ThePuristS Interview Karl Scheufele
President of Chopard


by Jaw
January 2003


(Mr. Karl Scheufele)



For those who are familiar with the watch industry, Mr. Karl Scheufele, the President of Chopard SA needs no introduction; he is a humble and a quiet man who shies away from the media limelight.

He was born 13th. March 1938 in Pforzheim, Germany and he bought the Chopard Company from Paul Andre Chopard in 1963.

From a company with 5 employees then, he transforms the Chopard into one of the most successful family-run high-end watch companies today.

I was fortunate to have the opportunity to interview Mr. Karl Scheufele on his recent Singapore visit, and we talked for almost 1-1/2 hours! As you will see, Mr. Karl Scheufele took all my tough questions in stride as he answered me frankly and boldly.

The comments in brackets are mine.


click on the picture for bigger view
(Fully working prototype of the LUC 8 day Tourbillon, to be launched next year)


The Interview

TP: You were trained as a watchmaker and worked as a goldsmith apprentice. Is this experience helpful in running Chopard?

KS: Yes, because I learned how a watch is made, how many parts, functions of parts, what it means to assemble a watch or design a movement. I have in fact made a clock all by myself and I gave it to my son (Mr. Karl-Friedrich Scheufele), and the clock is still hanging on his wall. Personally, I like making jewelry even more as you are free to design your own and be creative and have more freedom. With gold and a few gem stones, I can make my own jewelry.

TP: When you took over Karl Scheufele GmbH, you were only 20 years old...

KS: That is right, I was born in 1938, and I took over the company from my father in 1958: The Company was founded by my grandfather.

TP: How did you cope with the situation at such a tender age?

KS:I was thrown into water, and I had to swim. I overcame and I learnt most about management in that first 3 years.

TP: What was Karl Scheufele GmbH like before the Chopard take-over?

KS: It was always a watch company, we designed and produce bracelets, gold watches with diamond settings - mostly ladies watches - we sourced movement mostly from Swiss companies, we OEM for other brands and also produced some of them carrying our own brand, Eszeha. Consumers became more brand conscious since the 1950's and Eszeha wasn't a big name then. We bought Chopard from Paul Andre Chopard in 1963, assisted by my father-in-law.

TP: Why Chopard?

KS: We were negotiating with 20 companies. Some of the brands still exist today. Most of the potential targets have huge stocks of watches and Chopard had only a few pocket watches in stocks. We also like the name "Chopard" It was also a healthy, small company without bad debts.


(LUC 1.96, Automatic with Micro-Rotor, Cote de Geneve)

TP: Chopard has grown tremendously since then and in my opinion is a big success story. Would you consider this process a bumpy one? Or smooth sailing all the way?

KS: It was never 100% smooth, but the growth was consistent. We do not want to be flying high one day and plunge the next. We have constantly been growing, step-by step, 5% to 10% annually for almost the last 45 years. There never is a time when the company was in danger.
We had only 50 people when I took over the company from my father. Chopard had only 5 employees. Today Chopard has 1200 employees. We expanded our Geneva factory 4 times; not in one go. We built factory in Fleurier to produce LUC watches, extended our Germany factory twice, bought over Gold chain factory next door. We have distributors and subsidiaries in America, Asia and Europe, i.e. 5 in Germany, France, Spain, Italy and Great Britain. We started the first boutique in Vienna in 1988, inaugurated by Mr. Jose Carreras. It was there that we started our close friendship.
Today we have 64 boutiques worldwide; the 65th boutique will be opened in Bangkok next week. I am proud to say that 15 out of 65 boutiques are in Asia. This indicates that Asia is a very important market for us.


(LUC 1.98 Quattro, 8 days power reserve, Manual Wind, Cote de Geneve)

TP: Are new boutiques seen by authorised retailers as a threat to their business?

KS: We have exchanges information with our retailers, boutiques opening are not only good for brand visibility but also promote sales in retailers. The boutiques also act as a show room for our full range of products, something our retailers cannot do due to limited space, as they have to allocate spaces to the many brands they carry.
This is definitely not a means to take away their sales. We have 65 boutiques and perhaps at most 80 to 90 in a few years, but there are over 1500 sales points! We need these boutiques to show our strong commitments our brand and as our brand ambassadors and flagships and to stimulate our retailers to do more with Chopard.
Most of our retailers are very happy eventually.

TP: I noticed your staff in Boutique everywhere. Even the young girl wiping the glass behind the bar counter is pleasant, always smiling and professional in handling customers. How do you maintain such high standards?

KS: We are one of the very few family owned high-end watch company. We are like a family, and we invite all our managers to Geneva annually for seminars and training. There are close contacts within the family. Whether one is in a factory, distributors, subsidiary or boutique around the world, every member of our family pay very close attention to how Chopard customers are treated.

TP: What are the strengths and weaknesses of a family run company like Chopard?

