Fortune Character December 2014 by Fortune Character

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CONTENTS Elite Lifestyle

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FORTUNE CHARACTER

THE BEST WATCHES OF 2014 146 088

Steven Yao Ben Williamson Tina Zhou Stuart Wass Guang Ning

Tina Zhou Charlotte Rhodes Keith Strandberg Jack Carroll David Robinson Neil Beckett John Delgoulet David Hibble Bill Dunnett Ying Wei / Yi Zai / Ivy Liu / Cindy Sun / Maud Zhu Tonia Hou Paul Bao Evan Yang Peter Hu Guanying Wang Mengxia Ren Iris Guo Celine Xiong Teresa Li Monica Han / Isabella Wu Shikai Yao Victor Yan Anber Tong

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Editor's Letter

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FC REPORT

FC VIEW

THE PREDICTIONS FROM THE CEOS OF LUXURY BRANDS

FC VIEW

Luc Perramond, CEO, La Montre HermĂ¨s

usiness is now becoming more stable in China to a level which is closer to the normality since the government has taken some decisions against corruption.

The fast speed with which the Chinese consumer has become knowledgeable and sophisticated about luxury objects is phenomenal.They are very interested in the high craftsmanship and the heritage of the House, which offers quality and creativity in terms of design, functions and philosophy. We continue to offer timepieces of exceptionwhich highlight craftsmanship and creativity and which surprise our customers. We are still reinforcing internal distribution through HermĂ¨s watch dedicated stores all around China in order to guarantee the best environment of our products. On top of this, we also focus on self-purchase and the women's market. We need to consolidate our position as a legitimate watch manufacture with strong history and high craftsmanship, while highlighting our singularity as we growth and exclusivity. It was not possible to increase the business at the same rateas we have for the past years. Now we are achieving a progression to a normal rate. There is always a very high demand for quality objects in China which can last over generations. There is a huge market potential with the development of the upper middle class and the growing appetite for luxury.

FC VIEW

Philippe LĂŠopold-Metzger, CEO, Piaget

hina and mainland consumers

opportunities in the future for Piaget- a consistent creation of new wealth and the development of the upper middle class - a fast growing knowledge of products and brands through print and more and more through digital channels - a sophisticated network of luxury malls in first,second and third tier cities The Chinese understand and value real luxury. This is part of their cultural inheritance. The market has and will continue to change in the next few years. Consumers buy increasingly for themselves as opposed to gifting. The market used to be mostly men driven whereas now women account for a big share of luxury sales, hence the rapid development of branded jewelry in China. And clients are getting younger and younger.

FC VIEW

Jean-Christophe Babin, CEO, Bvlgari

eing a still new market, the game remains wide open to further leverage our great positioning with jewelry, we want to be the unrivaled leader in high jewelry in China. China is a market where brands are not as rooted as in other markets. We want to be the reference brand for high jewelry and jewelry. We are one of the best Swiss watchmakers with Italian design -- the Chinese buy products for the Italian design and we want the Chinese customers to know that we are born from Italian design. China has been challenging since a few months now. For sure, the Chinese context has been more favorable for jewelers rather than watches. The anti-corruption campaign has been more skewed towards watches, as they are more recognizable. If you are a politician and are caught by someone with a mobile and the watch will be recognized, and you might be in trouble. Jewelry is differnet -- you can have a Bvlgari necklace for three million Euro, with precious stones, but you can also have a similar style wtih non-precious stones. We are posting very good growth in China, we bounced back pretty quickly, and we are back to growth rates like a couple of years ago. Watches in our stores are selling again. We have been very aggressive this year with models perfect for the Chinese taste. The Lucia is the first

Swiss watch designed to be made in steel and gold, and then we make other variations in other metals. Two tone is important for the Chinese market. We have a competitive advantage because we have been pushing steel and gold, with three different designs (the Serpentine, the BB and the Lucia). Now, and for the months to come, we will surely post stronger growth in the market. In jewelry, Chinese customers are extremely knowledgeable, probably more than other countries. For them, it is an investment, but the purchase is born of emotion as well. For watches, it's a very complex market. China is very balanced -- the heart of the market is medium range, but the most famous manufacturers like VC, Breguet, Piaget and Bvlgari have China as their number one market. The Chinese are very attracted to watches and they spend more per capita than any other country. They often start with TAG Heuer and then move on to much more expensive watches. We have very good sales for our complicated watches. The Chinese immediately understand how extraordinary complicated watches. It's an exciting market to work in, it's a no bullshit market -- you have to deliver great products and there has to be value for money.

