China Watch

The watch­maker is a late­comer to the mar­ket but its new ceo be­lieves a sporty, Mil­len­nial-tar­geted look will help it suc­ceed.

WWD Digital Daily - - Front Page - BY TIF­FANY AP

Bre­itling’s Ge­orges Kern on

jump-start­ing China.

BEIJING — #Squad­goals. It may have been an un­der­state­ment for the group that Bre­itling put to­gether here one evening in late Novem­ber, with ac­tors Brad Pitt, Daniel Wu, pho­tog­ra­pher Peter Lind­bergh, and surf­ing cham­pion Sally Fitzgib­bons rub­bing shoul­ders at the Phoenix Cen­ter.

The Grenchen, Switzer­land-based watch house was pulling out the stops for the Chi­nese cap­i­tal, although up un­til quite re­cently, such a night would have been im­plau­si­ble. China had been the ele­phant in the room, or rather, the ele­phant not in the room for the watch brand. De­spite its long his­tory dat­ing back to 1884 and how its lux­ury ri­vals had quickly clam­ored to reach the lu­cra­tive Chi­nese con­sumer, Bre­itling had not made many in­roads into the coun­try.

En­ter Ge­orges Kern, who ar­rived last year as its chief ex­ec­u­tive of­fi­cer. A lux­ury watch in­dus­try star, Kern had just been pro­moted at Com­pag­nie Fi­nanciere Richemont to the group's head of watch­mak­ing af­ter a 15-year ca­reer lead­ing IWC Schaffhausen through a turn­around when he jumped to join the CVC Cap­i­tal-ma­jor­ity- owned Bre­itling.

With one suc­cess­ful watch house trans­for­ma­tion al­ready un­der his belt, Kern has set about to do the same for Bre­itling. Among the changes: he's beefed up the star power of its celebrity brand am­bas­sadors, a re­flec­tion of his be­lief that emo­tion rather than tech­nique is the key to cre­at­ing happy, loyal clients. He's also placed China at the core of the com­pany's strat­egy, set­ting up an om­nichan­nel dis­tri­bu­tion net­work, and launched new prod­ucts bet­ter fit for smaller Asian wrists, and the more youth­ful cus­tomer. And in a post #Me­Too era, things like the heavy-handed male gaze mar­ket­ing that Bre­itling had long re­lied on also had to go.

The day af­ter host­ing the gala, Kern sat down with WWD to re­veal how he plans to catch up in a crowded Chi­nese mar­ket­place and why he has per­son­ally staked on build­ing the in­de­pen­dent watch­maker into a more global player.

WWD: Bre­itling has put China at the cen­ter of its strat­egy since you came on board as ceo. How does the gala night with celebrity am­bas­sadors like Brad Pitt work into your over­ar­ch­ing strat­egy?

Ge­orges Kern: For many years, the brand has been fo­cus­ing on West­ern coun­tries where we are in the top three and top four — in the U.S., U.K. and Ja­pan. For some rea­son, and I re­ally don't know why, we've never en­tered the Chi­nese mar­ket. But greater China in­clud­ing Hong Kong rep­re­sents 50 per­cent of the [watch] lux­ury in­dus­try, it's as simple as that. If we are suc­cess­ful in China and in Hong Kong as we are in other coun­tries, this brand will be one of the big­gest brands in the world.

Se­condly, we are launch­ing here a line called the Pre­mier, which is an el­e­gant sports watch, in­spired by one of our iconic lines of the 1940s. It's a new seg­ment, less bulky than what we usu­ally do at Bre­itling. With that, we're reach­ing out to a new cus­tomer base in the West­ern world, but also in Asia, it's a smaller prod­uct.

WWD: You’ve re­vamped cer­tain key as­pects of the brand since you took the helm. Given that the aware­ness is lower for Bre­itling in China, do you have a dif­fer­ent op­por­tu­nity and per­haps eas­ier time to com­mu­ni­cate the new Bre­itling im­age here?

G.K.: First of all, I've been trav­el­ing to China for the last 25 years. To­day, it's eas­ier to en­ter the mar­ket and much quicker. You have dig­i­tal com­mu­ni­ca­tion, and the mar­ket is to­tally trans­par­ent. Chi­nese cus­tomers are trav­el­ing and they know ex­actly how strong we are in the West­ern world.

