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The French watch industry &#x2013; A quest for renewal
Europa Star WorldWatchWeb&#44; 8 April 2005
&nbsp;&nbsp;
Antoine Menusier
<p>Already a conflict marks the beginning of the year for the French watch industry. The affair is half funny but half bitter. A whole economic sector is up in arms against a cellular telephone company named SFR. What is all the fuss about&#x0131; SFR recently launched an advertising campaign that certain people feel portrays the watch in an unfavourable light. Since the scene of the crime is France&#44; these same people imagine that the tri-coloured timepiece&#x2019;s reputation is at risk. The result is a vigorous and vociferous reaction by the French Watch&#44; Clock and Micro-mechanics Manufacturers&#x2019; Federation (CFHM)&#44; which has decided to bring the perpetuators of this timely crime before the courts.
In a recent advertising campaign&#44; the SFR employed some rather strange techniques to get the message of its low price calls across to the consumer. One of its posters proclaims &#x2018;30 centimes per call&#44; time no longer counts&#x2019; and beneath the slogan is a picture of watches and a comptois clock being sucked into a vacuum cleaner like rubbish. Other campaigns have a similar visual message using watches.
&#x201C;This is too much&#44;&#x201D; said Patrice Besnard&#44; the head of the CFHM. &#x201C;It is very degrading and unfair&#44;&#x201D; continues this seemingly jovial man who is also as stubborn as a mule when the issue is important. &#x201C;Never would they have represented the watch in such a demeaning manner in Switzerland. We are going to show the SFR what we think of this and what we are made of. They will think twice before denigrating the watch sector again.&#x201D;
CHRISTIAN BERNARD&#44; DANIEL HECHTER &amp; PACO RABANNE
<b>Insulting French manufacturers</b>
Why am I talking about the affair in this Market Report&#x0131; It is perhaps because it is quite revealing. As Patrice Besnard says&#44; a Swiss mobile telephone company&#44; or any other Swiss company for that matter&#44; would never have risked such an obvious insult to its nation&#x2019;s watch industry.
This raises two issues or questions. Why did it happen in France when it probably would not have happened elsewhere&#x0131; Why does the CFHM feel so targeted and threatened&#x0131; Two questions with two different explanations&#44; and I am not sure either answer is politically correct.
First of all&#44; the watch in France does not have a sacred aura. It is symbolically&#44; and we must say politically&#44; a less important product than the country&#x2019;s perfume or its haute couture. To the average consumer&#44; French watches are not the Olympia that Swiss watches are. They are quite simply less prestigious than their neighbours&#44; thus making them less respectable and respected. This is the hard law of the &#x2018;image.&#x2019; Ask someone from Paris or Bordeaux or Marseilles to name five brands of watches and he will most undoubtedly name five Swiss brands. If that list happens to include a French brand&#44; it will certainly be because the person did not know the watch was French.
Secondly&#44; the CFHM&#44; perhaps without realizing it&#44; thinks the watches in the trash heap of the SFR&#x2019;s ads are lower ranged French watches. In fact&#44; it is this segment of the industry&#44; in other words&#44; the lower-end price range - with no negative connotation implied - that is the most profitable sector of the French watch industry. With the world watch fair&#44; BaselWorld&#44; soon opening its doors&#44; the stakes in terms of image are high. The CFHM and its partners&#44; the brand owners&#44; want to make sure that the French timepiece is treated with respect and consideration&#44; regardless of whether it is expensive or not. There are about twenty manufacturing partners of the CFHM. Each controls its own little group of &#x2018;house&#x2019; brands and fashion brands produced under various licensing agreements. For example&#44; the TWC group makes Clyda as well as Adidas &#44; Ted Lapidus and Smurf under licensing agreements. TWC is also getting ready to launch two new fashion brands: Celio et Rykiel. The Christian&nbsp;Bernard group&#44; in addition to its own Christian&nbsp;Bernard label&#44; makes Fontenay&#44; Alan&#44; and Still&#44; plus it holds watch licenses for Balenciaga&#44; Cacharel&#44; Morgan and Guy&nbsp;Laroche . These companies are grouped together at the core of the French Watch&#44; Clock&#44; Jewellery&#44; and Silverware Centre (CFHBJO).
