Companies
Hublot eyes big gains from luxury boom, to double stores in Asia
By Tom Mulier (China Daily)
Updated: 2010-09-19 09:59
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GENEVA - Hublot, the Swiss watch brand that timed the World Cup, plans to more than double store numbers in Asia, driven by Chief Executive Officer Jean-Claude Biver's conviction that China offers at least 30 years of growth.
The watchmaker plans to have 15 stores in the region by next year, mostly in China, where its first outlet opened in Shanghai in early 2009, Biver said in an interview in Geneva on Wednesday.
Hublot, owned by LVMH Moet Hennessy Louis Vuitton SA, aims to accelerate in China after focusing on Europe, the United States and Japan in past years, the CEO said.
"It's such a huge country that I see no limit for luxury brands," said 62-year-old Biver. "I might die in 30 years, so I see no limit. If I was now 10 years old, and I had the expectation to live to 100, eventually I could see a limit in 60 years. But for my lifetime, no limit."
Mainland and Hong Kong have become the biggest market for watches, and the combined wealth of millionaires in Asia may rise 8.8 percent annually through 2018, according to Capgemini and Merrill Lynch & Co. Wealthy Chinese consumers own 4.4 luxury watches on average, according to the Hurun Wealth Report.
Hublot, known for its Big Bang watches that started using unconventional materials such as natural rubber on gold watches, gets less than 1 percent of sales from China and about 8 percent from Asia, where it has six stores, Biver said.
Some rivals are preparing for a possible slowdown in China. DeWitt Chief Executive Officer Nathalie Veysset said last week it's possible that the Chinese economy is a "bubble".
Slowing growth
Economists expect the country's economic growth to slow to 8.9 percent next year from 10 percent this year, according to Bloomberg data. Gross domestic product increased 10 percent or more each year from 2003 to 2007. Premier Wen Jiabao said on Tuesday the world's fastest-growing economy is in "good shape".
Opening stores in China is cheaper than adding them in prime locations such as Paris and New York, Biver said. Chinese rents of about $100,000 a year compare with more than $1 million on Paris's Place Vendome, he said. Some of the Chinese openings are franchised, Biver said.
"In Asia, the watch is a status symbol-communicating tool," Biver said. "Each time a Chinese or Asian makes money, he wants to show it. When you have a rich European or US citizen, he might not necessarily buy an expensive watch.
You see very wealthy people, more often in the US than in Europe, and they have rubbish on their wrist because they just don't care."
Record sales
Hublot had record sales in each of the 11 months through August, and 2010 will be "much better" than 2008, Biver said.
"Business is good for everyone in the luxury segment," he said. US retailers have rebuilt their depleted inventories and sales to end-consumers have improved, Biver said.
Hublot has been increasing prices to adjust for the strength of the Swiss franc, which reached parity against the dollar for the first time since December on Sept 14.
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The current rate is about 1.33 francs. The watchmaker plans an increase in those prices to reach an exchange rate of 1.35 francs per euro on Nov 1.
The weakness of the euro boosted sales in France as that country attracted more tourists and watches were 10 percent cheaper than other markets, Biver said.
LVMH, the world's biggest luxury-goods maker and owner of the Tag Heuer and Zenith watch brands, bought Hublot in 2008. The Paris-based company had 764 million euros of revenue from watches and jewelry last year.
Bloomberg News