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Speaker 1: Now you may remember this story from last month. The

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Speaker 1: Swiss watchmaker Omega alleged that three former employees were involved

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Speaker 1: in a criminal plot that resulted in the sale of

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Speaker 1: a fake Speedmaster at auction for more than three million dollars.

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Speaker 1: When it comes as a leading watch industry CEO has

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Speaker 1: today sounded a warning over the rise of quality fake watches.

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Speaker 1: What I see called is Frankenstein watches pretty much everywhere.

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Speaker 1: The CEF watchfinder and co Ian van Derval calls on

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Speaker 1: buyers and sellers to be vigilant, with even experts now

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Speaker 1: struggling to tell the difference between genuine and counterfeit. And

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Speaker 1: joining us now is Ian Vandival, who's in the London

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Speaker 1: radio studio with us this morning. Great to have you

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Speaker 1: on the program. So you specialize in secondhand watches. How

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Speaker 1: big of an issue is this now for you?

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Speaker 2: First of all, good morning and thank you for having me.

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Speaker 2: It is It's always been a problem. I think what

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Speaker 2: we're seeing we have consumers we want to be associated

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Speaker 2: with with luxury brands, and sometimes it's a matter of accessibility,

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Speaker 2: the price point and beyond. But what we're seeing in

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Speaker 2: the last years is that the level of sophistication of

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Speaker 2: these fake watches is increasing significantly. So in the olden

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Speaker 2: days and the authentication of watches, it's kind of art

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Speaker 2: and science. So there is a checklist that we have,

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Speaker 2: but our watchmakers when they feel a watch, they have

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Speaker 2: a first impression if it's real or not. In the

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Speaker 2: olden days, you would say that roughly twenty percent of

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Speaker 2: watches required really further inspection to understand if it was

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Speaker 2: a real or a fake watch. Today it's more eighty twenty.

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Speaker 2: So it's the other way around where we really need

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Speaker 2: to do very furrough testing and inspection to understand if

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Speaker 2: it's a genuine watch or not.

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Speaker 3: Where are these being produced on the continent they produced elsewhere?

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Speaker 3: What presumably this is a function of those record high

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Speaker 3: prices that we saw for luxury hand pieces time pieces

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Speaker 3: during the pandemic, and the stimulus checks that people were

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Speaker 3: putting too play to snap up these watches. That must

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Speaker 3: be a factor. And then again where they being made

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Speaker 3: and to what extent is the industry coming together to

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Speaker 3: kind of fight this.

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Speaker 2: So it's really a global problem because in order to

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Speaker 2: create watches of that quality, you need access to specific tools,

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Speaker 2: and you need real technicians you need watchmakers to be

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Speaker 2: able to put those together, so it's not necessarily one

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Speaker 2: specific region where it comes from. As an industry, what

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Speaker 2: we're seeing is that so for us, all of the

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Speaker 2: watches that we sell, we own, and before we buy them,

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Speaker 2: all of the watches go through a sixty step process.

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Speaker 2: So it's an inspection of the watch cosmetically, but it's

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Speaker 2: also checking if the watch is not registered on any

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Speaker 2: lost in stolen databases, and then it's authentication steps to

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Speaker 2: match the serial number with the documentation and then step

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Speaker 2: by step every part is inspected, after which we look

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Speaker 2: at the functioning of the watch and then depending on

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Speaker 2: what work we find needs to be done, we operate

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Speaker 2: on these watches within our service center, and that is

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Speaker 2: something that is not a standardize process. That is really

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Speaker 2: our process. But as one of the industry leaders, we

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Speaker 2: encourage the industry as a whole to adopt similar practices.

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Speaker 2: So it's not just about fake watches, but it's also

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Speaker 2: very much about lost and stone and watches.

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Speaker 1: Okay, that's interesting. What are the brands that are most faked?

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Speaker 2: So Rolex is the most aspirational luxury watch brand and

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Speaker 2: the highest demand, hence it's the most replicated. But you

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Speaker 2: today you see replicas or clone watches, very very high

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Speaker 2: quality watches of virtually all of the big luxury brands.

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Speaker 2: So the whole gamma is represented today.

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Speaker 3: But when it comes to Rolex, is there a percentage?

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Speaker 3: Is it kind of eighty percent of the fakes a

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Speaker 3: Rolex is what your kind of? Is there a number

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Speaker 3: you can put to that? Approximately?

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Speaker 2: Yeah, it's difficult to put a number to it. But

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Speaker 2: if you look at the watch industry as a whole

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Speaker 2: and the proportion that Rolex has within it, than you

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Speaker 2: would say up to fifty percent is probably Rolex up to.

