China’s love affair with Swiss watches is showing no sign of abating and no one understands this more than Swatch CEO Nicolas Hayek. The Swiss watch giant has opened a boutique on Shanghai’s Bund aimed at compelling Chinese consumers to see that a watch is jewellery, not simply a timepiece. The new boutique, which is located as part of the soon to reopen Peace Hotel, marks a fresh push to extend its brand into what is expected to become the biggest luxury market in the world within a year.
Swatch group has spent $100m renovating the Peace Hotel, and four of its watch brands – Swatch, Omega, Breguet and Blancpain – opened own-brand boutiques last week in the iconic building, selling for anything from $60 to over $1m each. The project is also conceived to support the arts, with studio spaces available for artists.
Demand for Swiss timepieces is surging in China, shipments to China rose 79% year-on-year to $203m. In China, a quarter of all internet searches for watch brands last year were for Swatch Group’s Omega, according to research firm IC-Agency, publishers of the World Watch Report. This is underscored by analyst expectations that China will become the biggest luxury market by next year. According to KPMG, which released a survey of Chinese consumers last week, 72% say the downturn had “little or no impact” on their spending.
This is all very good news for Hayek. Swatch is marketing its timepieces as “jewels”, with the implication that a watch is not a sensible, practical and singular purchase. The importance of this strategy is supported the KPMG research, which found that self-reward and pampering are the now the biggest motivators for luxury purchase in China. The investment in the Peace Hotel, a piece of Shanghai’s history, and Swatch’s support of local artistry, indicates the next stage of a long-term strategy. The move demonstrates awareness of a need to now create a deeper emotional connection with Chinese consumers.
As more and more watch brands attempt to charm the Chinese market, brand awareness will not be enough, there needs to be brand intimacy and deeper connection. Hayek is often credited with reviving the fortunes of the Swiss watch industry, now it seems he finds himself at helm of an industry that is conquering the hearts and wallets of China’s wealthy.