Why the family-owned luxury watch brand Patek Philippe won't rush into China

Mr Thierry Stern , president of the family-run luxury watch brand values the freedom to chart his own course

Mr Thierry Stern took over as president of Patek Philippe from his father in 2009. Two of the nine New York 2017 Special Edition timepieces produced by Patek Philippe for its The Art Of Watches Grand Exhibition.
Mr Thierry Stern took over as president of Patek Philippe from his father in 2009. PHOTO: PATEK PHILIPPE
Two of the nine New York 2017 Special Edition timepieces produced by Patek Philippe for its The Art Of Watches Grand Exhibition. PHOTO: PATEK PHILIPPE

The president of Patek Philippe says running one of the world's most prestigious watch companies is like playing with the devil.

"I have to go a bit on the line but I have to be careful not to fall on the wrong side," said Mr Thierry Stern whose family in Geneva has been running the 178-year company since 1932.

This balancing act, he added, is only possible because Patek is not part of a conglomerate like Richemont which owns brands such as IWC, Piaget and Montblanc; or Swatch, whose brands include Omega, Longines and Breguet.

"You can't do that if you were part of a group with a strict CEO. We are a family business. I bring my creativity and I innovate, but I also have a guardian in my father who tells me to keep a certain DNA in the brand," said Mr Stern, 47, who took over as president from his father Philippe in 2009.

That DNA includes impeccable artisanal craftsmanship (the most basic watches take at least nine months to produce), groundbreaking technology and a quality so revered that the resale value of Patek timepieces - whether vintage or modern - beats all others. According to auction house Christie's, some Patek perpetual chronographs which sold for US$20,000 (S$22,277) in the 1980s can easily fetch more than US$400,000 today.

"I can try something different like the Calatrava Pilot," he said, referring to the 42mm sport watch released by the company two years ago to target a younger clientele. But the quality has to be there. The movement has to be precise, every detail has to be important.

"It's not an easy game. If I do something today, I already have the next few moves figured out," added Mr Stern who spoke to The Straits Times recently in New York where Patek staged its The Art Of Watches Grand Exhibition. Held in the historic Cipriani building in Wall Street, it was a magnificent showcase of the brand's history as well as envelope-pushing watchmaking techniques, and featured more than 400 new and historical timepieces. The exhibition's next stop will be Singapore in 2019.

Charismatic and personable, the outspoken honcho said being a private watch company has worked well for Patek Philippe.

"I think watch conglomerates are becoming too big. I can't say they're losing control because they are highly professional but they are businessmen, not watchmakers. That's the difference."

He continued: "To have 10 or 15 brands under one group is not easy. The brands are going to lose their own personality. They will have the same supplier, watchmaker and service agent."

The freedom to chart his own course is something he values greatly.

Patek, he said, has no intention of diving into e-commerce, even though brands such as Vacheron Constatin, IWC and Zenith have started retailing their watches online.

"It's a good moment when you decide to buy a Patek Philippe. You go to a store, you're willing to sit, listen, learn about watches and try them on. I'm not selling something mass. They're not a lot of them around, you need to choose wisely and you need to try them on. And we have well-trained people to help you and answer all your questions."

"That's not the case when you buy on the Internet. You just sit in bed, look for the best price and then order. Where's the need to do something exceptional if you go this way?"

It also explains why he does not regard smart watches as a threat.

"We all have different tastes. Today, the younger generation may wear a smart watch. Tomorrow, it may be a Patek."

He prefers to exploit technology in other ways. For instance, The Art Of Watches Grand Exhibition featured a virtual reality installation, which took viewers inside the movement of a Patek Philippe watch.

In the last decade, many luxury watch brands have been clambering over each other to get a slice of the multi-billion-dollar Chinese market.

But not Patek Philippe, he said.

"It would be a big mistake to adapt to a market. If people like Patek Philippe, it's because they like the design and the philosophy of the brand. If you start to adapt yourself to every market, you are going to lose that."

He would not shortchange other markets to exploit the demand in the Middle Kingdom too.

"I'm not going to take pieces from America and Europe," said Mr Stern whose company produces just 58,000 timepieces a year. "I'm not going to say: 'Thank you for your help for so many years, but now China is booming so I take everything for China. It's not fair."

Such a strategy, he added, would turn off the Chinese too.

"If they're willing to buy Patek Philippe, that's because they know the brand commands respect."

He believes the rush to kowtow to Chinese demand has left many watch companies in dire straits.

"They all thought it was going to be fantastic, they were going to sell so many watches. I warned a lot of them, but they just produced, produced and produced. Look what has happened," he said, referring to the less than impressive bottomlines of many watch companies in the last few years.

"If you think people are just going to buy like this, you are a fool. People are not stupid. Now many companies are lost because they have produced too many pieces."

Winning over customers is not an easy process, he said.

"You have to have the right products and that takes time. When times are easy, you may be able to sell anything. But when times are difficult, only the good ones stay. And I'd like to be one of them."

Join ST's Telegram channel and get the latest breaking news delivered to you.

A version of this article appeared in the print edition of The Straits Times on July 27, 2017, with the headline Why the family-owned luxury watch brand Patek Philippe won't rush into China. Subscribe