Europa Star



SWATCH versus ROLEX

June 2006


Edito


For quite some time, the Swatch Group and Rolex have exchanged pleasantries. We are not yet to the point of name-calling, but a certain tension seems to be building up at our two watch giants, which have, up to now, been relatively courteous to each other.
The flames of hostility began to spark during an interview that Nick Hayek Jr. gave to the excellent newspaper, Frankfurter Allgemeine Zeitung. “The growth of Rolex seems to be slowing down a little,” he declared, adding quickly, “Omega, on the other hand, is doing quite well.” And, laying his cards on the table, he went on to say, “Our ambition is clear. We want to equal, and then to surpass Rolex in three to four years.” This goal means that the sales of Omega alone would have to move above the bar of 2 billion Swiss francs, which, according to Nick Hayek, is the presumed turnover of Rolex. (According to other sources, Rolex's total sales vary between 2.2 and 2.5 billion Swiss francs, which includes its other brand Tudor.)
Rolex wasted no time in announcing that it had just acquired 46,000 square metres of land in Bienne, where the company has its movement manufacturing centres, integrated in 2004, and where it will create 1000 new jobs. Furthermore, Rolex has just terminated three gigantic building sites in Geneva – some say that the work cost one
billion Swiss francs – the construction of which is a veritable Fort Knox for watch assembly, one immense and
luxurious hi-tech black mass whose shadow falls at the foot of its
neighbour, the elegant Patek Philippe manufacture, as well as the integral renovation and enlargement of its headquarters.
Is Rolex’s announcement a sacrilege in Bienne, a city where Nicolas Hayek is king, and intends to remain so? Through the media, Hayek declared that “there is a lot of media noise” surrounding this expansion project, that he welcomes, moreover, as “positive”. He immediately announced that he also has plans for development in Bienne. “Omega is exploding in all directions. For months, the Swatch Group has been looking to acquire between 50,000 and 70,000 square metres.”
A few weeks earlier, during the middle of the SIHH festivities, it was also interesting to watch Nicolas Hayek and his son Nick flaunt their presence in the centre of Geneva at their City of Time inauguration, a cultural exhibition and group ‘ambassador’ located in the heart of ‘enemy’ territory. Greeted by “Welcome to Rolex City,” Nick Hayek did not appreciate this biting remark from a local journalist, and stated, “We are a Swiss company in a Swiss city.”
So, this is where the situation stands for the moment. But beyond these few public tensions, the stakes are colossal. For the brands, it is all about being able to strongly position themselves in the emerging markets – or those that have already emerged such as China, mainly, India and even Russia. “In China, Omega controls 20 percent of the market,” explains Nick Hayek, “while Rolex is satisfied with 4 percent.” And, he wants to increase sales even more in the Chinese market during the Olympic Games in Beijing. An anecdote sums up the battle. Omega is the only brand to be visible between the Forbidden City and the Mao Mausoleum on the famous kilometre long Tiananmen Square, the heart of Chinese power. How did Omega succeed in doing this? It offered China an immense countdown clock, bearing the Omega brand name and located in front of the National museum, that counts down the days until the inauguration of the Olympic Games in the Chinese capital. Each day thousands of Chinese people line up to be photographed in front of this new addition to their city.
While waiting to count down the manoeuvres and counter manoeuvres between our two watch giants, there are however those who are rubbing their hands together with glee, and why shouldn’t they? They manage the employment office in the city of Bienne.


Source: Europa Star June-July 2006 Magazine Issue