At a time when watchmakers look in the mirror every morning and think “China, China, China” as they shave, there is one brand for which China is the mirror. For more than fifty years (since 1959), this brand has been solidly anchored in this vast nation. It has traversed the trials and tribulations of the country, from the Cultural Revolution to the current opening, from the most intransigent Maoism to today’s most original single-party capitalism. It is thus with a very special awareness—and a particular distance—that Daniel Schluep, representing the third generation of the family owners of Titoni, looks at the current obsession for China, a country that he knows extremely well and in which he has travelled extensively for some thirty years.

Talking about his long time business partner based in Hong Kong—a family enterprise also managed by its third generation—Schluep says that they “have known each other forever.” Together, each with a 50 per cent share, they own an import company in Shenzhen, four different branches (Shanghai, Beijing, Guangzhou and Changchun), eleven large brand boutiques (of which four are owned directly), and 700 points of sale in China, of which 450 are Titoni ‘shop-in-shops’. All this is used to distribute approximately 160,000 watches per year, but as Schluep adds, “an additional 100,000 watches would not pose a problem in 2011”.

“It is good for Titoni”
Contrary to what one might think, Daniel Schluep looks favourably on the current rush of new competitors into the Chinese market. He does not fear the mass arrival of brands wanting to take part in this immense playing field. Quite the opposite. He thinks that “it is good for Titoni”. He goes on to explain that “hardly seven years ago, there was simply no ‘luxury’ structure in China. The opening of this market has transformed the traditional practices and now it is possible to work in a much more professional, planned and efficient manner than before. During these last seven years of major transformations, we have also strengthened our image and our branding process. With the arrival of the high luxury brands, of haute horlogerie, selling very expensive watches, the entire market has seen its watch level gradually rise. This period has also seen an increase in understanding and knowledge of timekeeping. All of this clearly benefits us. Just think about it for a moment. Ten years ago, it was nearly impossible to sell a COSC-certified chronometer in China. No one was interested in them. Today, more than ten per cent of our watches are COSC-certified and, believe me, the Chinese consumer places much importance on this fact. When he goes home, he will patiently check the precision of his watch. He will participate in all the online chat rooms and if he is not happy, he will not hesitate to come back and let us know.”

Avoiding trompe-l’oeil
Yet, while he views the current excitement and activities with satisfaction, Daniel Schluep also knows how to differentiate the impacts of marketing from the realities in the field. “All the brands sell watches in all the segments in China. But, beyond the marketing effects, there are many brands on the other side of the bamboo curtain that are merely raising their stocks. It is for this reason that we have redoubled our vigilance and, in a very precise and detailed manner, we are closely controlling our sell-out, store by store, display by display, week after week. We know exactly what we have sold and where we sold it. The eighty people who work for us are constantly in the field. I can assure you that our organization has an iron will…” He opens a large file folder in which all the sales points in China are recorded, filed, and photographed with their sales figures, their decorations and their quality of service.
In looking through the file folder, it is easy to understand the extent of the network that Titoni has patiently created throughout China, where no secondary city has been ignored. It even reaches to the outer markets of the empire, including Tibet and Mongolia, not to mention the vast Chinese diaspora of Singapore, Malaysia, Taiwan and Vietnam.

A very classic market
From a stylistic point of view, has the opening of the Chinese watch Eldorado changed things, we ask. “Titoni is and will remain a classic brand, with nine clearly defined product families, of which eight lines are automatic, and one is a uniquely feminine quartz line. In the near future, we are undoubtedly going to reduce our collection to seven well-targeted lines that will nonetheless maintain our classic orientation. You know, we cannot trust all the marketing hype. I believe that the current strength of the demand for luxury comes essentially from the trade itself, even if there will always be a Chinese billionaire to purchase extravagant watches. The commercial base of the Chinese market, however, remains fundamentally classic, even very classic. The Chinese consumer wants a serious Swiss watch, one that is durable and precise. His three main criteria are: quality, quality, and quality. And, he also wants totally irreproachable after-sales service. The brand name is secondary. This, in a nutshell, is what guides us.”
Apparently, Daniel Schluep is not worried about the increased competition, at least not in the medium term. “China is so vast that, in the medium term, there is room for everyone. In the long term, it is more difficult to say, but based on what is happening now, I believe that the great winner will be the Swatch Group. If ever we should loose ground, part of our market share will be taken by the Swatch Group since it is the only player to also propose lines and brands in the segments and with the qualities that are comparable to ours, with prices ranging from CHF 600 to CHF 1,500 and an average price of around CHF 1,000. Our most expensive timepiece is priced at CHF 12,000 for an automatic watch in a gold case.”

Titoni, a case apart
Daniel Schluep continues, “You know, Titoni is considered to be a case apart. We are very particular and we follow our own path, with discretion and consistency. We are totally independent, in perfectly good health, and we have very close relationships with our distributors. In a few years, the fourth generation of the Schluep family will be in the starting gate. I am thus very confident about our future, while still remaining aware of the risks. The only limit to our development is in our dependence on movements. Ninety per cent of our pieces are equipped with calibres made by ETA, with whom we have an excellent relationship. For our products, there is really no viable alternative in Switzerland. We are therefore obliged, like many others, to actively think about developing our own movement. Even though this would require a great deal of time and effort, we must think about it. To paraphrase Nicolas Hayek who once said, ‘money is to me like painting is to a painter,’ I would say that ‘movements are to Titoni like painting is to a painter. Without movements, there are no watches.’”

Source: Europa Star February - March 2011 Magazine Issue