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DCF and vIndustry oaluation pverview arameters PPage 65age 65 I Points of view from EY global sector Chinese appetite for luxury goods and brands reshapes the luxury and other industry professionals landscape These young entrepreneurs are convinced that they European luxury groups have shown a strong interest *& French luxury groups strategically increase their can get past the loo%imalitq repmtation of Émade in in Chinese companies. This relation also works the Swiss watch activities China” products and appeal to the other way around and has not left the Swiss luxury In the second consolidation wave starting in the proud-to-be-Chinese sentiment of its customers — sector — more precisely the Swiss watchmaking early 2000s, two large French luxury groups qes, made in ;hina can be mniime, original and of industry — unchanged. entered the stage. With a diverse luxury product high imalitq. And it seems to be working: many portfolio ranging from clothes to perfume and Chinese consumers now want products made for the Asian groups, new driver of the consolidation accessories, DNE@ and Cering expanded their Chinese by the Chinese, and the success story of waves in the ownership of the Swiss watch brands prodmct offerings bq acimiring Koiss oatch w local brands, such as the cosmetic producer The Swiss watchmaking industry — with 30 million manufacturers in the premium segment, including Herborist, the designer Mary Ching and the number Lag @emer and @mblot bq DNE@ and ervie watches shipped abroad in 2014 — was not left v one jeweler in market share in Greater China Chow mntomched in this fight for smpremacq in the lmxmrq Girard-Perregaux and Ulysse Nardin by Kering. try o Tai Fook, is convincing proof. sector. 9lthomgh it seems at first glance fairlq +& Asian _jgmps _jgo in l`e a^^gjdaZle lmpmjy Indus However, European brands also want a slice of the fragmented with more than 200 watch brands, the space gigantic cake that represents Chinese-made luxury Swiss watchmaking industry has undergone a After these two consolidation waves, the four products, and a number of companies have been multifaceted consolidation process with few sizable luxury players mentioned above (Swatch, successful in combining European branding with independent players left in the market. Looking a Jichemont, DNE@ and Cering! hane reached a Chinese design and production. Hermès, for instance, little bit closer at the past two decades (see the certain level of saturation. The remaining founded Shang Xia, a craft designer that focuses on graphic below), three different types of consolidation independent players in the Swiss watchmaking Chinese savoir faire, in 2007. Hermès owns 90% of oanes'rationales can be identified2 market include sizable heritage brands in the the brand, which has even opened a shop in Paris in )& Consolidation g^ Zjand pgjl^gligs g^ leadin_ premium luxury segment, such as Rolex, Patek 2013. Swiss watch groups Philippe, Audemars Piguet, Chopard, and Also in 2013, Kering bought Qeelin to penetrate the Starting in the mid%)11(s, the first consolidation Breitling, as well as smaller brands; many of which Chinese luxury market. Qeelin asserts its Chinese wave hit the Swiss watchmaking industry when are active in the affordable luxury segment. While identity, not only by using Chinese materials and the two large watch groups Swatch and the sizeable heritage brands are strongly craftspeople, but also through its iconic collection Jichemont began acimiring lmxmrq oatch positioned with high brand value and critical mass, “Wulu,” which celebrates China’s cultural heritage. manufacturers to complement their product the smaller brands face challenges due to Shanghai Tang, another example of a successful offerings in different price segments and to international competition and scale. Demand for association of European brand management with benefit from scale effects. Lhese acimisition affordable luxury products has increased in Chinese design and production, aims at rejuvenating targets included manufacturers with strong brand emerging countries in the Middle East and Asia Chinese fashion of the 1920s and 1930s; it is now value and brand heritage, such as Breguet and mainlq drinen bq the high affinitq for part of the prestigious brand collection of Richemont, Glashütte (Swatch) and A. Lange & Söhne, IWC “Swiss-made” watches in the growing middle alongside ;artier, Eontblanc and Nan ;leef  9rpels. and Jaeger-LeCoultre (Richemont). class. The luxury and cosmetics financial factbook 2016

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