All eyes on SIHHAnalysts on thelookout for brightspotsat thefirst fairof thenewyearPage 2

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Piaget’s planChief executivereveals new focuson fast-growingjewellery marketPage 3

FT SPECIAL REPORT

Watches & JewelleryMonday January 20 2014 www.ft.com/reports | @ftreports

The once white-hot growthenjoyed by the hard luxuryindustry appears to be over –but the news is not all bad.

Consumer appetite – partic-ularly for fine jewellery – hasremained resilient and many industryobservers are predicting a bright year.

Growth slowed considerably in 2013,damped by falling Chinese consumerdemand – triggered in part by a recentgovernment clampdown on corruptionand ostentatious gift-giving that flat-tened Swiss watch exports.

The value of gold, the sector’s coreraw material, plummeted 28 per centto $1,204 a troy ounce, thwarting theend of a spectacular 12-year bull run.The silver price sank 36 per cent,while diamonds and other gemstonescontinue to be hampered by supply-side problems.

The macroeconomic conditions thatfuelled a rush to offload bullion lookset to continue in 2014 – including arebounding global economy, buoyantstock prices, flat inflation rates andthe Federal Reserve’s announcementlate last year that it would start taper-ing quantitative easing.

But investor jitters witnessed in thefinancial markets do not seem to beweighing heavily on the minds ofwealthy shoppers with a taste for theyellow metal.

“Total worldwide sales of gold jew-ellery were up 20 per cent in 2013,indicating that most markets remainunfazed by the volatility we’ve seensince April,” says Marcus Grubb,

managing director of investmentstrategy at the World Gold Council.

“Although western markets havetraditionally been driven by discre-tionary spending and personal taste,Asia – where investment remains thekey motivation and sales are cur-rently extremely strong – is movingthat way too.

“People are purchasing both forshort-term enjoyment as well as withlong-term asset potential in mind. It’sa reflection of the recovery of confi-dence in the global economy.”

WGC data show demand for goldjewellery, bars and coins reached ayear-to-date record in the first ninemonths of 2013 of 2,897 tonnes.

Looking ahead, weakness in thecritical Indian market is expected tocontinue thanks to new tariffsimposed by the government on goldimports. But gold jewellery demand inChina surged in December in anticipa-tion of the lunar new year on January31, and is set to continue in the samevein. Southeast Asian economies such

as Thailand, Indonesia and Vietnamare also expected to shine, recordingdouble-digit sales growth in 2014.

Industry observers say that soaringdemand for earrings, bracelets andnecklaces, coupled with lower rawmaterial costs, constitutes a winningequilibrium for luxury brands.

“For most luxury companies, theselower prices will sit nicely on their P& L sheets. They’ll be good for grossmargins, although it can take six to 12months to appear, depending on thesize of their inventories,” says Tho-mas Chauvet, an analyst at Citigroup.

“One of the reasons the luxury sec-tor is attractive to investors is itsability to absorb the impact of poten-tial commodity prices and currencyheadwinds and pass them on to theconsumer.”

Watch and jewellery prices mayhave rocketed alongside that of goldover the past decade, but one thingexecutives say we will not see in 2014is the price of those products comingdown. Consumers purchase hard lux-ury pieces as permanent investments,offering price stability and the assur-ance that the value of a piece is notgoing to fluctuate.

Larry Pettinelli, US president ofPatek Philippe, says that the per-ceived value of a luxury product mustremain the same or greater – anydecline would erode customer faith inwhat pieces and brand equity areworth. For this reason, the artisan-ship of a watch is as important as thematerials from which it is made.

“Precious metals certainly play arole in the pricing of a product and,like many companies, we try to buyforward based on our expected needs.However, because of the extremeamount of labour involved in time-piece production – namely the hand-finishing of the movements –

Continued on Page 2

Unstoppable year of the horseOutlookChina is stilldriving growth in thehard luxurymarket,writesElizabeth Paton

Runaway demand: a display of watches in a shop window celebrates the forthcoming Chinese year of the horse Charlie Bibby

On FT.com »

GalleryBehind thescenes atShinolaThe fine watchcompany bringingjobs to Detroit

2 ★ FINANCIAL TIMES MONDAY JANUARY 20 2014

Watches & Jewellery News

After three years of stellargrowth, 2013 was a year ofinconsistency and uncer-tainty for the watch indus-try. Sales fluctuated month

by month as the vicissitudes of theglobal economy and, in particular, aslowdown in Chinese purchases ofluxury goods, hampered watchmak-ers’ progress.

As such, the industry’s first bigevent of the year, La Salon Interna-tional de la Haute Horlogerie (SIHH),which has kicked off the watch indus-try’s calendar since 2009 and opens inGeneva today, will be of particularinterest to those hoping to gain a firstglimpse of watchmakers’ plans andprospects for 2014.

In the lead-up to this year’s fair,which plays host to 16 premiumbrands – 11 owned by Richemont, theSwiss luxury conglomerate, as well asthe independents Audemars Piguet,Parmigiani, Greubel Forsey, RalphLauren and Richard Mille – a degreeof caution has been perceptible.

“2014 is a transition year for theindustry and even more so for Aude-

mars Piguet,” says François-HenryBennahmias, chief executive of the138-year-old family-owned companywhich is among the independentbrands exhibiting.

“We don’t forecast any majorchanges at this stage, most brandswill keep focusing on their core mes-sages, while we will be consolidatingour strategy.”

The mood of caution is understand-able, given that Swiss watch exportsin the 11 months to November wereup just 2 per cent year-on-year accord-ing to the Federation of the SwissWatch Industry, a far cry from thedouble digit growth the industry hadenjoyed since 2010.

This lull was foreshadowed last yearby an SIHH that had few genuine nov-elties, and analysts will be watchingclosely for any signs of a pick-up inactivity this year.

“What will be interesting for me isthe number of new launches,” saysJohn Guy, retail and luxury analyst atBerenberg Bank.

In terms of content, areas of watch-making that have seen development

in recent years are likely to remainprominent, according to PhilippeLéopold-Metzger, chief executive ofPiaget, one of Richemont’s stable ofbrands.

Ultra-thin styles have become a the-atre for change, he says. “There willbe a lot of activity at SIHH. We hold alot of records; some will fall, and wewill establish new ones.”

He also expects to see a shifttowards greater “elegance”, underwhich he includes a focus on jewel-lery watches and on “skeletonisation”– removing as much of the bulk of awatch’s movement as possible.

Mr Léopold-Metzger regards thedevelopment as a reaction against aperiod during which watches becamelarger and larger, to the point thatsome, he reckons, “looked liked StarWars”. “We probably went a bit over-board,” he reflects.

Two other developments worthwatching, according to Mr Guy, arethe materials used by watchmakers,and the balance between watchesdesigned for men and those designedfor women.

“Some brands have been makingmore models in cheaper materials,such as stainless steel, in an attemptto gain exposure to the growing mid-dle class markets around the world.Others are likely to offer a moreunderstated prestige collection inwhite gold and platinum,” he says.

“The female market remains under-penetrated and brands such as Jaeger-LeCoultre have been focusing onbuilding up their women’s line.

“These trends have been going onfor a while, but it will be interestingto see if there has been any noticeablecommodity or demographic reweight-ing,” says Mr Guy.

Perhaps almost as telling as thechanges to the watches shimmeringin their display cabinets will be thecomposition of the crowds of guests.

Watch executives expect a similarnumber of retailers to attend aslast year. But they expect a largernumber of visitors from the countriesof Latin America and easternEurope – a sign that the industry’sgeographic reach is growing, even asits sales slow.

All eyes on firstshow of 2014 tosee what yearhas in store

SIHH preview Analysts are on the lookout forsigns of a pick-up in activity, says James Shotter

Elizabeth PatonUS luxury correspondent

James ShotterSwitzerland and Austriacorrespondent

Andres SchipaniAndes correspondent

Simoney KyriakouNews editor, Financial Adviser

Simon de BurtonContributing editor,How to Spend It

Syl TangFounder, HipGuide

Claire Adler, Justin Cash,Jenny Dalton, Rachel Felder,Meehna Goldsmith, Jim Shi,Robin SwithinbankFreelance journalists

Helen BarrettCommissioning editor

Tracey Beresford,Elizabeth DurnoSub editors

Andy MearsPicture editor

Steven BirdDesigner

For advertising details,contact: CharlotteWilliamson, +44 (0)20 78734038, emailcharlotte.williamson@ft.com,or your usual FTrepresentative.

All FT Reports are availableon FT.com at ft.com/reports

Contributors »

a significant proportion ofour price is based on crafts-manship as opposed to themetal choice.”

Despite a recent slip indiamond prices, manyexperts believe that strongsales of precious stone jew-ellery will continue una-bated this year.

“Prices were predomi-nantly stable in 2013, andwe saw sales go up byaround 5 per cent both inNorth America and China,where western-style engage-ment rings are really driv-ing growth,” says StephenLussier, an executive direc-tor at De Beers.

“Present exchanges atChinese new year will con-tinue to fuel consumption.”

He adds that the tworegions combined generatemore than half of all dia-mond jewellery sales world-wide.

“There’s no question thatwhile supply is limited andincreasingly hampered byproblems, demand – partic-ularly from emerging econ-omies – continues to growand grow.”

Patti Wong, chairman ofSotheby’s Asia, agrees.“The top end of the marketis stronger than ever, asevidenced by our Novembersale of the Pink Star dia-mond in Geneva, whichwent for a record-breaking$83m,” she says.

“The focus in 2014 willcontinue to be on big stonesof 10-plus carats with realquality and rarity.”

Coloured diamonds andespecially pink, blue andyellow stones will continueto attract interest from buy-ers in the emerging Bricmarkets, as will the most

Continued from Page 1

precious gemstones such asemeralds, sapphires andrubies.

Ruby prices have doubledin the past four years as USgovernment sanctions onMyanmar – a leading pro-ducer of the stone – remainin place. Limited suppliesmean that stones are nowgoing for anywherebetween $400 to $50,000 per

carat for exceptional gems.“The coloured jewels

market is a cottage industry– nothing like that of goldand diamonds – and conse-quently production regu-larly gets very dodgy,”explains Russell Shor, sen-ior industry analyst at theGemological Institute ofAmerica.