FC VIEW

Ricardo Guadalupe, president, Hublot

high quality watch. And therefore have a clear and strong preference for traditional and classic watches. The day (which will come very soon), they will buy their 3rd or 4th luxury watch, then their taste and preference will go for more innovation and for more different watches. So more uniqueness and exclusivity too. I believe it will be the biggest luxury market in the world. Every 5 years, 100 millions of Chinese acquire the same wealth as the 100 millions of Japanese. So one could nearly say that the Chinese market has no limits. The potential of Hublot is huge there as we have started to get active in China only 24 months ago. We will continue to reinforce our distribution network for the Chinese clientele, with an optimization in vibrant cities such as HK, Macau and others.

FC VIEW

Stephane Linder, president, TAG Heuer

espite the slow-down of the Chinese demand for luxury goods, we thing that the potential will be soon back to normal, especially in the below â&#x201A;Ź3000 category, which reflect the self-consumption of the Chinese customer, Indeed, the middle class will grow in the next years with the 2nd tier and 3rd tier city pushed by the determination of the Chinese government to develop and grow this demographics. TAG Heuer is a challenger in China therefore we must concentrate on taking market share from the competition. We have a huge opportunity, especially with the young generation which desire new brands, which will be different from their "parents" and traditional brands. We think TAG Heuer will match perfectly with this new generation of Chinese customer, who are in search of contemporary and avant-garde designs. In terms of sales, we plan a +20% growth in the next years (not stimulated by a growing demand but rather by entering and investing in this market and catching up).

FC VIEW

Aldo Magada, president, Zenith

he Chinese market and Chinese customers evolve very quickly in many different aspects. Incomes across China are rising and an ever growing

getting more mature and consumers are therefore looking for genuine values. China keeps being a key market and at Zenith, we, as a global luxury brand, will strengthen our presence and we are working in order to offer in China the same consumer experience as in Europe, taking into account the changes in Chinese travel and consumer habits. Chinese customers are keen for mechanical movement with classic design. As a result, as a manufacture brand, Zenith As said, the market is in perpetual evolution and the consumers are more and more mature being more sensitive to the product itself and not only to the brand. The tastes are also changing and more and more people are considering complications such as chronographs. The purchases also shift from gifting to majority self-usage, consumers are therefore more and more price concerned. This combination is favorable to Zenith. If we are able to keep bringing to the market the best timeless product with great value, thanks to its uniqueness of high frequency and its reliability, the El Primero will gain market shares on this market and the ratio of El Primero will be even stronger than ever in China.

FC VIEW

Alexander Schmiedt, managing director of watches, Montblanc

ow does the future for the luxury market in China look? We have a strong believe in the future of the china luxury market. Especially with our watches we have been developing very strongly.

potential. The watch buyers in china become more and more sophisticated in

For Montblanc watches, I am convinced we still have a strong development potential. I expect a stable but constant growth- probably at a lower overall rate than the last years as the market is more consolidated. And we see the first encouraging results that we our new products- especially the Meisterst端ck Heritage and the Boheme collection - we are on a good track to leverage this growth.

FC VIEW

Gucci Watches & Jewelry

believe in the great potential and expansion of high quality and luxury product in China.

The market is getting more and more mature. Consumers not only buy inland but in their travel abroad bringing home new experiences which reinforce the different Brand's value and reinforce the wish of be tied with luxury Brands. A very smart young population has also started to get strong interest in high quality products and this is the best guarantee of a long lasting future for this kind of business in China. watches and jewelry. We have over 100 shop in shop and we enjoy sales records very frequently. I believe that our potential is not yet reached and we work hardly to deliver best products with best quality.

FC VIEW

Jean-Marc Pontroue, CEO, Roger Dubuis

hina is a country that is one of the most fascinating in the world, and for the watch industry especially. Everyone is concerned about the market, but they are forgetting what happened in the last 20 years, and how fast it has grown. There has been such a huge growth and development. China made itself one of the leaders in the world. People who complain about the crisis don't look at the history. China is one of the most stable countries, they are the fastest growing, it's one of the most exciting markets in the world. They have problems, of course, but they have a vision and they know there will be problems, but it is one of the biggest engines of the world. For the watch industry, they are purchasing more outside of the country rather than inside. Most nationalities buy more inside the country, but in China, for the This may change, but all the problems that are happening are just small trouble and we will see great things happen in the future. I am very optimistic about the future in China. When i travel, I love to see the different cultures. We sell dreams and this is something that will never die. We can have problems but it will not limit the growth. We have such great reasons to be optimistic.

