THE ORIENT EXPRESS
NOTHING BETTER REFLECTS ASIA PACIFIC’S ECONOMIC FIREPOWER THAN ITS SURGING SHARE OF THE LUXURY GOODS MARKET. ANDREW SHIRLEY TALKS TO THE MAN WHO HAS LED ONE OF THE REGION’S TOP BRANDS FOR THE PAST 10 YEARS
The numbers tell the story. Five years ago the Asia-Pacific region accounted for just over 20% of sales at Richemont, the Swiss luxury brands business where jeweller and watchmaker Cartier is the star performer. By 2011 its share was almost 40%. Over the same period sales in the region grew by 140%, compared with 27% in Europe. Even in Europe analysts estimate that tourists from emerging economies account for up to half of the sales in Cartier boutiques.
ANDREW SHIRLEY When did it become clear to you that Asia, particularly China, was set to become your biggest market?
BERNARD FORNAS Cartier recognised very early the potential of the Asian market. We opened our first boutique in Hong Kong in 1970, followed three years later by one in Singapore and the next year by another in Tokyo. Cartier has been present in China since 2001. Today, with 43 stores in 22 cities, we benefit from our pioneering spirit and having taken a calculated risk at the time.
AS Were you surprised at how fast demand in the region has grown for luxury goods?
BF If the speed with which this development took place could have been a source of surprise, its scale was to be expected given the great economic power of the region.
AS Do you find that the demand mix for your jewellery and watches varies around the world – for example, is the growth in Asia being driven by sales of your “initiation” pieces rather than your most expensive ranges?
BF On the contrary, we find a very similar structuring of our activity in all regions.
AS Is it true that when times are hard, thewealthy prefer to buy things that appear less ostentatious?
BF When times are hard, customers tend to turn to legitimate brands with authenticity and there is less showing off. For instance in the watch sector, bigger pieces are losing ground to more discreet timepieces.
AS Although you have always been clear that Cartier does not, and will not, create specific products for different regions, do you have to alter your brand building and marketing messages when targeting consumers around the world?
BF A beautiful creation is recognised as such by any client around the world. Our strength stems from the consistency and continuity of style – a rich aesthetic expression fed from over 165 years of creation. It would be unthinkable and detrimental to our maison to try and alter our creation process seeking to cater to specific clients. The same goes for our brand building. We strive to spread the same values worldwide.
AS What is it about the Cartier brand that makes it so desirable to the Chinese – how important is heritage in a market that has only recently been exposed to luxury brands?
BF Chinese customers learn fast and are very much aware of what makes a brand desirable: over 165 years of history, an outstanding know-how and an unparalleled creativity, all features that define a maison such as Cartier.
AS As emerging economies become more accustomed to their new wealth are you concerned that the attraction of international brands will wear off or that local luxury brands will become more competitive?
BF I strongly believe that maisons like Cartier, known for their exclusivity, excellence, creativity and know-how, will always maintain their desirability.
AS Where do you expect future growth to be strongest and do you plan to open any new boutiques in countries where you do not currently operate?
BF We invested strongly in China, and there is still a lot of potential. Contrary to many other brands, Cartier can rely on an excellent repartition of its stores across the entire world. Latin America and the Middle East are markets that we will continue to develop, either by opening new boutiques or by increasing the size of existing stores. We can still gain market share.
The shift of economic power to Asia is undoubtedly one of the big geoplitical questions of this decade
AS Your presence in India seems low-key compared with China. Why is that when India’s economy and the spending power of its HNWI population are also growing?
BF Indeed, we only have one boutique in India (New Delhi), due to high import taxes on luxury goods. Watches, for example, cost 50% more in India than in other markets. So our Indian clients buy when travelling abroad. This is very unfortunate, because we see a very high potential in this country. But Cartier still has strong links with India as our maison had extremely close relationships with the Maharajas and the image of our brand is still very strong there.
AS Will the rising economic power of Asia mean that the likes of Shanghai or Hong Kong will inevitably replace established centres such as London and New York as the world’s most important cities?
BF The shift of economic power from Europe and North America to Asia is undoubtedly one of the big geopolitical questions of this decade. However, if the rise of new economic powerhouses is unquestionable, the decline of historic global centres of power remains to be seen. Why should the rise of a new power imply automatically the decline of another? With an increasingly interconnected global economy this is more than questionable.
AS Investments of passion such as art are increasingly being seen as attractive alternatives to the volatility of traditional investments. Do you think this has contributed to the surge in demand for Cartier jewellery and watches?
BF One can say that what is rare and beautiful definitely has more potential to offer an alternative to the volatility of financial products. In the case of a limited watch edition signed by a renowned maison, or a unique jewellery creation, one does not take a lot of risk to believe that this item will prove to be an excellent investment. The rarity of a product enhances its value.
AS What would be your own investment of passion?
BF Art and vintage cars.