He adds: “When supplies

are erratic, as they are atthe moment, prices inevita-bly rise as stone dealershold on to their [gems] andbank on selling them at alater date.”

Mr Shor believes thatsales of untreated sapphiresand emeralds will continueto shine in 2014, as willappetite for tanzanite,topaz, spinels and citrines.

“They are still fairlycheap,” he says of this lastgroup, “which is why manyjewellers and brands of allsizes like them. They pro-vide greater licence forartistic creativity withoutspiralling costs.”

He adds that strongdemand for jade of all hueswill continue, given its pop-ularity in China. In 2013,Asian sales of the stone out-stripped those of emeraldsand sapphires across allother markets combined.

Some experts remain cau-tious when forecastingwatch and jewellery salesfor 2014. They cite the risksof destocking by wholesal-ers, thanks to price pointsthat are significantly higherthan those for soft luxuryproducts, and to purchasingpatterns that are less influ-enced by seasonal fashion.

But most in the industryare upbeat. “Given the cur-rent climate, it is inevitablethat returns on jewellerymight not be quite as stellaras in previous years butthere is still much cause forencouragement,” says theWGC’s Mr Grubb.

“Demand from all mar-kets – east and west,mature and emerging –remains healthy if notthriving as the ranks of theglobal middle class con-sumer continue to swell.For now, the future for thesector is bright.”

No holding back in the year of the horseGold price

Source: Thomson Reuters Datastream

$ per troy ounce

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2013

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The best of the fairStandout offerings at SIHH 2014

Audemars Piguet: Royal OakConcept GMT TourbillonThe Royal Oak Concept was firstunveiled in 2002 as an avant­garde,30th­anniversary tribute to AudemarsPiguet’s octagonal Royal Oak. Its latestdescendant, the Royal Oak ConceptGMT Tourbillon, breaks new ground ofits own, using white ceramic not juston the bezel, crown and push pieces,but also in the movement itself.

Piaget: Altiplano 38MM 900PIf there is one thing that Piaget isknown for, it is ultra­thin watches, andat just 3.65mm, the Altiplano 38MM900P fits firmly into this mould. Ultra­thin models have come back into voguerecently, with the likes of VacheronConstantin, Patek Philippe and Graff allreleasing such timepieces over the pastyear. But Piaget claims that this is thethinnest on the market.

Roger Dubuis: Velvet HauteJoaillerieThe latest addition to Roger Dubuis’sVelvet collection is paved with 304diamonds adorning the dial, case­band,decor and flange, as well as two rubieson the decor. The watch is availablewith both a satin and a satin­finishstrap. Like all models in the Velvetcollection, it is stamped with thePoinçon de Genève.

Baume & Mercier 43MM CliftonChronographThe appearance of this self­windingchronograph harks back to the watchindustry’s 1950s heyday. In addition toshowing the hours and minutes, thewatch shows the day and date, and,when pressure is applied to its pushpieces, functions as a timer.

James Shotter

Source: World Gold Council

Gold demand by typeTonnes

2010 2011 2012 20130

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Central Banknet purchases

InvestmentTechnologyJewellery

Left: Piaget Altiplano 38MM900P. Above: AudemarsPiguet Royal Oak ConceptGMT Tourbillon

Left: Baume & Mercier43MM Clifton Chronograph.Above: Roger Dubuis VelvetHaute Joaillerie

FINANCIAL TIMES MONDAY JANUARY 20 2014 ★ 3

Watches & Jewellery News

After a decade and a half atthe helm of Piaget, PhilippeLéopold-Metzger ispreparing to ramp up theSwiss watchmaker’s

production of jewellery, increasingthe company’s focus on an importantbattleground for the industry.

In recent years, luxury groupssuch as LVMH and Richemont havedevoted significant resources toexpanding their jewellery brands.Johann Rupert, the founder andmajority shareholder of Richemont,the Swiss luxury group that ownsPiaget, has said he is keen to investin the area.

“It is obvious that today thejewellery market is expanding fasterthan watches,” says Mr Léopold-Metzger.

“Now, the opportunity is huge forus to revamp the jewellery business,moving much more into medium andhigh jewellery.”

“If you look at our watches, wehave some that cost SFr7m ($7.7m).The perception among the public isthat Piaget is a beautiful brand, veryexclusive . . . and this allows us tooffer more expensive jewellery.”

With Piaget expecting the jewellerymarket to grow faster than thewatch market in the near term, thecompany’s production, whichanalysts reckon is roughly balancedbetween watches and jewellery, couldtilt towards jewellery.

Mr Léopold-Metzger declines togive targets and precise numbers forcurrent output, which analysts putat about 24,000 watches a year, andabout 20,000 pieces of jewellery.

However, he does concede thatPiaget is running short of capacity.As a result, the group is planning toincrease the space at its main basein Plan-les-Ouates, the watchmakinghub on the outskirts of Geneva, by50 per cent. The group’s ancestralsite in La Côte-aux-Fées, in thenorthwest, will increase by 25 percent, he adds.

This might seem like a bold moveat a time when the combination ofan economic slowdown and aclampdown on corporate gifts isweighing on the luxury market inChina, which has powered globalsales over the past five years.

Mr Léopold-Metzger declines to sayhow Piaget, which has a strongpresence in Asia, has been affected

by that slowdown, but concedes thatthe double-digit growth rates enjoyedby the industry over the past 10 to15 years may not be repeated.

Yet despite this, the 59-year-oldFrenchman remains optimistic aboutthe prospects of the industry heentered more than 30 years ago – acareer path which he says was purechance.

In 1981, after an MBA in Chicago,Mr Léopold-Metzger was back in hisnative land working for a USconglomerate that sold vitamins and

plastics, among other things, whenan acquaintance suggested heconsider switching to Cartier, theParisian jeweller.

The international aspect of theluxury business was attractive to aman who had already worked on twocontinents. And selling watches andjewellery seemed more appealingthan purveying plastic – so MrLéopold-Metzger changed course, andthrew in his lot with Cartier.

“I thought that working in such abeautiful environment and selling tojewellery stores would be a muchnicer thing to do,” he says. “And mywife would be much happier visitingjewellery stores than visiting kitchenand bathroom retailers.”

After nearly two decades at Cartier– interrupted by a four-year stint atPiaget in the early 1990s – MrLéopold-Metzger moved back toPiaget in 1999 as chief executive andhas held the post ever since.

The company was initially knownfor making movements – a watch’smechanical heart. However, by thetime Mr Léopold-Metzger took thereins, the group, which was takenover by Cartier in 1988, was betterknown for its glitzy, jewel-encrustedwomen’s watches.

Mr Léopold-Metzger set aboutbuilding up Piaget’s capabilities inthe field of men’s watchmaking, aswell as re-emphasising thetechnological prowess of the brand.

“I thought that it was necessaryfor us to go back into the men’sbusiness – with a difference,” hesays. “That’s why we decided reallyto emphasise the ultra-thin side ofthe business. We always had[watches for] men, and we alwayshad ultra-thin [watches], but wereally went with a vengeance.”

Thirteen years on, the fruits of thisdrive are clear. Piaget has 35 of itsown calibres, 23 of which are ultra-thin. The thinnest, the Altiplano900P, measures just 3.65mm in depth– a modern echo of the ultra-thinmodels that Piaget first produced inthe late 1950s.

At the moment, says Mr Léopold-Metzger, there is no thinner watchon the market. “But it doesn’t meanthere couldn’t be tomorrow,” he addswith a self-deprecating smile.

His caution is justified. Otherbrands are increasingly producingtheir own similarly delicate models,with the likes of VacheronConstantin, Patek Philippe and Graffall releasing ultra-thin timepiecesover the past year.

However, Mr Léopold-Metzger issanguine about the competition.

“It’s always great when you arevalidated by your peers,” he says.“The more people come to thesegment, the more the segment isgoing to grow. Maybe we will lose alittle bit of market share, but the piewill get bigger.”

Piaget concentrates on market for precious gemsInterview PhilippeLéopold-Metzgergears up for industry’skey battleground,writes James Shotter

Montblanc is likely tounnerve its competitorstoday by unveiling plans toopen up the esoteric worldof fine watchmaking to awider market, as it seeks toexpand its business.

Led by Jérôme Lambert,the new chief executiveappointed in 2013, the Ger-man company known for itsdominance of the luxurypen market is to implementan aggressive strategy,releasing mechanicalwatches with high-end com-plications on to the marketat competitive prices.

At the Salon Interna-tional de la Haute Horlo-gerie in Geneva this week,Montblanc will launch theMeisterstück Heritage col-lection, which includes aperpetual calendar watch ina stainless steel case thatwill retail for €10,000, and agold monopusher chrono-graph made entirely byhand in its Villeret work-shop for €27,000. Both areuncommonly low prices forwatches in their category.

Mr Lambert says: “Mont-blanc wants to open this

world of fine watchmakingto clients that have beentaken away from it by theevolution of price over thepast five to 10 years.”

He has form in this area.At Jaeger-LeCoultre, whichhe headed until taking uphis new post, he pioneereda pricing strategy thatbroke with fine-watchmak-ing conventions. At Mont-blanc, he is pushing moreaccessibly priced high-endwatches harder still.

The new collection hasbeen taken from concept todelivery in less than sixmonths. In doing so, Mont-blanc under Mr Lamberthas showed how agile awatchmaker can be.

In an industry where sig-nificant new collections cangestate for two years ormore, the speed at whichthis collection has beenbrought to market is anachievement.

Montblanc is the second-largest business owned byluxury holding companyRichemont – behind Cartier– and accounts for 8 percent of the €10.15bn salesreported by the group in itslast financial last year.

Mr Lambert wasappointed to the role ofJaeger-LeCoultre chief exec-utive in 2002, two yearsafter Richemont bought thecompany in a deal thatincluded the purchase ofluxury watch brands IWCand A. Lange & Söhne.