TED LAPIDUS &amp; LIP
<b>French design</b>
With the exception of a few companies&#44; such as P&#x00E9;quignet&#44; Michel&nbsp;Herbelin and Alain&nbsp;Silberstein &#44; these groups subcontract all or part of their fabrication to Asian enterprises&#44; where labour is so much cheaper than in France. The CFHBJO does not include &#x2018;Swiss Made&#x2019; brands of the &#x2018;Place Vend&#x00F4;me&#x2019; category such as Cartier and others&#44; which belong to the luxury groups Richemont or LVMH .
When a company is situated &#x2013; with no complexes &#x2013; on the lower rung of the ladder&#44; it is natural for them to wonder what strategy they should adopt in order to carve out a place for themselves in the global jungle of the watch industry. In this regard&#44; the economic power of China is very menacing. &#x201C;France makes about six million watches a year. The Chinese make at least 200 million&#44;&#x201D; observes Patrice Besnard with a note of resignation in his voice. This is undoubtedly only a beginning. This is also undoubtedly why the CFHM is looking into creating sales points in China that reunite French brands with a common marketing strategy based on the &#x2018;France&#x2019; label rather than on a particular watch.
This necessary strategy&#44; one of many aimed at increasing visibility&#44; emphasizes the &#x2018;French touch&#x2019; in terms of design and spirit that is imbued in the watch&#44; regardless of whether the timepiece is assembled in Switzerland as is P&#x00E9;quignet&#44; or in Asia as is Clyda .
We can criticize the French watch industry for not having understood&#44; in the past&#44; how to make its products known on an internat-ional level. However&#44; &#x201C;things are beginning to change&#44;&#x201D; notes a director of the watch organization.
The charm factor is already beginning to take effect&#44; we could say. During February&#44; the &#x2018;watch&#x2019; exhibition at the Galeries Lafayette in Paris was dedicated to China that was celebrating its New Year. Posters and signs with Mandarin inscriptions were everywhere. French brands&#44; from Pierre&nbsp;Lannier to Saint-Honor&#x00E9;&#44; as well as a number of fashion brands were on display. Among the potential clients were many from China. A Chinese man seemed delighted with the purchase he had just made: a ladies&#x2019; watch by P&#x00E9;quignet&#44; worth over 1000 euros. &#x201C;Ah&#44; it is a French watch&#44;&#x201D; he said in English. &#x201C;I did not know&#44; but it is very beautiful.&#x201D; Fanny Zemmam was responsible for the P&#x00E9;quignet stand. &#x201C;Our watches are Swiss Made&#44;&#x201D; she explained. &#x201C;This fact is definitely a sales argument&#44; but so is the fact that the design is French.&#x201D; So we see the famous &#x2018;French Touch&#x2019; in action. The prices for the Morteau-based brand&#x2019;s products are 600 euros and above&#44; and for the exhibition at the Galeries Lafayette&#44; P&#x00E9;quignet&#x2019;s most expensive piece reached 23&#44;770 euros. For the French watch industry&#44; it is important for the brands to not all be positioned in the lower to mid-range. Alain&nbsp;Silberstein &#44; for example&#44; with his tourbillons costing 100&#44;000 euros and up&#44; is way out of the category.
P&#x00E9;quignet &amp; ST-HONOR&#x00E9;
<b>Inexpensive &#x2013; not cheap</b>
While those in the stratosphere are important&#44; we also need to be realistic. To survive&#44; French brands must sell their products. The French public buys more foreign watches than those bearing French labels. The Swiss brand Rolex and the Spanish brand Festina are at the top of their particular price ranges. Therefore&#44; exports are essential to the health of the French watch industry&#44; which currently sells 60 per cent of its production outside its borders.
