On April 24, 2013, China Haidian Group (owned by Ebohr, Rossini, Eterna Eterna, Porsche Design, Porsche Design and Codex Hao Watch brands) will be another Swiss Watch brand included in His Majesty: Corum Kunlun watch. Encouraging or disturbing? The answer comes from French-American Elsa Berry. The transaction was handled through her company, Vendôme Global Partners, a company specializing in mergers, acquisitions and sales in the luxury industry.
Elsa Berry, Manager of Vendôme Global Partners at BaselWorld
Interpretation! In 2000, Montres Corum Sarl was acquired by Severin Wunderman, who died in 2008, and his shares were bequeathed to the Severin Wunderman Group Group Trust, chaired by Richard Tomlin. In 2005, the company began a significant growth cycle, thanks to the tireless efforts of its manager, Antonio Calce. At 9:00 am on April 24, 2013, the coincidence of the opening of the BaselWorld Watch and Jewelry came with amazing news: China Haidian Group acquired Corum Kunlun Watch! The term ‘China’ has caused irrational fear in the public, the media, politicians, and of course the world’s watchmaking industry. But let’s jump away and discuss the background, interests, and prospects of this transaction with Elsa Berry, who has been dealing with this transaction since the fall of 2012!
Europa Star World: Why sell your brand when it’s midday?
Elsa Berry: The trust became active after Severin Wunderman’s death, but it was not a long-term ‘investor’, so a final sale was inevitable. But before that, the consortium had invested a lot in the Corum Kunlun brand, positioning it at the high end and allowing the trust to exit. Last fall, we were responsible for starting the sale process and spent some time getting to know the Colum Kunlun brand from our boss Antonio Calce before reaching out to potential buyers around the world. Potential buyers include major luxury conglomerates, watchmakers and investors around the world: Europe, the Middle East, Asia, Latin America and the United States.
Europa Star: How did China Haidian Group get into your sight?
Elsa Berry: China – and Asia – is already a key and future market for Corum. China Haidian Group has made outstanding achievements in the field of low-end and mid-end watchmaking, and has acquired Eterna Eterna in 2011. The major shareholder of the group, Mr. Korean Dragon, has always had the desire to enter the field of luxury watchmaking, and the critical scale, positioning, potential of the Corum Kunlun watch and the high awareness of the brand in the eyes of Chinese customers are in full compliance with this. In contact with them, both their manager’s infinite respect for Corum and the passion of Mr. Calce and his team to protect the brand’s Swiss DNA rooted in La Chaux-de-Fonds have impressed us. We spend a lot of time building relationships to ensure that the two companies are fully compatible.
Europa Star: On the other hand, 86 million Swiss francs does not seem to be high for Corum watches …
Elsa Berry: The sale process has had a slight impact on the company, as some agents have heard rumors of the sale and reduced their orders, which reduced the value of Corum.
Europa Star: But the takeover of Corum by China Haidian Group has caused shock in BaselWorld!
Elsa Berry: Perhaps people are shocked by who the buyer is, because there have been rumors of a sale since the end of last year.
Europa Star: Because the buyer is Chinese?
Elsa Berry: First of all, I would like to point out that China Haidian Group Co., Ltd. is listed on the main board of the Hong Kong Stock Exchange and has acquired the equity of Montres Corum Sàrl. To pay for the shares (equivalent to 38 million Swiss francs), the trust will hold 10% of China Haidian Group shares! That’s why we say this is a strategic alliance. Mr. Han holds 67% of the shares of China Haidian Group, which is the largest shareholder of the group, and the trust has become the second largest shareholder of China Haidian Group!
Europa Star: Specifically what does this mean?
Elsa Berry: This means that Richard Tomlin, the president of the trust, is still involved; it means that the Corum Kunlun team will not change, and Antonio Calce will continue to be in charge of the company. In short, this means that it is a true partnership.
Europa Star: At the BaselWorld press conference on Chinese media, a reporter asked the Swiss watch industry’s views on the transaction. The managers did not give their personal opinion, but merely expressed ‘perceived uncertainty, especially regarding the protection of the ‘Made in Switzerland’ label’.
Elsa Berry: Technology transfer between Switzerland and China will not happen because it is meaningless. In addition, the Ebohr and Rossini brands are positioned in the low and medium price range and do not need them, because they rank second and third in China, have more than 3,600 sales points, and sell more than one million Watches. The strategy of China Haidian Group is not to transfer these two departments, but to strengthen its luxury watch strategy with authentic Swiss products of famous brands and adopt localization management and technology, but at the same time achieve exponential growth in China.