There he engineered adecade of rapid growth and

creativity, as the businesstrebled in size, earning theSwiss brand its place in thebig time. By 2013, Jaeger-Le-Coultre was, he says, “mis-sion accomplished”.

Montblanc represents abigger challenge. The com-pany is spread over foursites across three countriesand had sales of €766m inits last set of reports.

According to Mr Lambert,writing instruments makeup 45 per cent of the busi-ness, leather goods andwatches 25 per cent each,with the final 5 per centattributed to jewellery andother accessories.

“The name of the game isdefinitely to further themaison, to grow it anddevelop the activities, someof which are blossoming,”says Lambert. “Withleather goods and[watches], we are still in afundamental period, eventhough we started doingleather goods in 1926.”

Montblanc’s historicinvestments in watchmak-ing have given it an advan-tage in the industry, andthe lion’s share of the com-pany’s recent growth isattributed to its watch busi-ness. “It was a smart deci-sion to develop the [Mont-blanc] manufacture in LeLocle, before many otherswere even thinking of doinga manufacture movement,and then to acquire Vil-leret,” he says.

The Le Locle facility wasopened in 1997, the sameyear Montblanc Montre SAwas set up. Villeret, as it isnow known, was formerlyMinerva, a small, ultra-traditional watchmakerbought by Richemont in2006 and then placed underMontblanc’s management.

It employs 50 people andproduces about 50 watchesa year. Volumes are so lowbecause the watches aremade by hand, a pre-indus-trial process performed byonly a handful of elite out-lets worldwide.

“What we do at Villeret isa golden opportunity,” saysMr Lambert. “We have 150years of history and DNA todevelop to further our goal.And it gives us a signaturein movement style.

“We have very deepwatchmaking expertise atVilleret,” he continues.“We’ll nurture this and useit for further developmentin other lines. That’s howwe’ll meet our ambition toshare our passion for finewatchmaking.”

The challenge will be tomake this approach profita-ble. For now, Montblanckeeps costs low by workingwith third-party supplierssuch as Dubois Dépraz, thespecialist movement manu-facturer behind its new per-petual calendar. But in timeMr Lambert intends tobring all movement manu-facturing in-house, a notori-ously costly operation.

“We can animate the seg-ment we’re in, in a reallyintelligent way,” he says.“We can introduce anddevelop useful complica-tions and functions – classy,high-value product thatmakes fine watchmakingmore open than it is today.”

Montblanc triesradical tacticPricing

Mechanical watchesat competitive pricesare key strategy. ByRobin Swithinbank

JérômeLambert isplanning toopen up theworld of finewatchmaking

The CV1954 Born in New York1979 The French­American citizenjoins Cyanamid, the US conglomerateafter completing an MBA in Chicago1981 Joins Cartier1992 Moves to Piaget as corporatesecond­in­command1996 Returns to Cartier to overseeits Asia­Pacific operations1999 Piaget chief executive

4 ★ FINANCIAL TIMES MONDAY JANUARY 20 2014

Watches & Jewellery Retail

Macau, the special adminis-trative region of China andundisputed champion of theglobal gambling industry, isgoing through a period ofunprecedented growth.

In the process, it isattracting the biggest play-ers not only in the world ofgambling, but also inwatches and jewellery.

Given a Chinese popula-tion eager to place bets, anda gambling revenue of$45bn in 2013 – an increaseof nearly 20 per cent on theprevious year – it is easy tosee why. And Macau’s gam-blers have an appetite forluxury goods.

“Our customers come toMacau to indulge them-selves,” says Jean-MarcPontroué, chief executive ofRoger Dubuis, a Genevawatchmaking company.Macau is his brand’s pre-mier market and in the pasttwo years the company hasopened three boutiquesthere.

Its smallest branch – inWynn Macau, a luxuryresort – is also its best-per-forming. “In a very smallarea you have the best ofwhat Geneva can offer,”says Mr Pontroué.

“We offer a lot of compli-cations and differentiatedaesthetic products, whichappeal to this clientele,” headds. “Customers who canafford this type of complica-tion know Dubuis. Theyexpect to come to Macau tosee and buy what they arealready aware of.”

Mr Pontroué points to agrowing demand for nichebrands: “It’s not for everybrand, but for our type ofpositioning – niche andwith strong credibility inthe high end – this is one ofthe cities where we aregoing to pay a lot of atten-tion to opening furtherstores.”

As the boom reverberatesacross the Pearl RiverDelta, the Chinese govern-ment is responding quickly.

A bridge from Macau tonearby Hong Kong is beingbuilt to alleviate pressureon the fleet of ferries thatin 2013 brought a signifi-cant proportion of 17m Chi-nese tourists to the region.

Peter de Kantzow, anAustralian entrepreneur,plans to launch a fleet ofseaplanes to escort highrollers to Macau fromChina’s Shenzhen airport asearly as next year.

Guillain Maspetiol, man-aging director for northAsia at Jaeger-LeCoultre,says: “The only constraint[for retail space] may be tofind a good location, sincemany luxury brands arealready open everywhere.”

For shoppers seeking finejewellery and rare stones,casino owners will often tapinto their relationships withauction houses, accordingto insiders.

“We have good contactswith the casinos for thosewho want to buy the verybest items,” says VickieSek, director of Christie’sAsia jewellery and jadeitedepartment.

Arnaud Bastien, presidentand chief executive, Asia, atGraff Diamonds, which hasa boutique at Wynn Macau,believes limitless gamblingopportunities ensure strongbusiness potential that canonly be helped by thebrand’s visibility on themainland.

“We work hard to ensurea balance between a domes-tic presence and overseassales in duty-free marketssuch as Macau and Hong

Kong,” he says. “We arekeen to ensure we continu-ously capture this touristmarket.”

China’s recent economicslowdown appears so far tohave had little impact inMacau. But the risk for lux-ury brands lies not only inpolicy changes and anypotential repeat of China’s2008 restrictions on thenumber of mainland visi-tors, but also in the terri-tory’s limited growth inhotel rooms, a result ofinfrastructure delays andbuilding labour shortages.

“Luxury watch compa-

nies cannot ignore Macau.However, we doubt it willever become a meaningfulwatch market,” says Tho-mas Chauvet, a seniorequity analyst at Citigroup.

He adds: “With gambling,not shopping, the primaryoccupation of mass-marketChinese tourists in Macau,Hong Kong offers moresteady growth opportuni-ties.”

Moves to rely less on highrollers, combined with theRmb20,000 ($3,300) restric-tion that a “premium mass-market” tourist, who has noaccess to casino-linked

credit lines, can take out ofthe region, have resulted inthe number of pawnshopsmore than tripling in thepast 10 years to about 170,according to Chou Chin-Leong, president of theMacau General Chamber ofPawnbrokers. Rolex, IWCand Cartier watches aretraded like baseball cards inthe these shops.

“Unofficial funding chan-nels are likely to gain moreimportance, as the casinosare keen to attract morepremium mass gamblers,”says Gabriel Chan, an ana-lyst in Hong Kong forCredit Suisse Group.

But there are still enoughVIP high rollers in Macauto generate healthy busi-ness for brands such asGirard-Perregaux.

“These customers are reg-ulars, and concierges servethem as would their finan-cial advisers,” says MicheleSofisti, chief executive, add-ing that it is not unusualfor a private viewing to beorganised in a hotel suite.

Then there’s the ego fac-tor. High rollers tend tospend generously to “showoff”.

Their friends will alsothen buy so as not to loseface, says Mr Sofisti, whosold 15 Girard-Perregauxtimepieces in the first threeweeks after opening hisFour Seasons boutique lastSeptember.

As Wilhelm Schmid, chiefexecutive of A. Lange &Söhne, puts it: “Macau isgood for business, notbrand building.”

‘The best of what Geneva canoffer’ – in a city that never sleepsMacau

Luxury brands haveset up shop in Asia’sgaming capital,writes Jim Shi

‘These customersare regulars, andconcierges servethem as would theirfinancial advisers’

Boom time: Macau’s fast­growing casinos can also help gamblers to buy fine jewellery

Chinese shoppers are respon-sible for a third of theworld’s luxury sales,according to data by Bain &Co, the consultancy, and

many enjoy treating themselves whentravelling abroad. But the Britishluxury industry is missing out – andthe UK government is waking up tothe problem.

Bureaucracy is in the way. Chinesevisitors to the UK and Europe areobliged to apply for two visas: one tovisit 26 countries in Europe – knownas a Schengen visa – and a second,separate visa for UK entry.

Research by the UK China Visa Alli-ance, a lobby group, found that just 6per cent of Chinese coming to Europebother obtaining the additional UKvisa. And why would they, when theSchengen offers passage to luxuryshopping destinations such as Parisand Milan without extra paperwork?

The UKCVA says that Franceattracts almost eight times more Chi-nese visitors than the UK.

Nevertheless, when they do makethe trip to London’s West End, Chi-nese shoppers spend an average of£1,688 – three times more than over-seas visitors from other countries,according to data from the New WestEnd Company, which represents busi-nesses in the area.

In 2012, the UK played host to179,000 Chinese visitors, who spent atotal of £300m, according to figuresfrom Visit Britain.

“Chinese tourism is vital to BrandBritain,” says Mark Henderson, chair-man of the London Luxury Quarter, atrade body. UK luxury industry lobby-ists are acutely aware they are miss-ing out and are trying to persuade theBritish government to change the visasystem. Their efforts might finallypay off in 2014.

The UKCVA, founded by WalpoleBritish Luxury, the New West EndCompany, Global Blue, McArthurGlenDesigner Outlets and London First,has been working since 2012 to per-suade the UK government of the bene-fits of encouraging Chinese visitors.

Last May, the alliance hosted areception with Mark Harper, theimmigration minister, at which 900British luxury retail and hospitalitybusinesses were invited to raise theirconcerns. And in October, it hosted a

reception in China for tour operators.A pilot scheme, launched last year,

allows Chinese travellers to apply forthe Schengen visa and the UK visa atthe same time and place. AndrewMurphy, chairman of the UKCVA andretail director of John Lewis, is hope-ful the government will roll thescheme out during 2014.

