High-end brands shift strategy from luxury to quality

Shoppers pass by a Chanel store in Shanghai, May 27, 2014. [Photo/IC]

As the government austerity drive takes a bite out of sales in China, companies are tweaking their image, report Xie Yu in Shanghai and Wang Zhuoqiong in Beijing

International luxury brands are shying away from being associated only with the super rich in an effort to conform to a Chinese market being affected by the central government's austerity drive.

"We are seeing certain watches, some very expensive ones, that are selling at a discount. People are afraid to buy even for themselves in order to stay low-key," said Omega Watches CEO Stephen Urquhart.

Swiss watch exports to China, including those from Richemont and Swatch Group, dropped 14 percent in the first 10 months of 2013, data from the Federation of the Swiss Watch Industry showed.

But as chief executive officer of Omega, which is part of the Swatch Group, Urquhart prefers to call what happened in 2013 a "consolidation" rather than "shrinking".

The austerity drive may even be thought of as an opportunity for "strong brands, good brands and authentic brands", Urquhart said, as some customers will shift to less conspicuous consumption.

Most of the Omega purchases in China are individuals buying for themselves, Urquhart stressed. The brand emphasizes quality rather than mere luxury, he added.

In a bid to avoid the impact of the anti-corruption campaign, almost all the luxury brands being marketed in China are trying to readjust their image.

Juan-Carlos Torres, chief executive officer of high-end watch brand Vacheron Constantin, said in an earlier interview that the brand is "not used in the corruption business".