Hublot Combats Global Slowdown by Spending More

When times get tough, Hublot CEO Jean-Claude Biver says spending is key.

Source: Hublot

Hublot exports 40 percent of its products to China. And with China’s GDP numbers out Friday morning indicating economic growth falling to 7.6 percent, the slowest pace in three years, the luxury time-piece company has a lot to think about.

However, the company, which sells watches with price tags ranging from a couple thousand dollars to couple million, says it has a plan.

“There is only one way to catch up, that is to make more noise than others, to make more noise, you need more investments,” Biver told CNBC.

The more uncertainty there is, the less you see the future, he added. That means investing more in research and development.

“The research and development is the only way to master the future. When there is no innovation, there is no future," he said. "When the future is not clear, you must invest in innovation. The more you innovate, the more the future will be your friend.”

Hublot currently holds a patent ‘Magic Gold’, a scratch-resistant gold used in its watches. The company continues to look for new ways to innovate, separating itself from its competitors.

“In a time of crisis, this type of product is so much different, so revolutionary and so unique that people, if they buy a gold watch, they will come and buy our gold watch. As soon as you are in crisis, innovation is key.” Biver said.

The battle has only begun for European fashion houses.

While Europe’s debt crisis is in for forefront for many investors and businesses, it’s the slowdown in the world’s second largest economy and biggest consumers of luxury goods that could dig into the profits of high-end retailers.

This week, Burberry reported weaker than expected sales, citing concerns over Europe’s debt crisis and the slowdown in China. Several companies, including Nike , Cummins and Cartier, are all feeling the pinch from weakening Chinese demand.

Hublot, which is owned by the conglomerate LVMH Moet Hennessy, is relatively new to the Chinese market, having only entered two years ago, but it’s heavily injecting capital into its biggest customer. Biver wants to expand its stores from the current five to 14 by year-end.

In this weak economic climate Hublot is making noise from the roads to the courts. It recently partnered with Ferrari and has Miami Heat’s Dwyane Wade as its ambassador.

“The Swiss watch industry had a record year in 2011 and will do another one in 2012, although the year is not finished," Biver said. "But I think we are plus 17 percent compared to last year, and as we have a slowdown in growth, we will end up between 8 to 10 percent more than last year, which means in 2012, it will bring us a second consecutive record year of exportation which is a phenomenal performance considering the uncertainties we have in the world.”

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