FC VIEW

Pascal Raffy, Owner, Bovet

ur timepieces are all about patrimony and passion for beautiful watchmaking art. It is mandatory, that our partners share these values. Nevertheless, we are more than happy and proud of our results in Mainland China. For almost a decade now, I have been pleased to observe Chinese collectorsâ&#x20AC;&#x2122; steadily growing interest in Bovet timepieces. Our partners in Macao and Taiwan report how much Chinese collectors appreciate discovering Bovet craftsmanship itself, they appreciate the ancestral decorative arts that we defend and cultivate. They also observe the consistency between 19th century Bovet pocket watches and the respect for tradition embodied in our contemporary timepieces. Quite obviously, the models we are from the progress in terms of watch co m p o n e n t s a f f o r d e d b y m o d e r n technologies. Nonetheless, Chinese collectors, like all others, recognize

Bovetâ&#x20AC;&#x2122;s commitment to defending one of the most precious assets of our civilization: respect for a watchmaking philosophy based on authentic cultural traditions. True luxury is above all a question of education.

with a permanent discovery of art in every country are my program for 2014 and beyond. I think it is a moral duty to better understand our collectors in order to beautifully express time, answering to their legitimate tastes.

We are pursuing our development according to our long-term strategy. The control we have over the quality and the quantity of the timepieces we manufacture will continue to let us master our development. Our vision, which is the most challenging, is the gift to be able to do all of our movements in-house and to succeed in that beautiful challenge, every day, and to create a perfect harmony so understanding between our engineers, watchmakers, craftsmen and our customers.

We grant the same care and the same attention to detail to each timepiece we

2014 is another year of journeys around the world to meet collectors of different traditions and cultures in order to share together the beauty and uniqueness of our timepieces for the most beautiful expression of time. Private diners and technical conferences

complexity and level of complication may be. The same applies to various areas where the House of Bovet is present. The Chinese market is, however, very dear to us because it is a part of our historical markets. Indeed, thanks to Edouard Bovet, the name of Bovet became part of everyday speech in China in the 19th century to indicate watches of high quality! The fame of our House thus built itself from its inception. China represents a very important market for culture and a watchmaking education there, so I am convinced that China still has an excellent growth potential.

FC VIEW

Giles Morgan, co-founder, Bremont

e are very positive about the long term future of the China consumer but the market is going through change both in terms of tastes and buying habits but also overt spending on luxury watches. For Bremont it is a long term play as we look to grow our exposure in China and educating them that watch making is not just about Swiss watches. Our exposure is growing every month in China but it still has a long way to go and we look to see a strong steady growth hence we have made a considerable investment in a boutique in Hong Kong and expect to be increasing our retail distribution in the next 12 months to mainland China.

FC VIEW

Edouard Meylan, CEO of H. Moser &Cie

here is still a lot of potential despite the recent slowdown overall, as Chinese customers are becoming more and more interested in exceptional small watch Manufactures. We hear from customers that this is for two reasons: their collections are growing and they are looking for something more distinct. It’s more about the product, and less about the brand. For an upcoming brand like H. Moser &Cie this means there is potential. The Chinese market is growing for H. Moser & Cie. Our watches are extremely elegant, very ingenious and offer the highest value for money.

The new Venturer small seconds in red gold with the argenté dial has quickly become a favourite. I hope our newest model, the Venturer Tourbillon Dual

FC VIEW

Wolfgang Sickenberg, CEO, Christophe Claret

e believe that the China market looks promising in the long term. There is currently a period of adjustment in the purchasing motivation and this impacts the business in China, and to some extend in some key placeswhere Chinese are a major clientele. Nevertheless, the size of the market, the economical development, thecustomerâ&#x20AC;&#x2122;s attraction to authentic western product, and in particular for Swiss watches, will remain in the future. It is our responsibility to continue to develop our brand awareness, communication, marketing and distributionnetwork to serve the demanding Chinese customers. The double digit growth that many brands have experienced for years is probably over for some time to come.This does not mean that there not the possibility to grow the business, especially with ultra niche brands likeChristophe Claret. We will implement micro-marketing events whereby we can meet small groups of customers or collectors who should still be ready to purchase, for themselves, high-end authentic products.