“If the visa process were stream-lined it could boost the economy by£1.2bn and create 24,000 jobs,” says Mr

Murphy. Preliminary findings fromthe pilot scheme are expected soon.

David Cameron, the UK prime min-ister, confirmed efforts are under wayto set up a permanent “joint shopwindow” during a visit to China lastmonth.

The British luxury industry is bank-ing on the visa changes to transformthe scale of its operations. “AttractingChinese shoppers is not just aboutfootfall and revenues,” says Jeremy

UK missing out on luxury buyersVisa laws Lobbyists say Chinese visitors are being deterred by bureaucracy, writesClaire Adler

Lucrative: Chinese tourists spend an average of £1,688 in Britain

Gordon, director at China Edge, a con-sultancy. “It can boost a brand’svalue, whether it is fundraising, orpreparing for an IPO or . . . sale.”

His digital communications tips forUK luxury brands include creating aChinese landing page on corporatewebsites and ensuring brand commu-nications articulate clearly what abrand does best, without assumingprior knowledge.

Meanwhile, the Bond Street Associ-ation, representing dozens of Mayfairbusinesses, has signed up to a “China-ready” workshop series devised byChina Edge to help retailers offer Chi-nese-friendly luxury shopping.

“This year, more than 100m Chineseresidents will travel abroad seekinghigh-end luxury brands,” says GordonClark, UK manager for Global Blue,tax-free shopping specialists. “Thesegoods can be up to 30 per cent cheaperto purchase in the UK than in Chinaeven before the tax-free refund.”

Tales abound among luxury indus-try insiders of the extravagance ofChinese shoppers. Last November,before “Singles’ Day” – China’s equiv-alent of St Valentine’s day – one Chi-nese man bought an engagement ringfrom 77 Diamonds, a London-basedonline jeweller, despite the fact thathe did not have a girlfriend. Hebought the ring “just in case”, thecompany says.

In February, Fortnum & Mason, theluxury London grocer, will for thefirst time host a private event and apromotion to celebrate the lunar newyear – peak time for Chinese visitors.

Celebrating the forthcoming year ofthe horse, products with an equestriantheme are expected to spring uparound London. De Beers, the world’slargest producer of diamonds, has cre-ated window designs for Harrodsincorporating a red background and ahorse silhouette in gold and will handout red-coloured surprise gift packagesto Chinese customers.

Some brands prefer to adopt a morecautious approach. Backes & Strauss,a diamond watch specialist, has notyet focused its marketing on Chinesevisitors. But it awaits visa changeswith interest. “We expect a significantimpact on our UK sales to Chinesevisitors at Harrods and our other UKlocations,” says Vartkess Knadjian, itschief executive.

Have your eye on an AudemarsPiguet Royal Oak but cannot quiteafford it? Now you can hire it, follow-ing the launch last year of ElevenJames, a luxury watch rental site andmembership club.

The company is hiring out time-pieces from IWC, Patek Philippe,Rolex and Vacheron Constantin,among other sought-after labels, andbelieves its business model will work.

Randy Brandoff, founder and chiefexecutive, says: “When I was the firstemployee of Marquis Jet [the aviationservices company] in 2001, we were atthe start of a new trend now calledluxury collaborative consumption.”

Mr Brandoff left the aviation indus-try as chief marketing officer ofNetJets, a private jet hire company, atthe end of 2012 to see if he could applythe same model to watches. The nameEleven James, he says, is based on the11 specially adapted gadgets presentedto James Bond by Q, the MI6 boffin, inthe spy thriller films.

Membership fees range from $249 to$1,599 a month depending on theretail prices of watches borrowed andthe frequency with which membersswap timepieces. Members will alsohave access to monthly events, suchas trips to the Super Bowl or ArtBasel.

Mr Brandoff raised seed financingfrom strategic investors with plans forexpansion capital in 2014.

But some analysts are sceptical.David Sadigh, founder and chief exec-utive of Geneva-based Digital LuxuryGroup, which publishes the WorldWatch Report, has fielded marketenquiries over the years and consid-ered the market’s the potential. Hesays: “This tops out at 100,000 poten-tial members worldwide maximum, soit’s impossible for it to become a glo-bal trend.

“Watches aren’t the same as bags.Most handbags’ lifetime value isshort, so rental makes sense. But thelifetime value of a watch is 50-100times longer.

“NetJets isn’t just about avoidingownership – it’s access to the same

service without the pain, thus solvinga problem. With [watch hire] the onlyopportunity is to wear without buyingit.”

Added to this, he says, is the poten-tial for embarrassment in social situa-tions. “What happens when you wearan expensive watch is people ask youabout it, and you tell a story. ‘It wasmy father’s . . . It’s my weddingwatch.’ So what do you say when yourented it? True, watch people will dieto buy a new watch – they will neverrent one, since from a status stand-point it’s difficult to justify.”

Others fear Mr Brandoff may bemiscalculating the psychology ofmen’s attachment to their watches. AlTehrani, a GIA-accredited watch andjewellery expert based in New York,says the current Eleven James modelthat allows members to hold on totimepieces for two-month rotationswill not work.

“This would have to be structuredlike a lease, in that you can keep awatch longer than six months. Menlike to have a longer relationship with

their watch. They put it on theirnightstand, look at it and remember:‘I wore it here, and I wore it there’.”

Mr Brandoff, however, is under noillusions that he is chasing the “Pan-eristis” of the world (as Richemont’stight-knit group of Panerai collectorsis known). Rather, he says, ElevenJames is chasing commitment-phobesor consumers with a history ofimpulse purchasing gone wrong. Ayounger generation of customers usedto access rather than ownershipmight well follow Mr Brandoff. Thecompany plans to open in Asia, Mex-ico and Russia, from which it isalready fielding requests.

“I’m not pretending I know every-thing about watches,” he says. “Itwould ring hollow to any true collec-tor. I’m reaching out to the right peo-ple.

“What I do know is clubs. Men loveclubs. Wine clubs, beer clubs, golfclubs . . . Guys take things they loveand hang out with other guys wholove those things.”

A relationship withno commitmentsTimepiece rental

Members’ club Eleven Jameswants to do for fine watcheswhat NetJets did for privateair travel, writes Syl Tang

‘Men love clubs. Guys hangout with other guys wholove the same things’

FINANCIAL TIMES MONDAY JANUARY 20 2014 ★ 5

Watches & Jewellery Raw materials

AColombian mine owner,speaking on condition ofanonymity, takes a littlewhite paper packet out ofhis shirt pocket and opens

it. He hands out three 9ct gems – eachcarat, he says, is valued at $50,000.

“There you go, you have $1.35m inyour hands,” he says, adding that thedeep, butterfly-green tone that glowsunder a beam of light is “unrivalled”.

“That’s the price people are nowwilling to pay for Colombian emer-alds,” he says. “Worth it or not, thetruth is that they are unmatched.There’s nothing better because Colom-bia is still the mecca of great emer-alds.”

The intensity of the natural green ofthe Colombian emerald is certainlyunique. But emerald mining in thecountry has a bloody history. Adecades-long turf war between rivalgroups for control of the lucrativebusiness left thousands dead.Recently, the prospect of a return toviolence has alarmed the Colombiangovernment.

Last November, Pedro Nel RincónCastillo, also known as Pedro Orejas,a powerful emerald trader in thenorth-central Colombian state of Boy-acá who is now in jail, was injured ina grenade attack that reportedly leftfour people dead. Soon after, he said a“peace pact” had been broken.

Days later, close to the site wheresome of the world’s most prizedemeralds are produced, Juan ManuelSantos, the country’s president,ordered his government to prevent

violence among gem businesspeople.He warned that Colombia, one of

the world’s largest producers of emer-alds, which has experienced an eco-nomic comeback in recent years afterdecades of violence, cannot suffer yetanother “green war”.

Since a peace deal among emeraldminers in the early 1990s, it is saidthat about a dozen powerful clanshave stayed in control of some 80 percent of Colombian exports. This

represented about $128m last year, saylocal exporters who have the US,Switzerland, Thailand, India and,increasingly, Hong Kong as their big-gest clients.

But conflict analysts in Colombiawarn that battles could resurface afterthe death from cancer last year ofVíctor Carranza, the “emerald tsar”,who brought a relative peace to theindustry. Mr Carranza, who wasbelieved to control at least 40 per cent

of the country’s emerald business andwho claimed gems “called to him”,warned in a 2012 interview of the pos-sibility of a new rift, saying “thepeace [pact] we signed . . . is cracking,it’s damaged”.

Some exporters and producers saythe situation around certain emeraldmines is tense. That threat, combinedwith slipping production, might be areason behind the rise in the price ofColombian emeralds, which spiked 30

per cent last year alone, according toindustry experts, and is expected toincrease by at least 25 per cent thisyear. What is more, miners have todig ever deeper, requiring moresophisticated equipment and formalinvestment. Some producers say thiscould become increasingly compli-cated, although a part of the Muzomine already has foreign investment.

Colombian emerald exports havebeen falling, partly because minessuch as Muzo and Chivor are becom-ing exhausted, adding to the rarity ofthe gems, say experts.

“The emeralds fetching the highestprices come from Colombian mines,and one of the reasons is that gettingyour hands on good gems is provingerratic,” says Ricardo Kling, presidentof Bauer, a century-old jeweller andone of Colombia’s largest.

According to data from Colombia’snational mining agency, productionhas dropped in recent years, fromsome 5.2m carats in 2010 to 3.4m in2011, hitting a low of about 1.2m in2012. However, there was a reboundlast year to some 2.6m.

Some in the industry say that envi-ronmental licences and tax issueshave added more pressure at a timewhen Colombia has been losing steamagainst rival producers such as Zam-bia and Brazil, which are catching up.

Still, according to Mr Kling, globaldemand for the Andean country’sgreen gem, historically sought-afterby elite customers in the Americas,Asia and the Middle East, is on the upbecause it is the “preferred” one.

“Now, big jewellers such as Chop-ard, Van Cleef & Arpels and Cartierare making more pieces featuringemeralds, and that says a lot,” henotes.

For Eduardo Chiquillo, a Colombianemerald exporter with a growing cli-ent base in Asia, “more and more peo-ple are willing to pay more and morefor fine, very fine stones”.