KS: The strength is surely our flexibility and our ability to react quickly. This is especially helpful when there are dark clouds in the economic horizon like now in Europe. Our products and company policy can adapt to the constantly changing socio, economic and political situation in any region immediately. As a result, we don't suffer as much as the big groups and we don't have to suddenly panic and fire top managements like some big groups do.
Our weakness is our capital size limited to the means of our company and family. We are not listed in any exchange and we cannot depend on outside capital. This is why we have to grow step by step on production and distribution expansions. For example, we only open 5 or 6 boutiques a year and not 50 at one shot. This is why we cannot grow as fast as we wish.


(LUC 3.97, formerly 6.96, the world's only form movement with micro-rotor)

TP: Last year, I heard the turnover for Chopard was more than CHF 500M...

KS: That is right.

TP: So, Chopard is the biggest family-run watch company in the world?

KS: I would say that, in any case, it is in the luxury segment.

TP: So obviously you don't suffer too much from the "weakness" you mentioned?

KS: No, no.

TP: You are still doing well.

KS: Yes.


(From Left to Right, Mrs. Karin Scheufele, Mr. Karl Scheufele - President, Mrs. Caroline Gruosi-Scheufele - VP and Karl Friedrich Scheufele - Vice President)

TP: In terms of human resources, considering the amount of time and energy you and your family have for the company, do you think there will come a time when Chopard needs many Professional Managers to run the company?

KS: Not many, we only need a few a good ones, and we have them already (laughing). There are already some managers in their 35 to the 40 working together with Caroline and Karl-Friedrich, they are very close with the family although important decisions have to be made by a family member. The best managers, in our experience are those who started young in our company and make their career with us. We prefer this arrangement than asking someone totally new in company to take charge of the whole production process, for example. A young man that grows with us can take over an important post easier.

TP: Judging from the success of Chopard, your management style is obviously working. Would you consider yourself more of a dictator or a democratic President in the company?

KS: Definitely a democratic one, because we have meetings with managers and managers on the weekly basis. We actively seek their opinions and inputs. We can have meetings anytime without long notice, and this is the advantage in favour of our company.

TP: But the final decisions are still made by the family?

KS: Yes, by at least one member of the family. In any case, all the members of our family, including the younger generation, are going in the same directions. If you ask my wife any question now (Mrs. Karl Scheufele was present around another table in the same premise), you will get almost the same answer from her.

TP: Your daughter Caroline is glamorous, at home with the high-society crowd, prominent, knows all the right people and perfect for the image of Chopard Jewelry and Jewelry watch products. I met your son, Mr. Karl-Friedrich this year, he is very intelligent, very determined, very serious, yet humble. At the same time he is quiet and very low-profile, parallelling almost perfectly with LUC watches! Is this them naturally? Or something intentional for marketing purposes?

KS: This is their natural characters from their childhood days. Karl-Friedrich is always down to earth but a perfectionist. Caroline is full of temperament, ready to party, do interviews and takes on the world. She sometimes has too many ideas, but it is always good to have ideas. And they complement each other well. Caroline will face the world while Karl-Friedrich will do his work behind the scene.

TP: Karl-Friedrich strikes me as a man who is very clear-headed...

KS: He knows exactly where he wants to go, he develops LUC systematically and steadily and always in full control, he produced 1000 LUC in the first year and is now producing 5000 LUC watches per year now.

TP: 5000? Great, considering the amount of decorative work put into each LUC...

KS: It is quite an achievement. He already has 3 different calibers, and the highlight next year will be his Tourbillon.


(LUC caliber 1.96, base and dial side, click on the pictures for bigger view)

TP: I have seen the new Tourbillon, and it is really impressive. Any more exciting products ahead?

KS: More complications, we will have an in-house chronograph (you heard it here first), but not next year. Perhaps it will be launched in 2 years time.

TP: I can see both you and your wife are very energetic and still very fit, but do you have a succession plan in place?

KS: Ya, my children will take over in 5 years time.

TP: Caroline or Karl-Friedrich?

KS: The 2 together, absolutely. And the 5th generation is already there, there are little Karl-Friedrich and Caroline-Marie. Of course, only the future will tell if they will eventually carry on the business.

TP: Chopard bought a factory in Fleurier, invested heavily in new machineries, in-house designed movements, employed watchmakers practically starting from nothing, Chopard basically chose the most difficult way to make a watch in LUC, why?

KS: Because Chopard is traditionally a Manufacturer, they made their own movements for Chopard pocket watches. Unfortunately, the knowledge was lost and we had to buy our movements from different companies. Very often, we heard from the end-consumers that Chopard watches are very nice but the movement is from manufacturer x or manufacturer z. So we seemed a little less qualified.
Karl-Friedrich's high objective is to become a true manufacturer again. Of course this is very difficult; our Tourbillon for example is totally in-house, including plates, bridges, movement designs and the Tourbillon cage. So we are now recognized as a real watch manufacturer.
Consumers now want to know what is inside the watch. And our Men watches has increased from 15% to the current 25% of our product mix in the last 5 years. He should be very proud of himself!