There are two new sen­ti­ments in

China. The first phe­nom­e­non is that the Mil­len­ni­als might want to con­sider other brands than the brands of their par­ents, the clas­sic brands that we all know in China. I think we can be the al­ter­na­tive to the new cus­tomer base who again want some­thing newer, fresher, more dy­namic.

The sec­ond thing is, the Chi­nese mar­ket and taste was very clas­sic, very con­ser­va­tive, and it has changed. We see this al­ready in our sales fig­ures of what peo­ple buy. Young peo­ple buy more sportier watches. And in a way, that taste — cer­tainly due to dig­i­tal — has aligned a lit­tle bit to the West­ern world. That's why I think our brand with the spe­cific de­sign and power we have is per­fectly adapt­able to the Chi­nese cus­tomer. WWD: What about specif­i­cally with women? G.K.: We want to be as strong with women as we are with men. The thing is, Bre­itling never did el­e­gant women's watches. We do sports women's watches and we just launched a prod­uct that is 38 mm in di­am­e­ter. It's big, a Nav­itimer 1 Au­to­matic, and we will launch more women's sports watches. That mar­ket is much less crowded than for el­e­gant women's watches, the small watches with di­a­monds, blah, blah, blah, which ev­ery­body is do­ing. We don't want to do that.

I think the way we fea­ture in our ad­ver­tis­ing — be it Sally Fitzgib­bons, a surfer, or ac­tors like Char­l­ize Theron — these are tough women, suc­cess­ful women, world cham­pi­ons and they are fea­tured in the same way as men. I think this re­flects much more the im­age of mod­ern women, in­clud­ing in China, than the stereo­types that we had in our ad­ver­tis­ing with the blond girls wait­ing for the pi­lots. That is very much 1980s, and doesn't re­flect a mod­ern woman of to­day.

WWD: What do you have in mind for re­tail and whole­sale dis­tri­bu­tion in China, and for e-com­merce?

G.K.: Our dis­tri­bu­tion is too low in China. We now have 25 doors and we need to in­crease to 80 or 85 doors. We need to open many more bou­tiques — 30 to 40 bou­tiques in China — which we will do in the next few years, but it takes time. You need to find the lo­ca­tions, you need to find the malls.

I think the land­lords ap­pre­ci­ate the style of our bou­tiques, which are very dif­fer­ent. It's an in­dus­trial loft de­sign which re­flects what I would call a mod­ern and retro style. Not vin­tage but mod­ern retro. We, as a brand, want to be in­clu­sive. We don't want to be ex­clu­sive in a neg­a­tive way. We want peo­ple to feel com­fort­able to stay in the bou­tique — to ap­pre­ci­ate the mo­tor­bikes, the pool tables. It's a younger, fresher way of ap­pre­ci­at­ing prod­ucts. I think that's some­thing that can work with the Mil­len­ni­als in China.

We just started to be on­line with

Tmall, we've had a WeChat store since a few weeks and they've been fea­tur­ing us tremen­dously, and we're launch­ing Bre­itling China's own web site.

WWD: Do you think the Chi­nese cus­tomer is more re­cep­tive to dig­i­tal than the West­ern cus­tomer?

G.K.: You have very savvy dig­i­tal coun­tries like the U.S. but China is su­per dig­i­tal and, any­way, you need e-com­merce be­cause the coun­try is too big; you can't be ev­ery­where.

It's cer­tainly one of the most dig­i­tal coun­tries, for sure, and young ►

peo­ple are like this so we have to be on these plat­forms and to of­fer an om­nichan­nel con­cept — be it off­line and on­line to the cus­tomer, be it plat­forms like Tmall and Alibaba or our own on­line. We com­mu­ni­cate a lot dig­i­tally.

WWD: Do you have plans to ap­point a main­land China am­bas­sador?

G.K.: For the mo­ment, I think we are very happy with what we have. I think it's quite amaz­ing. I think Daniel is a phe­nom­e­nal guy — very suc­cess­ful, film­ing a lot here in China and Brad Pitt is the most fa­mous face in the world. There is no more fa­mous, more rec­og­niz­able per­son than Brad Pitt and there are stud­ies on that. I think the cov­er­age we have on that is great. I'd rather look for a Chi­nese woman to add to our squad.

WWD: There was some chat­ter about Brad Pitt as he filmed a movie many years ago about Ti­bet, which is a highly sen­si­tive topic here. Were there any is­sues with him vis­it­ing China?

