The downfall and placement of the group Peace Mark under the protection of an official liquidator will shake up the watch industry on an international scale. In only a few years, Peace Mark had become the undisputed leader in the Far Orient.
Directly employing 5,000 people, Peace Mark’s activities included the production of quartz and mechanical watches (with factories in Hong Kong, Shenzen, Guangzhou, Shanghai and Switzerland), the marketing of brands (notably Milus, a few mid-range French brands and a number of Chinese brands including the significant Sea Gull) and distribution in China and South East Asia. In its role as distributor, Peace Mark holds a key position, which was recently reinforced by the purchase (50.6 per cent) of the Sincere network based in Singapore.
This latest acquisition, with close to 150 stores and a turnover of 350 million Swiss Frances (distributing Chopard, Franck Muller, A. Lange & Söhne, F- P. Journe and Zenith, among others) added to a considerable sales force reaching all ranges of watches from the luxury market, with its multiple joint ventures, to nearly 40 monobrand boutiques (11 of which are with Rolex and others with Omega, Cartier, Vacheron Constantin, Blancpain and exclusive rights with the brands Boucheron and De Beers) and the Tourneau network in China. Not to mention the mid-range with the network of boutiques under the name of TimeZone.
Furthermore, 12 months ago, Peace Mark acquired the Swiss holding company SFT, which is positioned as one of the strongest alternatives to ETA in the field of movements, with 90 million quartz movements produced per year (10 per cent of the world market). The companies in the SFT Holding include IMM Ineltec, Indtec (also known as Soprod, Sion), and also Soprod Les Reussilles which takes care of the conception, development and assembly of modules and mechanical movements which are compatible with ETA – Alternance 10 and Alternance 20.
The shake up
The first direct result of the downfall of Peace Mark is that STM Holding has just been sold to the Festina group which snapped up this attractive operation for the nice sum of around 80 million Swiss Francs. Thanks to this acquisition, Miguel Rodriguez, Festina’s President, (who owns the brands Festina, Candino, Lotus, Jaguar, Calypso and, at the high-end, Perrelet et L. Leroy) is gradually becoming an important player in the Swiss and worldwide watch industries and therefore surely irritating the Swatch Group.
The second direct result is the forthcoming sale of the brand Milus which is expected in the next few days. Milus, which is run by Jan Edöcs, recently took on a completely new lease of life with a turnover that was rumoured to have doubled from the first term 2008 over that of 2007.
The third result is the uncertainty and the slump which is setting in throughout the high-end distribution networks of China and South East Asia. This is reaching all groups whether they are Rolex, the Swatch Group, Richemont, LVMH or the high-end independents.
Now that Peace Mark is under the protection of an official liquidator, the cash flow of the distribution network, which should be continuing its activities as normal, has been frozen by the banks. Peace Mark owes around HK$ 1.22 billion (180 million Swiss Frances). What will happen with such a sum? Will it have repercussions for Swiss brands? And how soon?
All these questions are on hold until the arrival of new investors. There has been talk of the all-powerful Carlyle Group.
Whatever happens in the next few days or weeks, the economic tremors of this insolvency are certainly going to be felt even more than the first signs of a slowdown, as in the case of the USA.
Europa Star will certainly return to this subject.
Editor in Chief