In line with its exclusive and discreet image, the Swiss watch icon Patek Philippe never tries to surround itself with other luxury brands, choosing instead to place its shops in quiet and secure spot in the center of each city.

In Beijing it's tucked away in the downtown Qianmen area for its second boutique in China. Called the Legation Quarter, it's an upscale shopping, dining, arts and entertainment quarter in an historical location.

Originally built in 1903 during the end of the Qing Dynasty, the Patek shop is housed in the only fully preserved embassy building from that period.

Just as Patek's first China store at Shanghai Bund 18 was discretely located when the brand was first presented about three years ago, the Beijing store locale - which opened in May - is another bold but promising investment, the brand believes.

"The Shanghai store operates very well and the Beijing store is expected to do better, due to the local purchasing habits," says Patek Philippe vice president Thierry Stern.

Regarding the boutique's location, Stern says "Patek Philippe customers know who we are and where we are. They don't come here to find wide varieties of brands, but rather the finest ones in the world."

Different from many Swiss watchmakers, who are mainly competing with entry level products (10,000 to 40,000 yuan apiece) in emerging markets like China, Patek Philippe's time pieces begin at between 100,000-200,000 yuan and soar to 1.3-6 million yuan if wealthy customers are also patient enough to put their names on a waiting list for a year or two.

Stern is confident with Patek's long-term potential in China. "Chinese, with a long tradition of wearing watches and traveling frequently abroad, understand the difficulties in making a watch movement, which has normally 350 to 400 components inside. They appreciate the skill-intensive and time-consuming job it takes."

There are also newly successful customers who want to purchase a unique status symbol, he says. Stern is not worried about China's luxury tariff imposed on upscale items, including watches, because their target customers don't mind paying as much as 10,000 yuan or more for such goods. "I always suggest to my customers that if they see a watch they like, go ahead and buy it immediately," he ways.

While watch lovers throughout the world crave complex handmade timepieces, Stern has noticed that Chinese customers pay more attention to the aesthetic touches, such as diamond decorations. For example, some customers have called the boutique, wondering whether a 220,000-yuan Patek watch includes diamonds or not.

"It is not about diamonds," Stern says. "It is about a unique piece, with a long history and a lot of work," Stern says. "It takes a lot of effort to make customers here understand a piece without diamond can also cost a fortune." Currently, the Beijing store has a staff of six devoted to explaining such nuances as well as making sales.

Unlike many brands, which try to continually increase their sales volumes in China, Patek Philippe always emphasizes distributing its limited supply equally to all its global outlets. "It is a big problem for a company like us, which produces a small volume, which stands at 40,000 movements a year, including 12,000 quartz ones," Stern says. Currently, the firm provides 5 to 10 percent of its merchandise to China where in Beijing and Shanghai, it displays around 80 timepieces at a time.

"That's why we have no plans to open new shops in the Chinese market, simply because we don't have enough stock," Stern says. He adds the company is decreasing current outlets from 600 to 500 worldwide.

(China Daily 06/23/2008 page3)