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There are a couple of California-based South Africans – Elon Musk ($13.7bn) and Patrick Shoon-Sheong ($12.3bn) – who are richer than Richemont executive chairman Johann Rupert ($7bn). But neither would contest Rupert’s title as SA’s most powerful businessman. He is the one man in the country’s private sector prepared to say what he believes needs to be said, as he famously did at the Remgro AGM last November. He is capable of influencing the hardest headed local politician largely because he is regarded as a heavy hitter on the global stage. In this rare television interview, Rupert sat down with Lionel Barber, editor of the Financial Times of London. It’s vintage Rupert – the native of Stellenbosch opining on anything from China and the Apple Watch to the chance of England’s cricketers regaining the Ashes. – Alec Hogg
At the Financial Times of London’s Business of Luxury Summit, the newspaper’s editor Lionel Barber interviewed Johann Rupert, chairman of the world luxury goods business whose brands range from Van Cleef to Mont Blanc and Cartier. Johann, how do you see the economy right now?
Three or five years ago, it was much easier to see the excesses. I’m concerned that there’s not enough economic growth to repay the debt, which will lead to a huge incentive to those holders of the debt (governments that have socialised the private debt) to devalue the debt in order to repay. Unless we get proper economic growth… I’m concerned. China is obviously, the swinger.
You have very important businesses in China. Your luxury business is exposed in Hong Kong as well, where you see a slow-down.
I think China will grow at the pace it wants to grow. It’s still a command-driven economy.
We don’t necessarily trust the numbers and there is a slow-down right now.
Do you trust any Central Bank (or should I say Western governments)? I’m not sure. I was a banker and I used to think that Central bankers were the smartest people on earth. Somebody told me years ago, “Never meet your heroes. You may be disappointed”.
The Central bankers have kept the world economy from slipping into a depression, though. Have they not?
Yes, but we haven’t paid for it yet.
When do you think interest rates are going to rise in America? It will probably rise in America first.
If we knew that, I wouldn’t be sitting here in a suit, in Monaco. I’d be playing the markets. I have no idea.
Going back to China, are you ‘medium-term’ optimistic about China?
You are. Why?
Firstly, they’re smart. I know we’re not supposed to say that ‘people are smart’. It’s not PC. Secondly, they study like crazy. Every Chinese kid has six adults looking over his/her shoulder. That’s quite a burden. They study. They have a work ethic. Normally, when people are smart and they study, work, and save, they do better than the rest of us.
A good combination, indeed. One of the themes of the Business of Luxury conference here in Monaco, is technology and the new consumer and you’ve spoken eloquently about the power of technology. Just now, you said that ecommerce is going to be overwhelmed or dwarfed by artificial intelligence. Just apply that to your own products. You have beautiful, high-priced watches but now, you have the Smart Watch from Apple. Is that a threat to your core business?
It’s not a direct threat. Having been an Apple distributor in the mid-eighties in South Africa and being an Apple freak… where the floppy disk had more memory than the hard drive did – it was remarkable. I’ve been an Apple lover for 30-odd years now, and I look at the Apple watch as more of a remote control for the computer, which is your iPhone. It does all kinds of things but I find it hard to conceive spending $17,000 on a product, you’d have to throw away in two years’ time. That’s really, not in our culture (the Protestant culture). My wife would never buy a dress, wear it once, and then throw it away. In a sense, that’s why we’ve never made a luxury phone in Cartier or anywhere. We’re not disposable.
You just disclosed that there was some thought at Cartier, of building a Smart Phone.
Yes. We have a couple of terms there. One is a career-limiting move (CLM). If you have two CLM’s it becomes a CEM, which is a career-eliminating move and that first proposal was bordering on CLM. No, we would never make a phone.
Let’s talk about ecommerce. You’ve obviously made an important move with NET-A-PORTER and Yoox. Tell us about how you see ecommerce affecting your business and driving the business. I think you have a new idea, which is about to be unveiled as well, regarding ecommerce platforms.
I was persuaded by friends of mine. One being one of the smartest individuals I’ve met and will ever meet and whom you know as well – Nick [unclear 5:46] – that this is a big boy’s game. NAP and Yoox, even together, although they’ll be dominant, will also need to grow. This is ‘winner takes all’ and therefore, I invited all of our opponents, too. I went to Mr Arnaut. I had already spoken to Mr Pinot. Mr Armani is already there. We will invite everybody and it will be a neutral platform – truly neutral.
For luxury brands.
Yes. In order to prove that, even though we have currently have 50 percent of the shareholding, we limited ourselves to 25 percent of the votes. If people take up more shares, we’ll dilute. This really is a platform, which we’d like to have for everyone. The costs are too high.
It’s also, a way of combating Amazon as well, with these enormously powerful digital companies.
It doesn’t matter who they are. Firstly, they have to get the products before they can sell them. We’ve been guilty too of amalgamating everything as well, and branding it down – all of the luxury goods/big companies. With Franco Cologni, our family decided and we put in money to have a platform for artisans, designers, and people with style, and we want to get a platform. If you look at Yoox and NAP, they have the Outnet and they have various sub-platforms but we’d like to have a platform for the artisans of Europe.
Just in conclusion Johann, I think it’s time to play ‘long/short’, so here we go. The Euro: long or short?
The Swiss Franc.
You can say that. Oil price…
How long is this ‘long/short’ business?
Short would be approximately three months.
Very short? Bitcoin.
Brexit…Britain leaving…forget it.
Okay, that’s clear. FIFA?
I shorted them two years ago.
The traditional luxury watch.
The Apple Watch?
The Apple luxury (i.e. $17,000) watch…
I think that’s what we’re talking about.
Finally, I do know that you are a very keen cricket fan, so is England to regain the ashes?
You’re not serious. Very short.
Thank you. Andrew Strauss will be delighted to hear that.
Andrew is a very good man but you’re only as good as your team. After the first Test against New Zealand, Michael Vaughn said, “Is this a new dawn?” He comes to the Dunhill Links every year and I said, “Would you like a bet on that?” The answer was ‘no’.
Very good. On that high note; Johann Rupert, thank you for playing View from the Top and long/short.
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