective in working with key opinion leaders (KOLs). One high-profile KOL the brand has worked with is Mr. Kira (吉良先生) who understands high-end timepieces and is a strong content creator. Breitling has collaborated with him since the beginning of 2018 on a few major events from its Beijing WFC flagship boutique store opening in June 2018 to the “Premier” collection launch in November. In addition, Breitling has shown patience in nurturing the loyalty of future consumers -- Generation Z -- as it launched multiple digital touchpoints at once and by providing some handy digital services like an appointment-booking tool on its WeChat mini-program. “Reasons why we choose to go for eBusiness now is not to cash out for immediate commercial return, but prepare for [the] future as we believe e-C will be [the] central touchpoint among all the engagement with our customers,” said Antonio Carriero, Breitling's chief digital officer. Breitling’s omnichannel activations have apparently succeeded in improving brand awareness among Chinese consumers. According to the brand’s China team, Breitling generated 200 million impressions throughout its recent WeChat campaign. Its WeChat official account experienced a 100-percent growth in followers, and the average page view per WeChat article tripled during the campaign. The brand's Baidu index also jumped by 25 percent. An uncertain yet hopeful future To be sure, uncertainties stemming from the U.S.-China trade war, unfavorable foreign exchange movements and waning consumer sentiment are hovering around any brand that embarks on an aggressive expansion into China at the moment. Breitling’s rivals Richemont and Swatch, which see today’s Chinese nationals account for 52 percent and 42 percent of sales respectively, offer a glimpse at the current market. Investment bank Morgan Stanley, in its December 17 research note, downgraded ratings on both. The bank also expects to see a moderation in demand in the second half of 2018 from Greater China. But the right business strategy can weather any storm. “There are clear signs telling us the strategy works well, but we need some more time to really make it a global phenomenon,” Kern said in reference to his confidence in the brand’s future to Bloomberg last month. “It still needs to mature. And it will.”

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Latecomer Breitling’s Bold and Speedy China Expansion