Industry results for 2004&#44; according to preliminary estimates&#44; are &#x2018;stationary&#x2019;&#44; which means &#x2018;stagnation&#x2019;. This is still better&#44; however&#44; than the decline registered in 2003 (total turnover: 375 million euros for the overall sector including component parts&#44; finished watches&#44; clocks&#44; alarm clocks and industrial devices) from 2002 (turnover: 435 million euros). In 2004&#44; sales of CFHBJO brands increased one per cent by volume and three per cent in terms of average price.
According to estimates&#44; the relative stability of last year&#x2019;s numbers includes a net increase in sales of licensed brand labels but a decline for the traditional brands. Given this scenario&#44; we can better understand the desire for manufacturers to make &#x2018;fashion&#x2019; or &#x2018;sports&#x2019; watches&#44; such as Guy&nbsp;Laroche and Adidas . The trend &#x2013; and perhaps the future of the French watch industry &#x2013; is therefore the &#x2018;fashion&#x2019; timepiece. French because of design&#44; and design because of being French. This is the credo of Patrice Besnard&#44; &#x201C;We find ourselves today in a climate of fashion&#44; with a variety of lines&#44; such as those by Herbelin or P&#x00E9;quignet.&#x201D;
The most difficult and indeed risky part of the strategy to sell French elegance at a low price is to not fall into the &#x2018;cheap&#x2019; category. Brands tread a fine line when selling to customers from Buenos Aires to Beijing who want to wear &#x2018;Paris&#x2019; on their wrist. A salesperson at the Galeries Lafayette commented&#44; &#x201C;The Clyda brand does especially well with Asian clients&#44; who think that this is a watch that women will like. It is small&#44; delicate&#44; made in steel with gold-plating or in silver&#44; with special features such as colours.&#x201D;
So&#44; while the Swiss sell savoir-faire associated with the origins of watchmaking&#44; France&#44; a country with a long tradition in the art of timekeeping rooted in its Comptoise or Jurassian valleys&#44; sells the spirit of its capital&#44; Paris. Can we&#44; then&#44; still speak of &#x2018;French Made&#x2019; in the low to mid-range&#x0131; The answer is undoubtedly &#x2018;less and less&#x2019; since most of the production is carried out abroad. French labour costs in the watch industry have gone through the roof with each successive economic crisis. &#x201C;In 1975&#44; there were 15&#44;000 people employed in the French watch industry&#44; mainly in the Franche-Comt&#x00E9; region. Today&#44; there are not more than 5&#44;000. Today&#44; we also suffer from a dearth of trained workers&#44;&#x201D; sighs Besnard. &#x201C;France trains 120 watchmakers a year. This is very little.&#x201D; The French production zone is located primarily near the Swiss border&#44; but with Swiss brands offering higher salaries&#44; they attract qualified personnel from Morteau and Ma&#x00EE;che.
CACHAREL &amp; CLYDA
<b>French Time?</b>
What is still missing for a French watch industry in its quest for renewal&#44; is the financial means to realize its objectives. To market and position an image around the world requires a huge investment. The Swiss have the necessary resources. The French do not&#44; or at least not yet. Their watches are not seen on ads in the metro&#44; the streets&#44; in newspapers&#44; or on television. &#x201C;All that is too expensive&#44;&#x201D; says Besnard. That leaves the trade press&#44; where a presence in terms of image is necessary but obviously not sufficient to make themselves known to the public at large.
On the other hand&#44; Swiss brands&#44; which are often cited as examples by our French interlocutors&#44; have developed market leaders such as Swatch and Omega &#44; counting on the fact that they will help pull along the rest of the industry. This phenomenon does not exist in France. &#x201C;It is really too bad&#44;&#x201D; says an analyst of the French industry&#44; who calls for &#x201C;shaking the dust off&#x201D; the old structures. How can one hope to effectively sell a whole industry abroad with a label as obscure as CFHBJO&#x0131; Since we can no longer count on only &#x2018;French Touch&#x2019;&#44; why not invent something like &#x2018;French Time?&#x2019;
Source: April-May 2005 Issue
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