Making audio a sound biz in China

Franck Lebouchard shapes Devialet's strategy to offer high-end acoustics to consumers

Franck Lebouchard, 53, CEO of Devialet, a French acoustic engineering technology specialist that is known for its audio products like high-end speakers, sometimes feels overwhelmed by the sheer size of the China market. For, the company has yet to reach many Chinese cities.

The Paris-headquartered company opened a concept store in Beijing and a flagship store in Shanghai in September. The brand aims to sell more audio products in China where a consumption upgrade has been on for a while now.

Founded in 2007, Devialet plans to add more stores in Shenzhen and Guangzhou, both in Guangdong province, to expand its market presence in South China, and attract more young consumers via cultural, music and arts events, as well as online channels.

"We are investing heavily to build our brand in China," said Lebouchard. "What has been very interesting to us is that three years ago, we opened our stores in Singapore, Tokyo, Hong Kong and Taipei. And we have seen many people from the Chinese mainland coming in, buying our products. Top-tier cities remain our priority markets in China."

Such cities, he said, are ideal to develop the company's business because they are supported by well-developed high-speed railway networks. People in several cities can reach Beijing or Shanghai in less than one hour through high-speed trains. Devialet stores in these big cities can serve consumers living in smaller cities nearby.

Lebouchard said second-tier cities such as Nanjing and Chengdu are also the key to long-term success as the brand sees opportunities in many tourist spots and shopping malls.

In his opinion, there are new cities emerging, but the brand might not be ready yet for them. Devialet will eventually reach them as well when their infrastructure is well-developed. It has plans to recruit bigger teams and run bigger offices in the future.

Meantime, the company will focus on using digital tools to reach out to lower-tier markets across China. "We will continue to create a balance between physical stores and digital stores, as a large number of consumers use smartphones to explore things," he said, adding about 20 percent of Devialet's sales today are contributed by e-commerce platforms such as Tmall and JD.

Supported by more than 160 patents, the company runs two factories in France and one in Shenzhen. Its products are sold in 40 other stores across the Chinese mainland.

"I expect many surprises: Chinese customers are younger. When they see our product prices, I thought that they would buy inferior and cheaper ones. But, they listen to sales pitches of smaller players, only to go on to buy the big and expensive ones," said Lebouchard.

So, the company will continue to invest in China and introduce new measures to further diversify the guest experience at its stores. The idea is to make the customers' entire visit eventful, to ensure their time spent at the stores is enjoyable, exciting and offers something new every time they come, he said.

China is now Devialet's fourth-largest market after France, the United States and the United Kingdom. Boosted by local consumers' strong purchasing power, China may surpass the US and become Devialet's second-largest market in 2020, Lebouchard said.

"Chinese consumers, especially the millennials (those born in the 1980s and the 1990s), want to enjoy life ... they are quality-conscious and care about their individuality, and when it comes to shopping, they prefer premium brands," he said.

Rising disposable incomes and growing interest in music and home entertainment are big factors in China, he said, adding he understands locals' evolving tastes in fashion and high demand for experiential touch-points when shopping.

Sun Fuquan, a researcher at the Chinese Academy of Science and Technology for Development, said China, which is home to nearly 20 percent of the global population and boasts a fast-growing economy, is widely perceived as a lucrative and attractive market.

"The country's audio market will continue to thrive despite it being at a stage where industry players are battling for market shares," he said.

Sun said although more companies are entering China, only high-quality products will succeed and command market attention. Many players have also found that Chinese consumers are fairly focused on digital technologies and related products, not just affordable deals on e-commerce platforms. Everything in the virtual world interests them these days, he said.

To boost its sales revenue and profit in China, Devialet launched a smart speaker with Altice USA, a telecom operator in the US, in August. They will produce millions of smart speakers in Shenzhen, at Foxconn's contract-manufacturing facility.

Before becoming Devialet's global head in March 2018, Lebouchard was the CEO of Pathe Gaumont Cinemas between 2003 and 2012. He transformed the company into one of the world's major cinema groups and accelerated the company's digital transformation.

He then went about modernizing and digitalizing Demos Group, one of the French leaders in professional training, with a particular focus on China.

On a personal note, Lebouchard said he enjoys playing golf, tennis and skiing, and spending time with his three children during his spare time.

He can be found on some Saturday afternoons outside Devialet stores in Paris, observing how the company's products are received by consumers.