Uncertainty fuels price rise for Colombian gemsEmeralds Slippingproduction cannotmeet demand, writesAndres Schipani

The revolution in ethicalgold and diamonds is aboutto encompass silver.

Ethically sourced andenvironmentally sensitiveprecious stones and metalshave seen a steady rise inglobal demand since theturn of the millennium.

A Fairtrade scheme forgold gained traction in 2011,and last year a Fairtradesilver scheme was launchedin the UK.

Many jewellers haveswitched to silver fromtraceable sources and awayfrom the largely unregu-lated, artisanal miningindustry or suppliers usingenvironmentally unsoundmethods of extraction.

But ethical silver is stillin gold’s shadow, despiteefforts by the FairtradeFoundation and the Alli-ance for Responsible Min-ing to boost traceable met-als, says Greg Valerio,founder of Cred, an ethicaljeweller.

The sticking-point is cost.Most artisanal miners are

not environmentally con-scious, largely because sil-ver is relatively cheap.They make what littlemoney they can from goldand, because silver is abyproduct of gold mining, itis difficult to persuade themto adopt cleaner, morecostly processes.

The supply chain, too, istarnished, Mr Valerio says.The price of silver, cur-rently $19.4 a troy ounce, isstill far below gold, whoselustre diminished over 2013but is still priced at $1,226.2an ounce. Why pay more tosource and import ethicalsilver when margins arealready tight?

There is also a lack ofawareness among consum-ers about the importance ofbuying sustainable silver.

Alan Frampton, whobought Cred from Mr Vale-rio in 2009, says he is sur-prised that buyers are dis-cerning about the prove-nance of their food but nottheir jewellery. He is hop-ing to lead by example: “Wewant to know where our sil-ver has come from, espe-cially as mining is still adirty business.”

Slowly, Fairtrade is help-ing producers improve theway they extract and purifysilver. Mr Valerio says: “In2004, I visited Oro Verde, apioneering small-scale min-ing initiative in Colombiathat does not use cyanideand has a traceable supplychain. This catalysed thelaunch of Fairtrade Gold.”

From this scheme, whichrelies on panning and div-ing for sediment, haveemerged four Latin Ameri-

can Fairtrade gold minesand nine African pilotprojects producing bothgold and silver. The hope isthat Fairtrade mines willmake it easier to source eth-ical silver while improvingthe lives of miners.

Ute Decker, the architec-tural jeweller, has used Fair-trade gold since 2011, butuntil recently could not findethical silver – the closestalternative, she says, was arecycled material, althoughthe traceability of the origi-nal pieces was questionable.

She is switching to Fair-trade. “It is much better tocreate an artisanal piecethat has helped supportother artisans,” she says.

Jon Dibben, a fine jewel-lery designer whose special-edition collars can costabout £50,000, says demandfor silver jewellery could

grow this year, as fashion-conscious customers turn toit “psychologically” for itsprice and versatility.

He says: “It only costsmaybe £40 more to designbespoke pieces out of Fair-trade metal than non-specific metal. So why notgo Fairtrade?”

High-end retailers arealso taking their corporatesocial responsibility oversilver seriously.

Anisa Kamadoli Costa,vice-president for globalsustainability and corporateresponsibility at Tiffany &Co, says: “We believe ourcustomers trust us toensure the jewellery wecraft was extracted and cre-ated in an ethical andresponsible way.”

Tiffany has traceabilityand control throughout thesupply chain, she says. In2012, 83 per cent of the sil-ver used in its own manu-facturing facilities camefrom one large-scale minein the US, with 17 per centfrom recycled sources.

Other jewellers are start-ing to use ethically sourcedprecious metals. Garrard,the world’s oldest jeweller,signed up to sell Fairtradegold.

Danish jeweller GeorgJensen openly states itscommitment not to supporthuman rights abuses in thesupply chain. But MrFrampton says more shouldbe done to get consumerson board.

He and the 27 other jewel-lers that have signed up tothe Fairtrade gold schemehave made 2014 the year tochallenge consumers toinquire about the origin ofthe metals they are pur-chasing, so that more pres-sure can be put on suppli-ers.

The Fairtrade Foundationis campaigning among faithgroups in the UK, usingFairtrade wedding bands asbait to promote ethicaljewellery.

Mr Valerio is optimistic:“This is a vanguard move-ment and the British publicwill get it.”

Calls for consumers toback ethical revolutionSilver

Origin of materialsmust be queried, saysSimoney Kyriakou

Intensity: emerald mining in Colombia has a bloody history with some fearing a return to the ‘green wars’ for control of the lucrative business Reuters

Silver extractionA risky process

In the 1500s, Spanish mines in the Americasused mercury to extract a purer form ofsilver from gold and other metals.

The silver in the ore would form anamalgam with mercury and be extractedmore efficiently afterblasting with tonnes ofwater.

Today, cyanide hasreplaced mercury in mostmines around the world,but mercury is still usedby many artisanal

miners. Both substances are dangerous tohuman health and high levels of mercury andcyanide are often found in water andfarmland near gold mining communities,according to the Fairtrade Foundation.

Up to 90 per cent ofworkers around the worldinvolved in mining areartisans, the foundationestimates. Those workersproduce about 15 per centof the world’s gold.

SK

‘We want to knowwhere our silver hascome from, . . . asmining is still a dirtybusiness’

‘More and more peopleare willing to pay moreand more for fine,very fine stones’

6 ★ FINANCIAL TIMES MONDAY JANUARY 20 2014

Watches & Jewellery

Hublot The watchcompany hascollaborated withDepeche Mode, the popgroup, on a limitededition watch. Part ofthe proceeds aredonated to Charity:Water, a non­profitorganisation thatdelivers safe drinkingwater to developingcountries.

Graff DiamondsLaurence Graff, thecompany’s founder, setup the Facet Foundationin 2008 to supporteducation andhealthcare projects insub­Saharan Africa,where many of thecompany’s stones aremined.

Bulgari The Italianhouse has raised morethan $25m since 2009for Save the Children. Aversion of its B.Zero1ring engraved with thecharity’s logo is sold for$420, from which Savethe Children receives a$90 donation.

Nomos Glashütte Thequirky German brandhas created a series oflimited­edition watchesto raise money forMédecins SansFrontières, the Frenchhumanitarian NGO, witha target to raise $1m.

Bremont In 2012, theBritish watch brand’sVictory timepiece toraised funds for theNational Museum ofthe Royal Navy. Thisyear, it released theCodebreaker to raisefunds for the BletchleyPark Trust.

Robin Swithinbankand Justin Cash

Good luxuryIndustry tie-ups

Corporate social responsibil-ity (CSR) is often dismissedas a featherweight conceptdreamt up by marketingmen. But in the watch

world, which grows richer by the yearand is increasingly forging links withnon-profit organisations, it can pro-duce significant results.

Recent efforts prove the point – andhighlight the wide variety of watch-maker’s approaches to CSR.

In September 2013, 33 unique finewatches donated by brands wentunder the hammer in Monaco at theOnly Watch auction in aid of researchinto Duchenne muscular dystrophy,raising more than €5m.

In October, Rolex announced OlafurEliasson, the artist, and MichaelOndaatje, the novelist, would beamong the experts taking part in its2014-15 Mentor and Protégé Arts Initi-ative, an arts mentoring scheme thathas drawn high-profile names since2002.

And the Audemars Piguet Founda-tion has worked on 75 projects in 34countries to raise awareness of envi-ronmental issues, with a focus on pro-tecting forests.

Whatever the motives, the impera-tive for luxury watch brands to “givesomething back” by lending supportto charities is an increasing priority.But are consumers convinced?

Some experts say the luxury indus-try’s involvement in charitable andsocial projects can create consumerconfusion. “While individuals can beboth ‘selfish’ and ‘selfless’ dependingon the circumstances, they can neverbe both at the same time,” says CarlosTorelli, associate professor of market-ing at the Carlson School of Manage-ment, University of Minnesota.

Catherine Walker, a researcher atthe Directory of Social Change, a UKindependent research charity, andauthor of The Company Giving Alma-nac, says: “The concept of CSRclashes psychologically with the moti-vations for buying luxury goods, andneeds to be carefully managed.”

But she adds, “Any CSR is betterthan no CSR, and while in order to

change things you’d need people tostop buying luxury watches, and givemore money to developing countries,it may be easier to persuade them togive a small percentage of their pur-chase price to good causes.”

Certainly some non-profit organisa-tions are happy to enter into sucharrangements with luxury watchbrands. Médecins Sans Frontières, thehumanitarian aid organisation, lastyear partnered with NomosGlashütte, the German watch house.MSF receives a donation of 100 euros,pounds or dollars from the sale ofeach of 6,000 limited edition watchessold by the company in Germany, theUK and the US. Proceeds from thistie-up will be added to an initial€200,000 donated to MSF when thescheme was first run in Germany.

“Partnerships with luxury brandsare quite new for MSF,” says AntoineBogaerts of MSF’s fundraising team.“It helps us to reach people who wemight not have had the opportunity toaddress before.”

He adds that £100 can go a long

way. The sum will pay for 37 full setsof emergency wound dressing suppliesfor treatment in the field, or 25 woolblankets to protect displaced peoplefrom the cold in winter.

Nomos Glashütte acknowledges thatluxury products have no relevance incrisis situations, but says this shouldnot prevent it from supporting the aidagency. “Since mechanical watcheswere not on MSF’s priority list foremergency aid, we figured that fundsand additional awareness for theirorganisation was the best we coulddo,” says Uwe Ahrendt, the brand’schief executive.

Luxury watch retailers are alsoinvolved. Half of the donation made toMSF under the Nomos Glashüttescheme will come from retailers. Oneof the participating UK retailers isWatches of Switzerland.

“This project has given us an oppor-tunity to support an organisationwhose mission and values we believein, and to behave in a socially respon-sible way,” says Justin Stead, chiefexecutive of Aurum Holdings, parent

company of Watches of Switzerland,Goldsmiths and Mappin & Webb.