TP: Do you see any similarity between Karl-Friedrich starting LUC and you buying Chopard in 1963?

KS: I think so. I bought Chopard when I was 25 years old and it was my best business decision in my life. For Karl Friedrich, he was 35 when he started LUC, it has fantastic potential and although he was a little older but it is an important decision and in time to come, he will probably calls it the best decision he made in his career.

TP: With such a heavy investment, will LUC ever pay back financially?

KS: It has paid back! The company in Fleurier is now in the black and LUC contributed greatly to the prestige of the brand.

TP: What are you most proud of and what do you regret the most in your long experience running Chopard?

KS: I am proud to have transformed a small 5 man watch company to the world renowned Chopard today. I sometimes make mistakes but nothing that has caused a fiasco.


(LUC caliber 1.98)

TP: Regarding your investment in De-Grisogono, do you see De-Grisogono turning into a strong Chopard competitor?

KS: De-Grisogono is complementary to Chopard. I don't see any competition between the two, but funny enough, my daughter Caroline sees her husband as a competitor. She is upset when she sees her mommy wears De-Grisogono watches or jewelry. For example, Caroline reminded her mother to wear Chopard for the Singapore trip, she was wearing De-Grisogono's latest designed ear-rings at last night's Jose Carreras concert (2nd. December, at Esplanade Singapore) my wife told me she will wear what she likes (laughing).
I am happy that I can help my son in law (Mr. Fawaz Gruosi) to develop his company. He is a creative man. His products have strong niche and I see it will become successful.


(de-Grisogono Instrumento Doppio, Big Date Chronograph on one side, Second Time Zone on Rotor side)

TP: How do you see a De-Grisono, Chopard Mille Miglia, Chopard Jewelry watch and a LUC owner?

KS: Maybe a typical LUC owner is Mr. Jose Carreras, he is someone who love watches and accuracy but doesn't like to show-off. He is always low key but appreciates quality. For him, LUC is the ultimate watch. He has 3 or 4 LUC watches now.
A Mille Miglia owner tends to be younger and sportier men who like Mille Miglia related to classic cars, Mille Miglia watches are also affordable. A Chopard Jewelry watch starts from around $5000, A secretary, stewardess can afford to buy one without the help of her boy friend or husband. We also have higher end jewelry to cater to more sophisticated women.
De-Grisono is more for flamboyant type who like bigger and outstanding watches like Doppio. And the first Uno is huge and you either like it or hate it. They are also very exclusive.


(LUC caliber 3.97, formerly 6.96, movement view)

TP: The watch industry is increasingly dominated by big groups like The Swatch Group, Richemont and LVMH, do you see relatively smaller companies like yours surviving in the future?

KS: I have no doubt we will, People prefers to work with companies whose management is not changing every year or every few years. The retailers worldwide are increasingly disturbed by the big groups dictating conditions, i.e. what they have to buy, what they have to carry, what they could and could not do. Some retailers told me that they are no longer masters in their shops. This is an opportunity for family run company like ours. We have many partners, and our children will continue to do business with their next generations.

TP: If one of the big groups wants to buy Chopard at a huge premium, what will you decide?

KS: It has happened already! We had more than one offer. I asked my children to make the decision and I am lucky that my children rejected the offers. They love Chopard, won't know what to do with the money, no; there is no chance of that happening.


(Jaw interviewing Mr. Karl Scheufele, click on the picture for bigger view)

TP: What are your hobbies?

KS: My biggest hobby is to drive and collect classic cars; I like to be on the mountain, to go cross country skiing, to be with my friends and children, to take a long walk in the forest with my dogs.

TP: How do you cope with stress?

KS: I swim every morning for at least 20 minutes, open-air between 15 March to 10th November, and indoor whenever I can. I exercise to remain fit enough to cope with the stress we all have. I tried to travel with my wife as much as possible, and we help each other out.


(Mr. & Mrs. Karl Scheufele at a lighter moment)

TP: It is getting very rare for successful business men to keep all the family still intact like yours, how do you strike the right balance?

KS: I always try to share everything with my family since a long time ago, we still converse with our children of 40 and 43 years old (laughing), we talk over the phone when we are not together almost everyday. We meet each other at least once a week in one of our houses and we keep close contacts. We are very comfortable this way.

TP: Was there any time when you and your wife got into a business decision conflict? how was it resolved?

KS: Sometimes, and we always resolve it amicably. Once I was close to buying a hotel in Basel, my wife warned me, that buying the hotel means a divorce (laughing heartily, obviously joking) and I listened to her, and she turns out to be the wiser one!

TP: One of your competitors told me that your family is a German family pretending to be Swiss, what will you says to such chauvinistic accusation?

KS: It is very old-fashion to say that now in this cosmopolitan Europe, my children were educated in Switzerland and they are Swiss Nationals. My wife and I still carry our German passports and we are proud to be Germans.

TP: Thank you!

KS: Thank you!

Jaw


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