Europa Star: Everyone knows that Hong Kong is the largest export market for Swiss watches and Switzerland is the largest customer of Hong Kong’s watch industry. Because we are not repurchasing our own timepieces, we are talking about components-made in Shenzhen, which is a neighboring city in mainland China. So it is feared that the ‘Made in Switzerland’ label will be weakened, and … it makes sense.
Elsa Berry: So what is worrying is that Swiss production is reduced and China is producing more? On the one hand, the discussions between the two groups have sensitively protected the ‘Made in Switzerland’ label. On the other hand, Mr. Calce is the most powerful guardian of Corum’s DNA, and he will never compromise the brand’s ‘Made in Switzerland’ label. He also personally invested in cooperation with China Haidian Group, these ideas have never been discussed. I can only reiterate that the target markets for Corum watches and Chinese brands under Haidian in China are very different.
Europa Star: What about the impact of culture? We think of the resignation of Codex’s owner, René Köhli, who has a different strategic philosophy than the management of China Haidian Group. There is also the recent resignation of Eterna Eterna boss Patrick Kury, but the official reason for leaving is unknown … Sometimes the visions of Switzerland and China are very different.
Elsa Berry: I don’t know the real reason behind their successive departures, but I personally participated in the transaction between Corum Kunlun Watch and China Haidian Group. In fact, the trust is still involved, Richard Tomlin-representing Severin Wunderman, the two of them are friends for many years, to find the best buyer for Corum,-Antonio Calce is very firm, and has frequent contacts and discussions with China Haidian Group management To avoid any misunderstanding, the Chinese group does not want to mess up the deal. But as a half-European who grew up in France, in the face of cultural differences, I can fully understand the industry’s response to this headline. But its long-term interest is to further develop Corum Kunlun watch, especially in the Asian market, especially the Chinese market.
Europa Star: Is it possible for synergies between the four Swiss brands of China Haidian Group?
Elsa Berry: It really makes sense to build synergy through a small Swiss watch group consisting of four brands: Eterna, Porsche Design, Codex and Corum. But it’s too early to talk about it.
Europa Star: China Haidian Jiyuan is undoubtedly very active in providing Corum with its special distribution network in China. Is this included in the contract?
Elsa Berry: This is the second motivation for China Haidian Group to enter the luxury watch field: to promote the sales of Corum Kunlun watches in China. The group is involved in various areas led by the government and is currently developing plans. But I must point out that Rossini and Ebohr Ebo’s stores will not have any relationship with Corum Kunlun’s stores! The brand is exploring the best ways to maintain its high-end positioning in Asia.
Europa Star: It feels very positive …
Elsa Berry: Yes, this is a win-win situation because the seller is also a shareholder of the buyer, still retains the original management and China Haidian Group supports the development strategy that Corum Kunlun has been pursuing since 2006. I have been doing this for more than 30 years, and I know that doing things by will is not enough-fulfillment is a real mission. This is a job for both men and women, so with strategic expectations and good fundamentals, there is every reason to succeed.
Europa Star: What will happen to Hong Kong securities trading when the transaction is announced on Wednesday, April 24?
Elsa Berry: On the day of the announcement, the stock trading volume jumped from an average of 2.5 million to 8.6 million. And from April 24 (Wednesday) announced the day to the 26th (Friday) closing, the stock price rose from 0.82 Hong Kong dollars to 0.88 Hong Kong dollars, up 7%. So the market responded correctly with real growth, without overreaction.
Europa Star: As an expert in mergers and acquisitions, you mentioned that this transaction can be considered a historic event. what do you mean?
Elsa Berry: China has long been particularly interested in investing in international finance, energy and natural resources, but it has rarely invested in brands. One reason for this is that Chinese companies benefit from licenses issued by European or American brands. However, free from China’s economic growth, these brands have withdrawn their licenses, such as Ralph Lauren or Tommy Hilfiger. So now Chinese people either create their own brand or buy a brand. This is the first time because they are not used to buying brands. It is very interesting that the first acquisition in China’s luxury goods industry was in watchmaking. The future will show us how things will develop in this new era. Don’t forget, the Chinese have historically had the same ingenuity and delicate technology as the Swiss.