"The Chinese are saving European watch sales!" an excellent interview

of Mr Juan-Carlos Torres CEO of VC published in this month's HH Magazine: http://journal.hautehorlogerie.org/points-de-vue/interview/les-chinois-sauvent-les-ventes-horlogeres-europeennes-2200/


Having come through the 2009 crisis without losing any of its staff, Vacheron Constantin pursues its strategy of measured growth, always with excellence and quality as its leitmotif. An interview with CEO Juan-Carlos Torres.
Ask Juan-Carlos Torres, CEO at Vacheron Constantin, about the current state of Swiss watchmaking and he's likely to describe it as "post-crisis," although the crisis in question did less damage than it might have done. What began as financial meltdown morphed into an economic recession whose social cost is being paid today, particularly in Europe where purchasing power has diminished. The same is true in the United States, where the economy is still labouring.

Does this make Asia the luxury industry's lifeline? Juan-Carlo Torres: The Far East, led by China, didn't suffer the setbacks whose effects are now being felt in the West. Not only is this one of the world's most populated regions, disposable income is growing fast too which bodes well for the luxury industry. Asia, and more specifically Hong Kong and China, will be the driving forces for luxury next year. Then there's tourism: the Chinese have overtaken the Japanese who were the main consumers of luxury goods in Europe and the US. If Europe is keeping its head above water right now, it's largely thanks to them.

What does China represent for Vacheron Constantin? 
Vacheron Constantin has been in China since the beginning of the nineteenth century, which says it all. We've put a lot of effort into this market these past ten years, as well as making significant investments. I think this explains why our brand has become a reference as much in China as Hong Kong. If production could follow, our sales in the region could increase by 50% overnight. Of course, this is impossible given that 93% of the added value of our timepieces derives from human input and just 7% from machines. We maintain a strategy of quality and excellence, as our determination to have 100% of our watches hallmarked Poinçon de Genève shows. In other words, we're not about to let demand take over. We also have a duty to satisfy our local clientele by respecting how our distribution networks are spread worldwide. That said, we now have 24 points of sale in China including 12 Vacheron Constantin stores, with excellent after-sales service provided by Swiss watchmakers, and have done for years. We want to be the best in the market and do everything we can to hold on to this position.

With China doing so well, are you shifting the emphasis to other markets? We're working on India and Brazil too. Brazil's economic and social structure is very similar to those we're familiar with in Europe. India, on the other hand, is a far more difficult market which approaches luxury in a different way. Indian customers are great admirers of Vacheron Constantin yet tend to make their purchases outside India. Our task is to build up a climate of trust, which is why we've also developed after-sales services in Bombay and Delhi. I have to say though that for the moment, the majority of the watches we service were purchased abroad. Speaking in general terms, we aim to control our growth with production that should exceed 19,000 units this year.

You've commented that watchmaking avoided the worse last year. What do you mean by that? Watchmaking came out relatively unscathed, even though 4,000 jobs were lost and suppliers are still finding it hard to get back into gear. Having said that, I'm puzzled by some of the euphoric statements we're hearing. Yes we are on the road to recovery, but a little humility wouldn't go amiss. At Vacheron Constantin, we've come through with all our staff onboard. The strength of a company such as ours is to have adapted to each era and to have faced adversity full on while preserving our values and the core of our watchmaking activity. We weathered the quartz crisis and we weren't lured by the promise of short-term profits when the sector was at its peak. Our aim is to grow stage by stage, hence projects such as the extensions to our sites in Vallée de Joux and Geneva.

What's in store for next year's Salon International de la Haute Horlogerie? We always try to come with a few surprises up our sleeve, but be patient and all will be revealed on the day! ■

Juan-Carlos Torres was talking to Christophe Roulet

© 2010 All rights reserved

interesting to see that the world never "turns" at the same time for
11/03/2010 - 16:11
all. In the 80s the Gulf countries had the buying power, in the 90s it was the Japanese, in the 2000 it was the Americans and now the Chinese (including HK). It is true that with the sheer number of the Chinese population they could probably absorbe the whole production of all the top haute horlogerie brands! I think that nevertheless VC is taking a good route and not doubling production overnight even if it means double sales and going for quality. The other point I think VC should be lauded for is not forgetting other markets even if these markets are not as strong as the Asian ones.
VC has been the top luxury watch brand in China for a few years now
11/03/2010 - 16:17
This, plus VC's presence in Greater China, bodes quite well for the brand As Mr. Torres says, it is important, but it's good to not put all of his eggs in one basket - even on this hot!  I think the strategy of quality and excellence over demand is right on. On the other hand, being the leader in such a hot market: VC will have to keep running to stay ahead of the pack as the competition is are all gunning for them. I read an article a few months ago in China talking about luxury items, and they said the trend is to give VC's at the highest end of gift giving (to gov't and corp. officials).  The reasoning was with so many fakes in China, nobody would think these gifts are real VCs.  BR, Dan