Truisms by Titoni

June 2003

“Only produce what is ordered, nothing is to be stocked.” “Never deliver on credit, one-third to be paid with the order, the rest upon delivery in cash or letter of credit.” “Never work for third parties.” “Work strictly for your one and only brand.” … When Daniel Schluep finished the list of Titoni's Ten Commandments, he added, “We are very conservative...”

As Managing Director and representative of the family owners of this authentically Swiss enterprise specializing in automatic watches since 1919, Daniel Schluep is both proud and modest. Proud of his brand's independence, its quality, production, respect for watchmaking values, and its extraordinary foothold in China, Schleup is also modest. He quickly learned, with his 100,000 annual watches and 50 associates, how to navigate between the enormous ships of the Swatch Group (also very powerful in China) and others in the nation's high seas of watch activity.

“A brand needs a soul, somebody behind it with a soul,” affirms David Schluep when asked about the advantages and disadvantages of being independent. “We are not replaceable managers, with our nose stuck in the books. For us, everything depends on long-term personal relationships and the re-ciprocal confidence we share with our clients, who are also, for the most part, independents themselves. Of course, the power of the large groups concerns us, but our waters run deep, our networks are solid. We inspire trust, or rather our products inspire trust.”

The product
For Titoni, everything begins with the product, in the most Swiss-like traditional manner. “Yes, we are true watchmakers, in the most Swiss and conservative sense of the term. For us, all starts with the product. We are absolutely immune to the current talk by marketing gurus around us regarding the notion of the brand. People buy, above all, a product, not the pseudo-dream of a brand. For this reason, 93% of our watches are automatics. Only the automatic movement possesses a soul. In any case, Switzerland cannot win the war of the quartz calibre. Look at these watches,” he says, spreading out a series of quartz timepieces before me. “I bought them at the Hong Kong airport for 1 Swiss franc apiece. Here in this country, we cannot even buy a cup of coffee for that price. Yet, all of these watches contain a movement, a case, a bracelet. They had to be assembled by someone, sold by a middleman, a salesman… it's crazy!”

As part of its deepening activity in the automatic watch sector, Titoni just inaugurated a new assembly unit in its headquarters in Granges, not far from Bienne. These new workshops are organized into individual workstations, as part of a new production strategy that calls for making smaller series of pieces that respond better to an ever-changing demand. Continuous improvement in quality, introduction of new designs, flexibility and reactivity are elements that should also permit the brand to move slowly upmarket. Titoni will make less watches but the average manufacturer's price will rise from 220 to 250 Swiss francs.

Strong foothold in China
“We are Number 5 in China, after Omega, Rado, Longines and Rolex,” proudly declares Daniel Schluep. The relationship with China does not stop there because, in addition to the 60% of sales to continental China, Hong Kong and Taiwan, we must add another 20% to 25% that go to Singapore, Malaysia and Thailand as well as the growing Chinese tourist market around the world. Schluep points out the example of a Chinese tourist store in Paris that sells Titoni watches to the tune of a half-million Swiss francs (manufacturer's price) a year.

Surprisingly, this prodigious Chinese adventure began purely by chance in Singapore in the 1950s. Titoni was very successful in the city-state and its success spilled over into the neighbouring countries. Many Chinese sailors stopped in Singapore and bought watches that they took back to China. At this epoch, there were very few Swiss brands present in China. But around 1960, the Chinese government placed a large order with the brand. Although there was no advertising, the growing number of watches being sold in China made Titoni known throughout the vast country. “We then told ourselves that it was better to be strong in one market rather than weak in ten markets. We strengthened our presence and grew under the communist regime (with major constraints such as limited numbers of models, 180% taxes, maximum manufacturer's price of 80 Swiss francs). The economic opening of China has upset the watch landscape in this gigantic market, but our longstanding presence has given us decisive advantages. Of our 360 sales points in the country, the best there are, half are new businesses. The others, the Heng Deli's, are state-run stores, today restored and renovated, but known traditionally for their substantial timekeeping offer in all the major cities.”

The Titoni style
Since the beginning of its presence in China, Titoni followed one and the same path – the automatic watch. From then on, its offer has been strongly determined by this quasi-rigid principle of making essentially traditional watches, mostly round and very classic in design. The nearly systematic use of ETA standard calibre movements, notably the 2834, “limits the possibilities of design,” admits Schluep. The brand recently launched a new collection, 'Wall Street', that uses the ETA 2000 calibre, allowing certain stylistic “adventures” but it “remains expensive”, he adds. The brand is now offering small ladies' watches in a quartz series, often decorated with diamonds or zircons, and always with a metal bracelet. (“It is mandatory in China,” explains Titoni's head of production.)

When one seems surprised at seeing only a few chronographs, the brand's management explains that “sporty style watches do not work at all well in China. It is certainly a question of culture and the evolution of the marketplace, but in the mind of a Chinese person, a 'real' watch must be simple and classic.”

Far, very far, from the current wave of the 'fashionization' of the watch industry, Titoni is following its own path, one that is original in its conservatism. In fact, there are very few Swiss companies that continue the tradition of solid, quality, and reliable watches in the mid-range market sector that have classic appeal.

Current Situation
Is this commercial monoculture a danger, especially today, for the brand? Schluep replies, “Today we face three separate problems that have a cumulative effect: SARS, the exchange rate and the increase in the price of movement blanks, the ébauches. SARS is causing general uncertainty and our agents in China are not allowed to travel. The exchange rate between the Swiss franc and other world currencies penalizes us directly. We also have other worries with the increase in price of the ébauches, which have gone up 50% since 1996-97. We want to continue to assemble the majority of our movements ourselves, uniquely for our own production, as we have done since 1919. So we are now awaiting the decision of COMCO regarding ETA's future policy.” [Editor's note: ETA announced that a few years from now, it would only deliver finished movements. This policy was contested and the matter is now before COMCO, the Swiss Federal Commission for Competition.]

The Managing Director adds, “Our products, our reputation and the fact that we are firmly implanted in China guarantees our perpetuity in that country.” This patient success is one that Titoni would like to see repeated in Russia. “We have time. We give ourselves 15 years to succeed in this country…” smiles Daniel Schluep, as he savours the advantages of being independent and the captain of his own ship.