Stephen Urquhart, Omega’s presi-dent, believes brands benefit fromCSR because projects often reflect themood of consumers. Omega’s latestCSR project is with the GoodPlanetFoundation. It will help fund twoocean-based projects near the Indone-sian island of Sulawesi.

“Companies in all industries areaware that their potential customersare socially aware and are attractedby companies that share their pas-sions, whatever they might be,” hesays.

Although it has become a hack-neyed phrase, the merits of “doinggood” are enough motivation for somebrands. “We believe it’s everyone’sresponsibility to be respectful of theenvironment,” says Zahra Kassim-Lakha, Jaeger-LeCoultre’s global headof strategy.

“For us, that means environmentalprotection, commitment to humanvalues, and the preservation of knowl-edge and skills.”

Jaeger-LeCoultre, for its part, isinvolved with the Unesco World Herit-age Centre and (Red), the Aids char-ity, as well as the UK-based Prince’sFoundation for Children and the Arts.

For smart-thinking companies, CSRactivities can create opportunities toenrich a brand’s values. In June, theBritish brand Bremont launchedCodebreaker, a watch made in part-nership with the Bletchley ParkTrust, which maintains the site whereAlan Turing, the cryptanalyst, and hiscolleagues broke the Enigma codeduring the second world war.

The watch enhances Bremont’s pro-file as a British company by incorpo-rating wood from Bletchley’s Hut 6,metal from an Enigma codingmachine rotor and paper taken frompunch cards used by the codebreak-ers. Bremont paid the trust an undis-closed figure at the start of theproject, which it intends to recoupthrough watch sales.

“If you walk around Bletchley Park,it’s falling down. It needs money, itneeds support,” says Giles English,Bremont co-founder. “We can help dosomething. Their PR operation issmall-scale and we can add weight toit. In return, they’re giving us anamazing story.”

FT.com/watches­jewelleryHow luxury watchmaker IWC is help-ing to preserve the Galápagos Islands

Brands add value with charity partnershipsEthicsWatchmakersare forging convincingCSR relationships.ByRobin Swithinbank

Bletchley Park Hut 6 in1941: Bremont’s charity‘Codebreaker’ watchincludes materialssalvaged from the site

‘The concept ofCSR clasheswith motivationsfor buyingluxury goods’

The main watch auctionsstaged during the past twomonths of 2013 reflected acollecting market in rudehealth. The three bigGeneva sales conducted byAntiquorum, Christie’s andSotheby’s grossed morethan $50m between them.

Prospects for 2014 watchsales – the first of whichwill be staged by Antiquo-rum Hong Kong on Febru-ary 22 – appear to be rosy.But for a true internationalpicture, we asked six spe-cialists to provide theirthoughts on the year ahead– and to predict whichwatches will attract highprices.

John Reardon, Christie’sNew York:

“The momentum fromlast year’s record seasonhas encouraged sellers tooffer prized pieces for sale,and new bidders are liningup to try buying at auctionfor the first time. In addi-tion, our commitment toprivate sales in the watcharea [ie, non-auction sales]is growing exponentiallyand the world of retail isnow meshing with that ofthe saleroom.

“In both areas, the mar-ket for mint condition vin-tage and modern timepiecesseems to be gettingstronger, in particular forRolex, Patek Philippe andVacheron Constantinpieces.”

Paul Maudsley, BonhamsLondon:

“Last year proved to bethe strongest ever for thedepartment, with £14m ofsales worldwide, up from£12.5m in 2012. From a UKpoint of view, we have toaccept that the very bestvintage watches – such ascomplicated Patek Philippesand so on – exist here onlyin tiny numbers and rarelybecome available for sale.

“There is no doubt thattoday’s buyers are bothmore knowledgeable andhave a greater willingness

to learn, which means theyare being more careful intheir purchases and oftenwaiting longer for the rightwatch to come along.

“I would suggest thatLongines chronographsfrom the 1940s and 1950smight take off. They arebeautifully designed andengineered but currentlyundervalued.”

Julien Schaerer, Antiquo-rum Geneva:

“There is no doubt that2013 was another interest-ing and successful year but,in my opinion, the resultswere mixed – due, in part,to uncertainties in the Chi-nese market, which mayhave affected the interna-tional buying habits ofAsian collectors.

“On the face of it, the vin-tage Rolex market is look-ing very strong – but reallyit is only for the super-rareDaytonas, early chrono-graphs and moon phasepieces. Patek, too, is set toremain strong for the reallyrare references, but I envis-age some weakening inbroader terms.

“This year we will seepeople looking for alterna-tive dial names. VintageZeniths, for example, are

enjoying a trickle-downeffect from the successfulrevival of the brand, andcertain models of VacheronConstantin, such as steelversions of the GéraldGenta-designed 222, arelikely to perform well.”

Sharon Chan, Sotheby’sHong Kong:

“The growing number ofparticipants in our sales

suggests the Asian marketwill continue to grow,partly because the brandshave been increasing theirmarketing budgets in Asiancities in order to educatecollectors.

“I anticipate a slowchange in focus from mod-ern to vintage – generally,Asian buyers like onlyexcellent-condition watches,even if they are vintage.

“It is becoming more andmore difficult to consign

rare watches due to anincrease in competition,and the fact that some col-lectors are exchangingpieces among themselvesbefore we get to see them.

“I do, however, predict afurther increase in femalebuyers at auction. Manyhave gone beyond buyingfor fashion and are nowlooking at functions andcollectability.”

Geoffroy Ader, Sotheby’sGeneva:

“The huge demand for thebest Rolex pieces will con-tinue. In the 20 years that Ihave been in the business,demand for vintage Dayto-nas has always been high –in that time, the right oneshave risen in value from$5,000 to $100,000, and Idon’t see why they shouldstart to go down.

“The market for modernwatches will remain strong,but more and more buyersare demanding excellent-condition pieces with boxesand papers. The best pocketwatches, meanwhile, willstill make record sums butaverage ones will continueto make average prices. Thedemand just isn’t there.

“As for big money PatekPhilippe pieces, they arebecoming more and moredifficult to find. The peoplethat have them are reluc-tant to let them go, just asthey are with the crème dela crème of pieces by mak-ers ranging from AudemarsPiguet to Universal.”

Stefan Muser, Dr Crottauction house, Mannheim:

“China’s anti-corruptioncampaign has resulted inhuge numbers of unsoldnew watches in the coun-try, and that is bound toaffect the residual market.

“Vintage watches, how-ever, will continue to per-form well in the saleroom. Ienvisage collectors lookingto take advantage of cur-rently undervalued models– such as Longines chrono-graphs from the 1950s and1960s, and probably rectan-gular-cased Patek Philippesfrom the 1940s and 1950s.

“The trend for huge casesizes is not going to last. Alot of my clients are return-ing to wearing watches ofaround 35mm – they arejust more comfortable,more elegant.”

Salerooms to go back in time asanother vintage year is predictedAuction houses

International expertstell Simon de Burtonwhere they think thesmart money will go

Sought after: chronographs from Rolex and Longines

‘This year we willsee people lookingfor alternative dialnames, such asvintage Zeniths’

FINANCIAL TIMES MONDAY JANUARY 20 2014 ★ 7

Watches & Jewellery Watchmaking

Watchmakers have spentdecades perfecting the art ofkeeping liquids out of watchcases, writes Simon deBurton, but one of theindustry’s more avant gardebrands is now working tokeep them in.

“Hydro mechanicalhorology” has been pioneeredby HYT, the niche companythat broke new ground withthe launch of its H1 watch in2012. The main feature ofthe H1 is that it displays theminutes not with aconventional hand but with“an aqueous liquid filled withfluorescein” – fluorescent,coloured water – which

moves slowly around acapillary tube. The water iscontained in one reservoir,while another reservoir holdsa “transparent viscous liquid”(in other words, oil), withboth reservoirs linked to apair of piston­driven bellows.

These are connected to ahand­wound mechanicalwatch movement with a 65­hour power reserve, whichdrives the bellows to pushthe unmixable fluids inopposite directions around an11cm long, borosilicate glasscapillary with an internaldiameter of just 1mm.

The position of thefluorescent water indicates

the minutes, while the houris shown by a single,conventional hand. When thewater reaches the six o’clockposition, having made a fullcircuit of the tube, its pumpcompresses while the pumpfor the oil extends. The wateris pushed back and thewhole process begins again.

Frivolous as the idea mayseem, it has taken more thana decade of research and ateam of 30 technicians toperfect HYT’s liquid display,first mooted by its inventor,Lucien Vouillamoz, in 2002.

It came about thanks tothe involvement of PatrickBerdoz, an investor, and

Vincent Perriard, an industryveteran who as president ofConcord, the Swisswatchmaker oversaw thecreation of a timepiece witha liquid­filled power reservedisplay.

HYT’s watches are vastlymore sophisticated, so muchso that a sister companycalled Preciflex was createdso that the fluid systemcould be patented. Suchtechnology does not comecheap. The H1 is availablefrom £34,000 in titanium,while the next­generation H2model, due to go on salenext month, will have astarting price of £93,000.

Hydro-powered HYT takes fluid-system technology to the next level

Capillary tube filled with fluorescein

Coloured liquid reservoir

Viscous and transparent liquid reservoir

Hand-wound mechanical watch movement

H1 Titanium deconstructed

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Mechanicalwatchmovement

Pistons

FT graphic

Lakiska Raybon used to spendfive days a week in one ofDetroit’s dimly lit auto shops,where the air was filled withoil fumes and the clank and

scream of machine tools stamping outcar parts from solid metal blanks.

The 36-year-old mother of three stillsits on a production line in “MotorCity”, but since May 2012 she hasfound her work far more rewarding –because she now assembles time-pieces in her own, pristine work spacein the tranquil surroundings of alight-filled watch factory.

Mrs Raybon was among the firstnine employees to be recruited by thefledgling Shinola dial name, whichwas created through a collaborationbetween Dallas-based Bedrock Manu-facturing, the parent company, andRonda, the Swiss watchmaker.

Taking the name of a long-defunctbrand of US shoe polish, the companymoved into the fifth floor of the oldGeneral Motors Argonaut building,where it occupies a 60,000 sq ft space.

