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Exporting to China: "A different point of view is instructive"

Focusing on your own strengths is the magic formula at Titoni AG. It specialized in the production of high-quality mechanical timepieces for the Asian region in advance.

Titoni AG from Grenchen today operates around 1000 sales outlets throughout Asia
Titoni AG from Grenchen today operates around 1000 sales outlets throughout Asia

Titoni AG is a family business with 60 employees, which has been managed since 1981 by Daniel Schluep in the third generation. Around 80 percent of Titoni watches assembled in Gronchen are now sold in Asia, 50 percent of which is in China alone. Unlike other companies that only recently jumped on the boom bandwagon, Titoni's commitment to this region has a long tradition. Founded in 1919 (as Felco and then Felca), the company was originally active mainly in the US and in Europe and looked for new markets after the Second World War. Contacts were initially made in Southeast Asia.

A new watch brand was created with the catchy name of Titoni. The watch was a little more expensive than the Felca and therefore also addressed a different, more demanding clientele. In order to increase brand recognition amongst its Chinese target audience, the symbol of a stylized flower, the Meihua, was added to the manufacturer's trademark.

The move to China itself happened a little later. Company boss Daniel Schluep explains: “Our association with China began in 1959, when a trade delegation from the Middle Kingdom visited Switzerland and became interested in watches, amongst other things. At the time, many of our competitors showed no interest in the Chinese market, but at Titoni AG, my father and his colleagues listened to the desires and requests coming from Beijing.” Based on Titoni’s first sample delivery, the state company China National Light Industrial Products Import and Export Corporation placed its first order in 1960.

Strong in the Asian market

Customers clearly enjoyed the quality and design of the watches, as the Chinese market has continuously expanded since then. In the People's Republic alone, there are over 600 outlets operating together with local partners, and 1000 across the whole of Asia. According to Daniel Schluep, the primary target audience is ethnic Chinese across the world; after all, he says, one mustn’t forget that more than 100 million Chinese regularly travel abroad. The Titoni brand is accordingly also sold in selected locations in Switzerland and Europe.

In the years 2003 to 2013, Titoni AG recorded above-average growth, which subsequently consolidated. By contrast, sales in 2016 fell by more than 30 percent. 100,000 watches were still produced.

Overstock

As the CEO explains, there are various reasons for this: over the last decade, too much faith has been placed in the watch trade’s growth in China, “Too many watch shops were opened and supplied with too many relatively expensive Swiss watches, which the market no longer completely absorbs.” This results in overstock, he says. In recent years, competition has also increased massively. For the coming years, then his priority is to maintain position. He is quite confident for the future, even if there is never a guarantee of success. After all, he adds, one shouldn’t forget that half of the world's population live in Asia. “In general, China remains a very important market. The growth of the middle class, who can afford a Swiss watch in the mid-price segment, is enormous,” explains Daniel Schluep. With its own profile developed over many years and an intensive cultivation of contacts with local partners, Titoni AG is confident that it will continue to exist in the competitive Asian region.

Big commitment

The graduate economist describes the relationship with China as such: “In our company, everyone involved clearly understands that doing business with China is a big commitment that requires us to always give our best. We knew from the beginning that buyers in China had to save for many months to be able to afford one of our watches. Our long-standing activity in China was and still is a great opportunity, not only from a business perspective, but above all also from a human perspective. In the years we have worked with China, we were able to make many contacts, and many of these have developed into personal friendships. It was these personal relationships in particular that helped us to better understand the culture of China and thus to develop ourselves individually. Differing views of problems are often instructive and fruitful.”

Titoni AG has existed as a family business for almost one hundred years. The company hopes that it will have a future as such. But even in this regard there is no guarantee. At least Daniel Schluep’s two sons are studying at the University of St. Gallen and would be predestined from the perspective of their father to continue the family business.

This article was first published in November 2017 in the magazine Wirtschaftsflash.

Are you also interested in exporting to China?

Contact Daniel Bont, our consultant for China, and make an appointment for a non-binding, individual consultation session. Or sign up for a personal and closed meeting with a representative of Swiss Business China during the next country consultation.

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