Longines: Riding the storm
Mint speaks to Longines’ CEO Walter von Känel about the brand’s fortunes in China and its key launches for 2017
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In the business of watchmaking Longines’ CEO Walter von Känel is a legend. A man not known to mince his words or shy away from strong opinions, we spoke to von Känel about the brand’s fortunes in China and its key launches for 2017. Edited excerpts:
First of all what does BaselWorld mean to you?
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The fair... I think it is good to be at the fair. What with all this blah blah blah going on. I just regret that there are two fairs. The one in Geneva and here. But I like this fair. It is 100 years of the fair. A big achievement. The fair is a fantastic opportunity for me to meet my staff, we learn to know each a bit better. And this year so far there haven’t been any clashes. Everyone is behaving well. So far...
We’ve also seen lots of media. And lots of customers. Both international customers and many independents. I must say there is a big change in the mentality of the brands.
In what way is there a change?
There is a focus on business. Brands are here to show what is ready to sell. We at Longines are showing the products that are in production. And each day we keep track of how well we are doing.
Are you happy?
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I am satisfied. It is still early in the year, of course.
So you’ve told me what this fair is like. But what is the market as a whole like?
Let us see. Take the case of the last three or four years. Our revenues hit a high in 2014, we sustained that in 2015 and last year we had a very slight dip. A very slight dip. You can see it here in my papers. Why? Because of the state of the business in China. What is important is that we lost almost nothing in China. This is very important. Why? Because the price segment we operate in has not been affected at all by the anti-corruption measures. And we have a great team, great distribution and we make products that cater to local demand.
Maybe... maybe I was responsible for this slight drop. Last summer I slightly controlled production. Because I don’t want to be overstocked. But more importantly I don’t want my retailers to be overstocked. Sometimes when people have a full stomach they do stupid things. So to be fair when I look in the mirror I think I am responsible for that dip.
And this year has started well?
The first three months of this year have been positive.
And estimates look good?
How have you managed this?
Because as a brand we have remained consistent in what we are. We have stayed in our league. We don’t want to do everything. Tourbillon, connected, I don’t know what... we don’t want to do anything like that. We just focus on what we do best. As for individual markets. I think Hong Kong will recover. Taiwan is dead. And I think Thailand is still recovering from the passing away of the King. Tourists are coming back to Europe. And we are also totally reorganizing the USA market.
I maybe the only animal saying this, but I am cautiously optimistic about the world market. I will not repeat the mistake of having too many back orders. I will supply as much as the market needs.
One final question about the market. Do you ever feel you are overdependent on China?
It is a risk. But let me tell you something. In some price segments we have a 60% marketshare in China. In other 20%. In fact we still have the potential to grow a lot more if I wanted to. So we could be even more dependant. But you have to strike a balance. But it is a risk that has been very rewarding. In 2008-09 we didn’t lose anything to the US banking crisis. China helped us balance that out.
You have been lucky in that sense...
Not lucky, it was a decision. To stay focussed, to keep doing what we do well, and to stay in our league. Just look at the things happening in the market. Compared to that, I think we have done the right things.
Now a little about your products. The Very High Precision, or VHP, is your major launch this year. How did that come about?
The first VHP... I decided to make one when I came back from Japan in 1982. Because Seiko had just launched the Twin Quartz system. So I told my technicians— move your asses, this is what I want. And they did. And it did well for us. We sold 200,000 pieces or so in that period of time. We never stopped doing quartz. So we wanted to make something that was technically advanced and cater to a younger clientele who wanted watches with technology. So the VHP movement that will be exclusive to Longines for some time is not only high accuracy but also resistant to magnetism. And all this at a great price. From 950 CHF. Unbeatable. But I am very confident. I spend a lot on the development.
How long did this take to develop?
We started three years ago. And today you are seeing these models. We have many more planned with the VHP movement. But like I said we stay in our league. Three hands with calendar is 85% of our business if you look at the data. And that is where we will focus. On our strengths.