China Watch Report


China: introducing the dominant players in watch distribution

RETAIL

October 2019


China: introducing the dominant players in watch distribution

Often originating from Hong Kong, the continent’s watchmaking hub, giant groups have formed to organise the emergence of multiple points of sale in the People’s Republic of China. At the same time, two ubiquitous platforms dominate watch e-commerce and daily life.

XINYU HENGDELI

When we talk about watchmaking in China and Hong Kong, it’s almost impossible not to mention the power of this leading actor, whose control extends to both sides of the border: the Xinyu group, which operates more than 400 points of sale in the People’s Republic of China, and the Hengdeli group, which operates 71 points of sale including the Elegant chain in Hong Kong and mono- and multi-brand stores in Hong Kong, Macau, Taiwan and Malaysia.

A turning point in the Hengdeli group’s history was its joint venture in 2003 with the Swatch Group, which is now a shareholder, as is LVMH. Its points of sale are active from entry-level to luxury watchmaking. Hengdeli, listed on the Hong Kong Stock Exchange, had sales of RMB 2.68 billion (USD 380 million) in 2018.

A turning point in the Hengdeli group’s history was its joint venture in 2003 with the Swatch Group, which is now a shareholder, as is LVMH.

In the People’s Republic of China, annual sales by the Xinyu group, which is not yet listed on the stock exchange, are estimated at around RMB 18 billion (USD 2.6 billion). An IPO could take place next year. On the digital front, in addition to its own platform launched in 2015, Xinyu joined forces last year with digital giant JD.com to create online stores for the brands it represents, as well as to collaborate extensively on after-sales service.

HARMONY

Controlled by the public aeronautical conglomerate AVIC, the Shenzhen-based Fiyta group owns the brand of the same name (see p. 54), but it is also an important distribution player in the country. Its subsidiary Harmony operates more than 250 points of sale in the People’s Republic, serving the entire country from Beijing to Kunming, and from Nanchang to Wuhan. One of its flagship stores, covering more than 3,000 square metres, is located in the city of Shenyang.

Harmony represents most of the Swiss watch brands in China, in a range that extends from Oris, Titoni and Raymond Weil to Omega, Rolex and Cartier. The Fiyta group also operates two other retail chains in the country, Brand Gallery and Cross Time, representing more accessible brands. It maintains cooperative relations with both Alibaba and JD. In 2018, the Fiyta group had operating income of RMB 3.4 billion (USD 480 million).

CHOW TAI FOOK

This historic Hong Kong group is active in many sectors: watchmaking and jewellery, real estate, hotels, supermarkets, energy, transport and telecommunications. It is controlled by the powerful Cheng family and their conglomerate New World Development. The founder of Chow Tai Fook, Chow Chi Yuen, started out by opening a jewellery store in Guangzhou in 1929, before relocating to Macau and then Hong Kong. His son-inlaw Cheng Yu-tung diversified the activities of the business empire, which today is run by his eldest son Henry Cheng, and which operates nearly 3,000 jewellery stores in China.

Listed on the Hong Kong Stock Exchange, Chow Tai Fook Jewellery Group posted annual sales of USD 8.5 billion for its last financial year, 5.5% or USD 425 million of which represented watch sales. Watch distribution, representing most of the leading brands in the Swiss industry, is covered by a dedicated unit, CTF Watch. The first watch retail outlets were opened in the 1960s in Hong Kong and Macau, which now have around thirty stores. In 2008, watch distribution began to expand into mainland China: to date, more than 100 watch stores and after-sales service centres have opened.

China: introducing the dominant players in watch distribution

EMPEROR

The Emperor group is one of Hong Kong’s historic watch retail chains. In 1942, its founder Yeung Shing opened his first shop. Listed on the stock exchange since 2008 and headed by the founder’s granddaughter Cindy Yeung, Emperor has expanded its activities from Hong Kong to Macau, mainland China, Singapore and Malaysia. Its 2018 sales amounted to USD 601 million, 80% of which come from the watch business.

Its network of boutiques (including standalone stores for its jewellery brand) extends to 94 points of sale. In total, the group has 15 watch outlets in Hong Kong, three in Macau, eight in mainland China and five in Singapore. Emperor operates boutiques or corners for Rolex, Tudor, Patek Philippe and Chopard.

Its 2018 sales amounted to USD 601 million, 80% of which come from the watch business.

ORIENTAL

Established in 1961 by Yeung Ming Biu, the Oriental Group is another historical player in Hong Kong’s watch and jewellery industry. A partner of most Swiss luxury brands, it operates 11 boutiques in Hong Kong and Macau, including two Rolex stores. In 2004, Emperor became active in mainland China and then in Taiwan. Today, it has a total of 61 points of sale.

A turning point in the group’s history came in 1973, when it acquired major distributor La Suisse Watch Company. Oriental was also the first watch retailer to be listed on the Hong Kong Stock Exchange, in 1993. Turnover for the last financial year was USD 310 million dollars (2.4 billion Hong Kong dollars).

PRINCE

Operating some twenty points of sale in Hong Kong, including boutiques for Cartier and Carl F. Bucherer, Prince is an important retailer in the area. Founded in 1984 and headed by Jimmy Tang, it focuses mainly on Hong Kong, unlike other groups that have invested in mainland China. Like most Hong Kong retailers, it has also opened online stores on Tmall and JD.

TMALL

Although watchmaking is only a small part of the giant Chinese B2C e-commerce platform Tmall, it is large enough to make it an increasingly important player in the watch business in China.

The figures speak for themselves: according to the Alibaba group, nearly 700 million consumers use its Tmall and Taobao sales platforms. Tens of thousands of dealers offer products from 180,000 brands – including around a thousand watch brands – across all categories. It’s something of a digital jungle, populated by both authorised and unauthorised suppliers. Purchases are facilitated via the group’s own payment platform, AliPay.

Tens of thousands of dealers offer products from 180,000 brands – including around a thousand watch brands – across all categories.

Among the most important watch brands that have signed official partnerships with Tmall are Longines, Breitling, Zenith and TAG Heuer. Their online shops are hosted in Tmall’s luxury space, Luxury Pavilion. A major development occurred last year with the global strategic alliance between Alibaba and Richemont, under which luxury products currently offered on the Net-APorter and Mr. Porter platforms will be available through dedicated mobile applications in China as well as through online boutiques on Tmall Luxury Pavilion.

JD

With more than 300 million users, JD is another major player in China’s e-commerce space. It is particularly renowned for its reliable and fast delivery service, thanks to some 600 warehouses located throughout the country. In China, more than 90% of orders are delivered the same day or the day after the order is placed, according to the company. Another strength is its strategic alliance with the Tencent group, which gives it access to WeChat messaging, which has become a key app in the daily lives of Chinese people.

Watchmakers such as Tissot, Chopard, Titoni, Zenith, Carl F. Bucherer and even H. Moser & Cie have signed cooperation agreements with the platform, which has opened dedicated online boutiques for them. JD also collaborated with Audemars Piguet to launch their online sales in China. With a turnover of USD 67.2 billion in 2018, the group has established a strategic global partnership with Farfetch with a view to convincing more luxury brands to invest in e-commerce in China. JD also has a strategic alliance with Chinese watch retail giant Xinyu.