“People often raise their eyebrowswhen they hear that we chose to start

a new watch brand here, because theyonly think of the Detroit that is facinghuge financial challenges and infra-structure problems,” says Steve Bock,Shinola’s chief executive and a formerexecutive with Fossil watches.

“But the idea was to find a citysteeped in craftsmanship and innova-tion, which Detroit clearly is. It is alsosomewhere with a future as a verydifferent, perhaps smaller city – andhopefully Shinola will be an impor-tant part of that.”

From those original nine employees,Shinola’s watch division (it alsomakes bicycles, journals and leathergoods at separate sites) has grown toa staff of 58 working on the produc-tion side.

The team is led by Stefan Mihoc, amaster watchmaker who graduatedfrom watchmaking school in hisnative Romania in 1985 before movingto Detroit in 1996, where he spent 10years making tools, dies and punchesin an automotive machine shop. Afterbeing laid off in 2006, he set up hisown watch repair business beforebeing tracked down by Shinola.

“It was very surprising to hear thatsomeone wanted to set up a watchfactory here in Detroit, but I jumpedat the chance because it gave me theopportunity to do the work I trainedfor and that I really love,” says MrMihoc.

Since Shinola’s official launch atlast year’s BaselWorld watch show,Mr Mihoc has overseen the productionof about 50,000 watches costingbetween $648 and $1,160 apiece.

They are assembled on the Detroitproduction line using quartz move-ments shipped from Ronda in Switzer-land, with Chinese cases, dials, handsand crystals and US-made leatherstraps. The target for 2014 is 150,000units, and there is even talk of oneday producing Detroit-made watcheswith mechanical movements.

“Right now, however, we are verymuch at the beginning,” says MrBock. “The key to success will be tolearn slowly, not to rush in.”

FT.com/watches­jewellerySee more images from behind thescenes at Shinola in our gallery

Detroit home to a different kind of production lineShinola New face on the scene is taking time to learn slowly and build its business in a city steeped in craftsmanship, writes Simon de Burton

Clockwise: the Argonautbuilding, watchmakers atwork, precision tasks, aShinola worker, dial tasksdemand skill Fabrizio Costantini

8 ★ FINANCIAL TIMES MONDAY JANUARY 20 2014

Watches & Jewellery Trends

A new breed of jewellerybuyers is in search of piecescreated by designers fromthe wider applied arts.

A recent Sotheby’s auc-tion, where a design byAlexander Calder, the sculp-tor, sold for almost $2mand pioneering examplessuch as a jewellery collec-tion for Tiffany & Co byFrank Gehry, the US-basedarchitect, has alerted collec-tors to the appeal of crosso-ver jewellery design – bothfor its form and investmentpotential, according to Lou-isa Guinness, a London-based dealer of jewel-lery created by 20th-century artists anddesigners.

“I am noticing abuzz now,” she says.“It is interesting andfunky and cool jew-ellery, which is nottrying to enhance thebeauty of the personwearing it. It’s trying tosay something.”

Since Ms Guinnessstarted trading 10 years ago,she has watched a marketdevelop for pieces bydesigners such as Ron Aradand Ross Lovegrove, whospecialise in furniture.

Last year, her galleryexhibited at PAD (Pavilionof Art & Design) in London,at Art Basel and for the firsttime at Design Miami,where jewellery dealers,such as Brussels-basedCaroline Van Hoek and US-based Mark McDonald,made up 15 per cent of gal-leries on show.

At Design Miami, a seriesof bracelets by Gijs Bakkerfetched $37,000. The Dutchproduct designer and co-founder of Droog, the design

house, was presented byVan Hoek.

At the first Collectiveevent in New York, a fairselling vintage and contem-porary furniture anddesign, jewellery was cru-cial to its broad appeal –attracting customers whothen bought furniture, orvice versa, says StevenLearner, the event’sfounder.

The result, says Ms Guin-ness, is a customer base dif-ferent from that of conven-tional jewellery. “There’sincreasing crossover be-tween design and art fairs.I’ll get people coming infrom Frieze [a London mod-ern art fair] or DesignMiami, and they won’t haveheard of us. Then there are

the collectors who are col-lecting jewellery just asthey would art.”

The market has beenboosted by Galerie Kreo, aninfluential Parisian gallerythat has commissioned jew-ellery designs from HellaJongerius, an industrial de-signer, Jaime Hayon, whospecialises in interior de-sign, and the Bouroullecbrothers, who specialise infurniture.

“It’s an exclusive mar-ket,” says Didier Krzen-towski, owner of Kreo. “We

did not have the weight ofadvertising campaigns, orbrand images, only animportant designer or artistcreating a piece for an exhi-bition. The ‘design jewel-lery’ market gives morefreedom to creators and istherefore more interesting.”

Tomoko Azumi, a furni-ture designer based in Lon-don, agrees. Ms Azumi, whohas created a collection offaceted silver jewellery forTerence Woodgate underhis Eiger label, says herchallenge was that “thefunction of jewellery is toexpress a character andfeeling in something sosmall, rather than a practi-cal function”.

While Eiger is concentrat-ing on everyday pieces, MrWoodgate hopes that lim-ited editions will develop ashis designers suggest ideasthat cannot be developedusing mainstream tech-niques.

Where is the value insuch pieces? Arlène Bon-nant, an art expert anddirector of Caspita – anew Swiss jewellerybrand, which has ZahaHadid, the architect, asits first art guestdesigner – says jewel-lery from a recognised

design name is depend-ent on the value of that

person’s oeuvre growingover their lifetime andbeyond.

“For me, there’s only JAR[jewellery designer JoelArthur Rosenthal] whosework has increased in valueover his lifetime, but it ispossible, especially if thereis technological advance orsomething special about thework,” she says.

Johanna Flaum, a special-ist auctioneer at Sotheby’s,adds that while the futurevalue of such pieces isimpossible to evaluate, “themarket is finally recognis-ing the finest artist jewel-lery as beautiful works ofcontemporary art as well asmasterpieces of design”.

‘Crossover’ designersattract new collectorsRetail

Furniture makersand architects aregetting in on the act,writes Jenny Dalton

Now that most of us checkthe time with a quickglance at our mobile phone,the ordinary, single-func-tion household clock is at

risk of becoming an endangered spe-cies. But not if Quirky, the crowd-sourcing invention company, has any-thing to say about it. Enter Nimbus.

Nimbus, which resembles a digitaldashboard, is a four-dial desktopdevice that displays the time but alsotracks other data. Connected to auser’s phone via a Quirky app, theclock can monitor and display digit-ally available information such asweather, traffic, unread emails, Face-book likes, Twitter mentions, sportsscores and share prices.

Ryan Pendleton, inventor of theNimbus, says he had the “ahamoment” in 2012, when his clock radiobroke. “I commute an hour for workand live in a place where it snows,” heexplains. “I realised I wanted some-thing that combined when I have ameeting [in my calendar], withweather and traffic to tell me whattime to leave in the morning.”

Mr Pendleton, who manages IT for apublic school system in the US Mid-west, tried to program his own mobilephone app. But he struggled to over-come unanticipated hurdles, such asthe alarm clock not sounding on aphone drained of its battery.

While searching e-commerce sitesduring development of the product,Mr Pendleton came across tech-friendly Quirky. In April 2013, thecompany decided to move forward

with production of his “clock”, whichhit stores last month.

Reinventing the ordinary seems tobe the Quirky ethos. Its “hero prod-uct” is Pivot Power, a flexible powerstrip. It also manufactures an egg traythat monitors how many eggs are inthe fridge along with their expirydates. A rake becomes a tool that alsomashes leaves into the rubbish bag.Barbecue skewers come with levers toslide food on to your plate.

Bret Kovacs, Quirky’s head of stra-tegic partnerships, says of the Nim-bus: “What we know as the clock hasevolved. In a world with too muchinformation, this provides some disci-pline. You can go on your phone andsee 80 widgets but this monitors fourthings. I was using my phone as myalarm clock – my wife was sick of itso we made a conscious effort toremove our phones from the bedroom.I can still monitor what’s important.”

However, not everyone is a convert.“My first reaction is, ‘How ironic’,”says Shalini Misra, professor at theSchool of Public and InternationalAffairs at Virginia Tech. “Technologyis often marketed as innovation tosolve our information overload prob-lem, but actually exacerbates it.Whatever is not measured is consid-ered not to be of value,” she says.

“Facebook ‘likes’ make what’s new[more] important than saying hello toyour children. Further, we know fromresearch on interruptions and disrup-tions that every fragment of informa-tion from digital sources adds to taxa-tion of our working memory.”

The pros and cons of adding moreways to look at more data are widelyargued by cognitive scientists. TomStafford, lecturer in psychology andcognitive science at the University ofSheffield, theorises that we aremerely forgetful of information weknow to be easily retrievable, but areable to remember where to locate theinformation again. In other words,data are not eating our brain.

And clocks may be only the firststep towards digital homes, saysDavid Sadigh, founder and chief exec-utive of the Geneva-based Digital Lux-ury Group, the publisher of the WorldWatch Report. “We now have soft-ware that checks your sleep and tellsyour iPhone to match your cycle tothe time you want to wake up,” hesays.

He adds: “I just moved to a newhouse, and it took me two hours tounderstand the heating. What if thisconnected device can help me reduceenergy use in my house because ittells me when to leave and saves metime and energy costs?”

Indeed, the Nimbus clock is part ofa partnership Quirky has formed withthe US conglomerate General Electricto target the connected home market.

Nimbus can tell the user what timeto leave home, while Spotter, Quirky’smotion detector, is capable of trigger-ing the Pivot Power Genius, turningthe lights on and off. And if yourplans don’t quite go like clockwork,the app allows you to turn power onand off in your home from anywherein the world.

ElectronicsGet aNimbus and you need not take yourmobile phone to bed, says Syl Tang

Evolution: the Nimbus clockmonitors four elements of allthe information available ona mobile phone

‘In a world withtoo muchinformation,this providessome discipline’

Quirky reinvents the ordinary

One of the biggest trends inthe fine jewellery marketdoes not involve a new styleof earrings or unusually col-oured diamonds.

