“Jeweler to kings, king of jewelers” said King Edouard VII about Cartier. The jewelry and watchmaking House is prestigious for its finest quality. Since 1847, the brand is developing some of the most prestigious jewellery in the world. With time, their brand expanded; now including watches, pens and other luxury goods. In 1992, Cartier started to develop on the Chinese luxury goods market. Nowadays, this market is vital for the company. Cartier had to adapt its strategy to increase its Chinese brand image upon evolving Chinese luxury consumers. But the brand is facing some issues, particularly recently with events like the Coronavirus. After studying the company creation and evolution, we will see how Cartier China’s strategy evolved over the past thirty years.
Cartier: from its origins to the Chinese luxury goods market
Origins of Cartier, the “king of jewelers”
Louis-François Cartier created the jewelry brand in 1847. The brand quickly became prestigious thanks to its finest quality and many royal family and rich people adopted its products. In 1902, the reputation of Cartier is so important that the Prince of Wales (King Edouard VII) stated “Jeweler to kings, king of jewelers”. The brand established rapidly abroad in countries like the US or the United-Kingdom. They also found some clients amongst the Russian royal family in the 1900s. After the Second World War, Hollywood stars adopted the brand. Cartier has backers in royal families and stars since. Still, they created of tiara of Kate Middleton for her wedding with the Prince Charles. Through decades, Cartier successfully gained a solid reputation acclaimed by the most elitist people in the world. This brand image is a real asset for Cartier China
Watchmaking, the second main knowledge
Beside their solid reputation as a jewelry maker, Cartier began in the watch industry in 1904. This year, Louis Cartier created one of the first wristwatch for his aviator friend Alberto Santos-Dumont. In this time, wristwatches were mainly for women, pocket watches were more common for men. The Brazilian aviator needed a wristwatch to be able to see time information while flying.
The First World War generalized the use of wristwatch for men and was also an inspiration for the brand. In 1919, Cartier created the Tank watch with the shape of a military tank. One century later, the brand is considered as one of the main brands of the Swiss watch industry. In 2001, the company opened its own factory in Swiss to control every process of the watchmaking creation. Today, watchmaking is a real part of Cartier DNA. These watches are popular upon Chinese luxury consumers. The Chinese luxury watches market is an important part of the luxury industry.
Cartier today: a powerful brand on the Chinese luxury goods market
Nowadays, The Richemont group owns Cartier and also famous brands like IWC or Montblanc. It is the second biggest luxury group behind LVMH. Cartier is first on the jewelry market and second behind Rolex on the watch market. According to Statista, the brand holds a value of 6 million million US dollars.
The China market entry of Cartier started in 1992 with a store in Shanghai. The Chinese name of Cartier China is “卡地亚”. Currently, the brand possesses 37 stores in China. According to its official report, The Richemont group including Cartier, made a profit of 4.3 billion euros in Asia in 2018. It represents 40% of the group total profit. Since the 1990s the booming Chinese economy created massive opportunities for luxury brands. Thirty years after, the Chinese luxury goods market is vital for many luxury brands.
[Source: Behance.net – Cartier X Modern Weekly magazine By Yulong Lli]
How Cartier China developed on the Chinese luxury goods market
A golden market for the luxury brand
Through years, the luxury market in China is increasing and evolving. Cartier China features many developing strategies to adapt mutating Chinese luxury consumers.
Cartier China makes expositions to improve its Chinese brand image. Two expositions were made in 2009 and 2019 in the Palace Museum of Beijing. The first one is named: “Cartier Treasures – King of Jewellers, Jeweller to Kings” and the second “Beyond Boundaries: Cartier and The Palace Museum Craftsmanship and Restoration Exhibition”. They both tend to make the high-quality work of Cartier known in China. Not also among Chinese luxury consumers but also artists or those who like arts and craftmanship.
