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SCMP Reporter

CARTIER is a name famous enough to need little introduction.

  The privately held part of the Zurich-listed Vendome group makes watches, jewellery, perfume and a few accessories, such as pens and lighters.

  Gerrard Djaoui, managing director of Le Must de Cartier (Far East), will not say how big it is but 'bigger than our jewellery rivals put together' covers it.

  The company can keep selling 90-year-old designs, so it must know much about protecting and exploiting a brand name. It protects itself against counterfeiting with aggressive tactics.

  Cartier, employing about 50 lawyers worldwide full-time, was one of the first firms to make piracy a big issue.

  'In 1982, we made the first big noise when United States customs seized 5,000 fake watches and we destroyed them in public with a bulldozer,' said Mr Djaoui, who still has some of the watches sealed in blocks of clear plastic in his Jardine House office.

  The tactic was highly successful and developed.

  'In Thailand, where there was a problem and where there was also a bit of problem with the authorities turning the blind eye, we did it several times,' he said.

  'We also got watches destroyed in a police station.'   Despite the victories, counterfeiting never stops.

  'It is a plague. As soon as a market starts to have potential, the counterfeiting starts,' he said.

  'It is the same everywhere.'    The latest problem is in India and Vietnam, and China is not far behind.

  As markets develop, the problem recedes.

  'Hong Kong is a good example,' he said.

  'When we started our first shop here 22 years ago, retail jewellery shops were selling fakes. That is over.

  'The people selling copy watches on Nathan Road do not even dare to carry their stock any more, just pictures, because it is a big risk,' he said.

  He said there were decreasing instances of piracy in Hong Kong.

  The Cartier products that do get pirated tend to be at the lower end of the market.

  Cartier makes three kinds of jewellery - 'high' jewellery, which are one-off custom pieces for the very wealthy who will often have their own stones.

  This part of the business is profitable, but not hugely so.

  'There is a market price for the stones and gold and craftsmanship,' he said.

  The customers know exactly how much Cartier is charging for the added value in items that cost several million United States dollars each.

  The next level down is 'new' jewellery, which is 'semi-exclusive'.

  Between five and 20 pieces will be made, and the prices will range from US$5,000 to $30,000.

  Mr Djaoui said there were slightly higher margins in that sector, but the big money was to be made in the third category, termed 'international' jewellery.

  These pieces can remain in production for decades if they are popular.

  Cartier only sells its jewellery through its own shops.

  'If we introduced more middle men, the cost of pieces would simply be astronomical,' Mr Djaoui said.

  'We make most of the jewellery money from this diffusion range.'   These lines benefit from the exclusiveness and fame of some the custom pieces.

  In Cartier's other ranges, things work differently.

  Manufacturing costs are only a small part of the cost of Cartier's perfume, for example.

  As a percentage, the cost of marketing is far higher than is the case with the jewels.

  Although its perfume is sold in shops that are not owned by Cartier, it controls the number of outlets.

  'In Hong Kong we have 15 doors where Cartier perfume is sold,' he said.

  'Every other perfumer has 50 or 60 shops selling its range.'   The third plank in the Cartier strategy after strict control of availability and aggressive pursuit of counterfeiters is protecting the image of products.

  'In the 1970s, there was a lot of pressure to introduce special designs for the Middle East market, because tastes were so different,' Mr Djaoui said.

  'But it would have been a very bad plan.

  'It would be prostituting the name. It is the difference between short term and long term.

  'We do not make ties - in 50 years' time my successor could not be proud of the Cartier name.'   Consequently, no gigantic gold dolphin-shaped watches, designed to be worn over the suit cuff, are likely to be launched in the China market by Cartier.



Cartier cashes in on its brand with lawyers and rarity helping