FC VIEW

Sascha Moeri, CEO, Carl F. Bucherer

ithout doubt, China is a very strong market regarding luxury goods like watches and jewelry. The Chinese customers love products that are carefully manufactured and are examples of sophisticated craftsmanship. Especially Swiss timepieces that are the achievement of advanced skills and with a long tradition of quality and innovation are highly appreciated in the market. As our products enjoy a great response among Chinese customers, we want to even more increase brand awareness and further expanding our customer base. Therefore Carl F. Bucherer plans to continue investing in this region by opening new point of sales. We are constantly striving to expand our position in the Asian market in general. For us, China is a very important market with a great potential. We are confident that we will continue to gain more market shares in this region, because Chinese customers not only love our products, but are also very interested in our history. Our watches don´t just show the time – they tell the unique and interesting story of visionary courage and entrepreneurial and jewelry store in 1888 in Lucerne, and laid the foundation for the creation of timepieces that reflect values like continuity, passion, independence and technological perfection. This long tradition of exquisite watchmaking fascinates customers in China and all over the world, so we are constantly working on new, stunning timepieces that are the achievement of our genuine craftsmanship. For instance, the Manero Tourbillion that we recently launched is the crowning glory of the Manero line. It embodies the discreet but powerful elegance of a Manero timepiece and brings it to perfection with the extremely delicate complication, the tourbillon. Furthermore, Carl F. Bucherer, as a watch manufacturer, is in a very good position in the Chinese market. By the development of our CFB A1000 caliber we are part of an elite and exclusive group of watch manufacturers who design, develop and produce their own movements in-house. This is a great advantage that is highly appreciated by our Chinese customers. So, I can say, there’s a lot going on for Carl F. Bucherer, and the future looks very bright.

FC VIEW

h e Chinese Market i s i m p o r t a n t as wealthy people are more and more, due to a booming economy, and they want to enjoy art, wine, and luxury goods from western countries.

Guillaume Tetu, cofounder, CEO, Hautlence

In the meantime, a lot of tourism is now organized for mainland Chinese who want to experiment a European trip, but I’m convinced that a good local service, with an authentic relationship on the market, to touch people who don’t travel yet for a tourism trip, they will be more sensitive to an experience provided by a small brand, that they can really touch and feel through events or private dinners.

We are just building a strong network now in Hong Kong, Macau, Taiwan, and we will explore soon the big cities to expand the visibility, but we are not in the hurry, as we that to establish long term relationship it takes time, we don’t want to push sell in without a real action plan to touch our base of customer there. The good thing is that we have our own group subsidiary based in Hong Kong, MELB Asia so we are close to the operations and customer. We will organize in December an event in Hong Kong with our new brand ambassador, Eric Cantona, Manchester United Legend, and co designing limited Edition MorphosInvictus Chronograph, and we celebrate our 10th anniversary with a world tour, it will be a good opportunity to introduce the brand for few medias and local partners.

FC VIEW

Thomas Morf, Partner, ABS Distributors

hina is a very complex market with a lot of hurdles to overcome. Even if we think we understand the market, fact is we don’t. The cultural differences are huge and doing successful business in China is tough. China is unpredictable and nobody really knows where the market is heading. Everybody was rushing into that market. All brands were like lemmings, everybody wanted to go to China. Did all brands really make money in that market? I doubt! As we now see, the market is cooling down substantially for many reasons. The government wants to cool down

the hunger for luxury products and the anti-corruption law shows its results already. “Guanxi” is key to being successful. I’m an optimistic person but the market is very volatile. It’s like dealing with a high risk stock paper. You can win big time or you can lose big time. The business in China all depends on what the government decides. It’s difficult to make predictions for the future, but my reliable sources believe

that the market will not grow in the same pace anymore. One thing is for sure, brands are not built in China, brands have a strong image built in Europe and in the USA. If you’re strong in the key Western markets you might have a chance in China too. The Chinese market is the world. Chinese travel across the world. It they see a brand in the hotspots in Europe or in the USA, they buy it and they bring the brand back to the mainland.

FC VIEW

Sylvain Dolla, president, Hamilton Watch

t Hamilton we see the number of a younger clientele increasing, who are looking for an authentic brand with a long history and contemporary models. In terms of Marketing we will continue to organize the Hamilton Behind The Camera China for the fourth consecutive year in 2015 in Shanghai, an event where we celebrate and honor off screen talent of the Chinese movie industry.

FC VIEW

Shinji Hattori, President & CEO, Seiko

lthough the luxury market in China has been affected by the Frugality Campaign recently, it still remains a huge market, and we see it as a market which will continue to grow in the future. The Swiss brands are dominant in the market today, but we are eager to expand our presence with Grand Seiko at the core. It will also contribute to upgrading the perception of the Seiko brand in total. Chinese consumers become more rational and mature and they are able to better judge what items are worth spending on. In the future, they will appreciate more what is genuinely valuable and their consumption will increase. Also, intermediate consumers will rapidly increase, and we expect an expansion of the market in the midpriced range. In this background, Seiko will offer reasonably priced products that offer the original and customer service, which have been fostered in our long history.

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