Currently, one the main purpose of Cartier China is to attract male Chinese customers. Arnaud Carrez stated: “If you look at our designs, we’re dominantly feminine because we’re a jeweler but it doesn’t prevent us from addressing men with elegance and sophistication,”. As the communication director of Cartier International underlines: a majority of Chinese customers of the brand are women. The brand tries to raise interest among Chinese men on the Chinese luxury goods market. Thus, they launched in 2016 a Chinese advertising campaign with actor Lu Han to celebrate the “Juste Un Clou” bracelet. With such a young movie star, Cartier is aiming male and particularly young men. They are the main core of the Chine luxury goods consumer.
[Source: South China Morning Post – Lu Han in an advert for Cartier jewellery]
Digital strategies, the new cornerstone of Chinese marketing.
According to Bain Consulting, from 2015 to 2018, the digital marketing proportion in the total marketing budget of luxury brands in China increased. It progressed from 35% to 60-70%. Luxury brand try to seize the online luxury opportunity in China. On January 2020, Cartier made an agreement to sell their product with the T-mall marketplace. This will contribute to improve the Chinese brand image of Cartier China.
It is too soon to notice if this will have an impact on the brand selling in China. Most of the time, Chinese luxury consumers go online to seek product and then they go to real stores to buy products. This concept is called ROPO (Research Online, Purchase Offline) and is the main luxury buying strategy in China. Buying online can be a real solution for city where the luxury goods demand exists but is not filled by stores. Cartier China also has their own Chinese online store.
[Source: https://www.cartier.cn/ – Cartier China website]
Second, Cartier China started to work with “KOLs”. Key opinion leaders are online influencers. Lots of luxury brands are working with them because they have a real influence of the Chinese luxury goods market as they can improve the Chinese brand image of any company. The brand is working for instance with Chrison, an influencer with five million followers on Weibo.
Cartier China: Issues slowing development
Counterfeits, the nightmare of luxury brands.
In China, up to 70% of bags or designer jewelry bought online are counterfeit. In non-brand stores 60% of luxury goods are imitations. Cartier is one of the most affected brands by this phenomenon. The brand stands with Louis Vuitton, one of the most engaged luxury brand in China to wipe out fakes. Indeed, in the 1990s, consumerist culture appeared. The booming middle class increased the demand of luxury goods in China. The backfire is that it also increased the counterfeits industry in China. Since then the quality of fakes has improved a lot. Today more than 73% of fakes came from China. Cartier China has to tackle the fake luxury goods industry. The brand is losing money and it could confuse Chinese luxury consumers.
The Hong-Kong crisis and the Coronavirus: Impediments for Cartier China
Since 2019, these two recent events have strong impacts on the Chinese market.
First, the Kong-Kong crisis which complicated shopping and tourism there. The island is today the first watch industry market in the world. Recent events affected the Richemont group. Cartier is one of the main watchmakers of the group. According to Richemont statistics, retail sells of jewelry, watches and luxury gifts were affected. There was a decreased of 47.1% in August and of 40.8% in September. Chinese luxury consumers demand was impacted by this.
[Source: Cartier.hk – CARTIER PEKING ROAD BOUTIQUE]
Second, the Coronavirus has an impact on Cartier China. In one hand, the company had to close its main shops in China. In the other hand, the company closed its jewelry and watchmaking factories, in March 2020. Around 1200 workers cannot work. This will impede the fulfillment of the Chinese luxury goods demands. Both hands are weakening Cartier China whether on the demand and the offer.
Thus, for decades Cartier kept a strong brand image. The brand is known for its finest quality in jewelry or watchmaking in every country. The Chinese entry market of Cartier started in 1992. Almost thirty years later, the Chinese luxury goods market is vital for the brand. Cartier China continue to develop its strategy, particularly with digital marketing. Still, the Coronavirus could have a real impact for the watch and jewelry market on the long-term. Which could weak the company in China and the whole Richemont group. But contrary to other jewelry brand, the Chinese brand image of Cartier could save the company.
Author: Enzio Cacciotto