G.K.: No, not at all. He was here in China three years ago, I think, when we was pro­mot­ing a movie. I think what is more in­ter­est­ing is it was the first time he was trav­el­ing for a brand. He did en­dorse­ments pre­vi­ously but he never at­tended an event for a brand so it was a re­ally an honor for us to have Brad in China. I told him right from the be­gin­ning, “We need you to help us in China,” and he loves China. He loves moder­nity, he likes ar­chi­tec­ture so he loved the spot [of the gala din­ner], Phoenix Cen­ter, and en­joyed very much to be here.

WWD: How would you de­scribe the com­pet­i­tive land­scape?

G.K.: This is life. We are in a com­pet­i­tive world. If we fear com­pe­ti­tion, we have to stay at home. I think we have all the as­sets to be suc­cess­ful. We started a few months ago and we are grow­ing 60 to 70 per­cent in China from a very low level. If we grow at 60 to 70 per­cent for the next few years, we will be where we want to be.

We're do­ing ex­tremely well in [South] Korea and Ja­pan. We have all the as­sets, the right prod­ucts now, we have the right cam­paign, the right am­bas­sadors, the right brand strat­egy and bou­tiques to be suc­cess­ful. We've been im­ple­ment­ing since a cou­ple of months, and the re­sults we've seen in­di­cate that we are most likely on the right track.

WWD: How do you see the role of Hong Kong and Ma­cau then?

G.K.: These are dif­fer­ent mar­kets. Hong Kong is and has been the num­ber-one mar­ket for years, big­ger than China. It's a huge duty-free plat­form. We're look­ing to open bou­tiques in Hong Kong and Ma­cau, for sure, and we have ac­tiv­i­ties go­ing on. We have to work on all these three re­gions but we are one price. You al­ways have to ad­just prices on ex­change rate. The mar­ket is trans­par­ent. The old days are over where you have dif­fer­ent price in­dexes, for­get it. The only prob­lem we have is ex­change rates, such as the pound, be­cause of Brexit, is go­ing down. We want world pric­ing, ex­clud­ing taxes.

WWD: Is it cor­rect that you took a 5 per­cent stake in the com­pany?

G.K.: This was the rea­son why I joined the com­pany as many did, so we could all in­vest in the com­pany — which is a prob­lem if you fail, but is very re­ward­ing if you are suc­cess­ful. I al­ways wanted to be a lit­tle bit more en­tre­pre­neur­ial and it's a ques­tion of op­por­tu­nity and sud­denly the op­por­tu­nity oc­curred. Es­pe­cially know­ing Bre­itling, it cer­tainly has one of the best and in­ter­est­ing his­to­ries in the in­dus­try. We looked at it and said the po­ten­tial is huge, we have to do it. It wasn't only me but many oth­ers joined.

WWD: How do you ex­pect the global busi­ness to fare this year?

G.K.: We'll grow by dou­ble dig­its on a world­wide level.

The U.S. is a huge mar­ket. We're grow­ing in the U.S. even at a very high level, thank God. It re­ally is the num­ber-one mar­ket. We have 80 to 90 per­cent brand aware­ness there, but we are very suc­cess­ful with the big­ger, bulkier watches. But now also with the Pre­mier, the Su­pe­r­o­cean, we can gain a new cus­tomer base. We want to keep the cus­tomer base we have and bring to­gether these two dif­fer­ent cus­tomers, the re­cent past Bre­itling lovers of the past 20 years and the prod­ucts of the Forties to the Seven­ties, these col­lec­tors are very dif­fer­ent. We want to bring them un­der one hat. Ja­pan and Korea are also huge for us.

The beauty with Bre­itling is that we are an in­de­pen­dent brand so we're much quicker than in a big­ger en­vi­ron­ment, ex­tremely flex­i­ble, you can make de­ci­sions on the spot. What we've achieved in a year is sur­pris­ing for out­siders. Bre­itling has al­ways been a suc­cess­ful, very prof­itable com­pany. We have that new feel­ing of a dy­namic start-up com­pany try­ing to dis­rupt the mar­ket a lit­tle bit. ■

Ge­orges Kern

A watch from Bre­itling’s new Pre­mier se­ries, a less bulky model aimed at smaller Asian wrists and younger cus­tomers.

The Nov. 20 gala din­ner Bre­itling hosted in Beijing.From left to right: Ge­orges Kern, Peter Lind­bergh, Brad Pittand Daniel Wu.

Bre­itling’s Tmall store as viewed on an iPhone, fea­tur­ing ads with ac­tors DanielWu, Char­l­ize Theron and Brad Pitt.

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