Instead, designers nor-mally associated with cos-tume jewellery havelaunched fine jewellerylines, working for the firsttime with precious stonesand metals and often charg-ing prices that are, under-standably, well above thoseof their standard offerings.

For costume jewellerybrands, the impetus toexpand into the fine realmis simple: it is a compara-tively easy way to increasetheir reach.

“It’s critical for designersand their companies to findgrowth,” says MarshalCohen, chief industry ana-lyst at the NPD Group,which tracks the retail salesindustry. “It’s easier to cre-ate another version of yourcore business than it is todo something totally differ-ent. They’re playing off theproduct and the consumerbase that they have and cre-ating an aspirational prod-uct to do it.”

In many cases, these lineshave a spunkier sensibilitythan consumers wouldexpect to find at, say, Tiff-any & Co.

Alexis Bittar’s fine jewel-lery collection, launchedlast autumn, tweaks vin-tage-inspired pieces withsettings that suggest eagleclaws and barbed wire,albeit in 18-carat gold, whileAurélie Bidermann’s lineincludes a gold apple corecharm dangling from apaper clip. Jewellery designduo Dannijo’s new goldpieces, Fine by Dannijones,look like items onemight see on Shoreditchtwenty-somethings.

Tastemaker brandssuch as Zara Simon andCC Skye are also about tolaunch fine jewellery lines.

The trend includes main-stream brands such asSwarovski, which intro-duced fine jewellery inChina in late 2012. The com-pany has two boutiquesthere dedicated to the col-lection, as well as 10 shop-in-shops in its traditionalstores. The line is aboutfive times more expensivethan Swarovski’s costumepieces, starting at Rmb5,000($827).

Francis Belin, Swarov-ski’s senior vice-presidentof sales and operations inGreater China, comments:“If you want to grow and bea key player in the jewel-lery market, not being infine jewellery at all is ahandicap.”

Although his brand’s pre-cious pieces do not featurelogos, many are designedaround motifs with which itis associated, such as aswan. Swarovski and itspeers are offering essen-tially fashion jewellerycrafted from investment-cal-ibre materials.

In China, the jewellerymarket is growing: it wasup 5 per cent in 2013,according to a recent reportby Bain & Company.

“Our Chinese customersare becoming more andmore affluent,” says MrBelin. “They’re very muchin tune with international

brands. Quite a few of themwere asking: ‘When are yougoing to be getting into finejewellery?’”

Eddie Borgo, a New York-based designer, says he wasasked the same question. Inresponse, he created ahandful of 18-carat gold-based pieces last year – aCleopatra-themed group forChinese retailer Lane Craw-ford and a limited edition ofsix numbered cuffs for Nei-man Marcus in the US.

While his costume collec-tion is vast, his strategy isto limit the distribution andnumber of styles of the pre-cious creations.

“What I didn’t want to dowas cannibalise the cos-tume business with the finebusiness,” he says. “Iwanted to run them as sep-arate entities. For us, theanswer really is in theexclusivity of the pieces.”

Drawing a line betweenhigh and low collections,even though there may becustomer crossover, hasproved a successful tactic.

Anna Sheffield launchedher fine jewellery collectionin 2011 after building a solidcustomer base for the BingBang costume line. Lastyear, her fine jewellerysales nearly tripled and arenow four times more thancostume sales. She recentlyopened her first boutique,showcasing precious jewel-lery, in Manhattan.

One factor in the transi-tion into the fine arena maybe the price of gold, whichdropped substantially lastyear. Still, the greaterinvestment in metals andgems has some brandsstarting small.

Dannijo, for example, inNovember launched its finecollection exclusively on itswebsite to keep down over-heads and the number ofpieces it needed to produceinitially. “We were veryconservative with our num-bers,” says Danielle Snyder,who founded the brandwith her sister, Jodie.

“Fine jewellery’s moreexpensive; the raw materi-als add up quickly.”

Some items sold out onthe first day and a secondcollection of more pieces isplanned.

Mr Bittar spent six yearsbuilding brand recognitionand opening boutiques inaffluent areas beforelaunching his fine jewellerycollection, which includespieces with diamonds, sap-phires and amethysts. “Aretailer needs everything inplace: the packaging, thebrand manifesto, the staffto support it,” he says.

Economic conditions areconducive to fine jewel-lery’s appeal. “Now theeconomy is recovering, weexpect the jewellery indus-try will see rising revenue,”says Caitlin Newsom, retail

analyst at IBISWorld,a research company,that forecasts US

industry revenue willrise for the next five years.

“Timing is everything,”says Mr Cohen. “Trying todo this four years agowould have been a waste oftime.

“Now, aspirational mid-market consumers are feel-ing pretty confident, andthey are only going to gainin confidence as economicrecovery continues.”

Costume brands in search ofgrowth venture into fine arenaAspirational products

Designers’ use ofprecious materialscreates new versionof core business,writes Rachel Felder

Exclusive: Swarovskifine pendant, right,and a winged scarabcuff, part of EddieBorgo’s fine jewellerycollection, below

Gijs Bakker‘Holes’bracelet,1992

FINANCIAL TIMES MONDAY JANUARY 20 2014 ★ 9

Watches & Jewellery Profile

Collectors do not necessarilyregard Russian watches as afirst-class product, and Mos-cow is not usually consid-ered a centre of excellence

in the haute horlogerie world.Konstantin Chaykin, a Russian-born

watchmaker, intends to change that.He points out that before the Rus-

sian Revolution of 1917 and the subse-quent Soviet era, high-quality, compli-cated timepieces were produced in thecapital.

“Communist ideologists tried towipe from people’s memories every-thing that was good before the revolu-tion of 1917,” he says. “Sadly, this alsoaffected clock- and watchmaking.”

As evidence of his city’s forgottentradition, he points to timepieces builtby Terentiy Ivanovich Voloskov, bythe Bronnikov family and by IvanKulibin, who presented a clock toEmpress Catherine II of Russia.

At his workshop, Mr Chaykin pro-duces about 250 pieces every year,costing between $16,000 and $165,000.

He aims to appeal to buyers inEurope, Asia and the Middle East, aswell as in his native country.

He is serious about the “Russianmade” description, producing most ofthe parts in his workshop with therest sourced within the country.

He even buys the hairspring, atricky part to manufacture, fromRaketa, a supplier based in St Peters-burg.

Though Mr Chaykin can constructhigh complications such as the Tour-billon 55, he prefers to invent novel

complications that play with represen-tations of time.

“Timepieces with a Russian soulcontain a different worldview, a differ-ent perception of time,” he explains.“Hence they are different – differentfrom, let’s say, Swiss timepieces.”

The Decalogue Rega counts theancient Jewish units of time halakimand regaim as well as the modern 24hours. The helek, which means “part”in Aramaic, equals 31/3 seconds, whilethe rega, “the twinkling of an eye” inHebrew, is 44 milliseconds, whichmakes it the smallest measured unitof time in a watch.

The Quartime divides a day intomorning, day, evening and night, inte-grated into a traditional dial. It fea-tures a revolving indicator that com-pletes a quarter of a circle every sixhours; apertures show the passinghours and segments of the day.

Last year, Mr Chaykin launched theCinema, a camera-shaped watch thatincludes a 20-second animated film onthe dial activated by a crown on thebezel.

The Cinema offers not only animage but also the sound of an oldmovie projector as the horse and rider“gallop” in the frame.

Mr Chaykin’s accomplishments havebeen recognised by his peers. He is theonly Russian watchmaker to become amember of the prestigious AcadémieHorlogère des Créateurs Indépendants.

“He is able to make very aestheticand unique watches,” says SvendAndersen, one of the founders of theAHCI.

Lost world ofthe tsars liesbehind dazzlingnew designsRussia Moscow-basedKonstantin Chaykin isreviving an industry that f lourished until the1917 revolution, writesMeehnaGoldsmith

Konstantin Chaykin, 39, was born inSt Petersburg. He is, he says, a self­taught horologist, discovering anaptitude for mechanics when hebegan restoring clocks and watches inthe city of his birth a decade ago.

He produces his own movementsand invents new complications in hisMoscow workshop. He is known in theindustry for complicated movementsand an original approach to illustratingtime, such as the Shabbat clock thatincorporates the Jewish/Hebraiccalendar and the Hijra watch with anIslamic calendar and moon phasedisplay.

In 2010 he became a member ofthe Académie Horlogère des CréateursIndépendants.

Young virtuoso whobrings fresh approach

Russian­made:(clockwise fromabove) theCinema, the CarpeDiem, Moscow’sstreets before the1917 revolution,KonstantinChaykin Alamy

Mr Chaykin’s most recent creationis the Carpe Diem, which representsthe abstract concept of time usingmetaphors from western mythology.

Chronos, the Greek god of time, sitson an off-centre dial that shows thehours against a starry night sky. Oneof his hands holds a scythe, whilethe other leans on an hourglass thattracks the minutes through theappearance of flowing sand.

Mr Chaykin created the illusionusing a shutter system, for which hereceived a patent.

Carpe Diem also includes a skulland date indicator, which employsastrological signs instead of numbers.

Since opening his workshop, MrChaykin has created 26 calibres andbeen granted 17 patents.

“Konstantin’s work in recentyears has really amazed me,” saysMax Büsser, the founder andowner of MB & F, an independentSwiss watch manufacturer.

“On a design perspective, we

are not on the same planet, but hemanages to instil a real sense ofwhimsy and childhood awe in his crea-tions.

“Something makes his watchmakingart so personal and unique in a worldwhere real creativity has become alltoo rare.”

Mr Chaykin hopes to maintain themomentum he has sparked in Rus-sian horology.

There are no professional watch-making schools in Russia, so he has

decided to tackle the problem bytraining young enthusiasts through an

apprentice system at his atelier inMoscow.

“We are creating tradi-tions,” says Mr Chaykin.

“Step by step, cog bycog, here in Russia weare creating our ownwatchmaking schooland raising our owngeneration of world-class watchmakers.”

10 ★ FINANCIAL TIMES MONDAY JANUARY 20 2014