In the wake of this week’s news that China is banning ads for luxury gifts, including watches, TAG Heuer are reportedly hedging their bets by looking to a different growing market: India. Jean-Christophe Babin, the president and CEO of the Swiss watchmaker, says TAG Heuer’s investment in the Indian market will help the company forestall the kind of drop in share prices currently affecting the Swatch Group and Richemont as a result of the ban.
The Economic Times spoke with Babin at TAG Heuer’s office in India, where the company saw sales grow by 7.8% in 2012. “It (the ban in China) might boost the market here as brands could shift more resources to develop the market. The Chinese market was kind of peaking out.” With economic growth picking up pace in India, Babin says he expects even stronger sales in the years to come. “India has gone through a lot of uncertainties in terms of economic growth and that is certainly reflecting in the growth rate,” Babin told the Economic Times. “With more stability this year, we can believe that the market will grow double digit again.”
Part of TAG Heuer’s growth strategy includes diversification, with a focus on previously under-developed markets, such as women. Babin’s trip to India marked the launch of TAG Heuer’s new Link Lady collection; “We want to focus a bit more on the ladies. In India, there is a large potential for luxury watches and within it there might be a bigger potential in the women’s business, which exists today but is not as penetrated as men’s watches.”
In addition, TAG Heuer are growing their manufacturing capacities, reducing dependency upon component suppliers such as ETA, which is owned by rival Swatch Group. “We were competing against Omega, the number one brand. But at the same time we were sourcing components from them. Obviously, it was not the ideal situation for both the groups,” Babin told the Economic Times. With new production facilities and an in-house workforce, the company now produces 1/3 of its own manufactures, with plans for further growth after TAG Heuer’s purchase of a Chevenez, Switzerland-based dial manufacturer.