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Speaker 1: Fifty Okay, fine? Has it changed a great deal then?

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Speaker 1: As we saw the kind of market boom now prices

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Speaker 1: are coming down in terms of the secondary market. Has

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Speaker 1: the level of kind of fake watches that you're finding

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Speaker 1: has that changed in the last two five year compared

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Speaker 1: to five years ago, two years ago?

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Speaker 2: Yeah, So it's always been somewhat up and down. And

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Speaker 2: the percentage of fake watches that we get in is

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Speaker 2: anywhere between ten and seven eight percent on a yearly basis.

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Speaker 2: I said, I think the main difference that we're seeing

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Speaker 2: is that the level of sophistication of these watches is changing,

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Speaker 2: but also that certain parts of the watch can be genuine,

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Speaker 2: but then there's fake parts being used in the watch.

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Speaker 3: Is there more that some of the luxury brands themselves

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Speaker 3: could be doing.

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Speaker 2: Yeah, absolutely, And there's a lot of initiatives that brands

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Speaker 2: are doing today, utilizing the blockchain, for example, to register

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Speaker 2: all watches as a unique piece on the blockchain. And

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Speaker 2: there's also a lot of work being done to understand

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Speaker 2: visual markers on a watch that make it very difficult

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Speaker 2: to mimic at a level of quality in a fake watch.

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Speaker 3: And you might do with with banknotes for example.

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Speaker 2: Yeah, exactly, yes, and so there are various initiatives in

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Speaker 2: the industry that are being done. And as a pre

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Speaker 2: owned player being part of the Richmond Group, we also

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Speaker 2: get to collaborate directly with the brands and support in

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Speaker 2: that in admission.

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Speaker 1: Yeah, I mean obviously Richmond, you know Cartier, course not

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Speaker 1: on lots of those big brands and names. What do

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Speaker 1: you do then, if a customer sends in a fake watch?

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Speaker 1: What do you do if somebody complain, So I think

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Speaker 1: the watch I bought is fake, I don't know what's well,

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Speaker 1: that's that's complicated.

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Speaker 2: Because in many cases we don't assume that there's any

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Speaker 2: wrongdoing from the customer who wants to sell us the watch,

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Speaker 2: so very often it's met with surprise. Depending on the jurisdiction,

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Speaker 2: there's various things that we have to do, So in

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Speaker 2: certain cases we're not allowed to send the watch pack.

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Speaker 2: We need to hold on to it. In other cases

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Speaker 2: we can return to watch. But the first the watch

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Speaker 2: to the customer.

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Speaker 1: Yeah.

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Speaker 2: Yeah. And the case is where it's us selling a

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Speaker 2: watch that is then fake. That's our reputation that's on

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Speaker 2: the line. And luckily those cases are virtually non existing

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Speaker 2: in the twenty years that we've been we've been around,

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Speaker 2: but typically those are quite tough conversations to have with

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Speaker 2: with our clients.

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Speaker 3: Yes, yeah, I bet that's probably a diplomatic wave, so

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Speaker 3: underplaying how challenging that must be. That conversation it taught

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Speaker 3: us about before we let you go about prices of

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Speaker 3: secondhand watches. They've come off quite a lot, particularly at

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Speaker 3: the high end. Do you expect that to continue? Are

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Speaker 3: we nearing a bottom what you're seeing in terms of prices?

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Speaker 2: Yeah. I think, first and foremost, what we've seen this

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Speaker 2: whole speculative wave in the last two or three years.

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Speaker 2: That is not necessarily what is at the heart of

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Speaker 2: pre on watches. Watches is very much either a gateway

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Speaker 2: into luxury watches at a more friendly price point, or

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Speaker 2: it gives you access to watches that have been discontinued

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Speaker 2: or watches that have a different story to it. Speculation

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Speaker 2: boom peaked really April of last year, and since then,

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Speaker 2: especially the higher segment above ten pounds, have come down

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Speaker 2: thirty forty percent. We now see it stabilizing, although it's

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Speaker 2: still gradually sliding down. For us, we as watch and

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Speaker 2: we're not interested in kind of the next crypto run.

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Speaker 2: So for us, it's not about speculation. Stability is good

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Speaker 2: and it's purely to do with our ability to buy

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Speaker 2: watches at the right price point to be able to

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Speaker 2: sell them at the right price point.

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Speaker 1: Aye, and I cannot let you go without a mention

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Speaker 1: of a few of your favorites. You must see tens

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Speaker 1: hundreds of the best watches out there for collectors at home.

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Speaker 1: I'm sure listening your favorites.

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Speaker 2: So I'm lucky that we're part of the Richmond Group

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Speaker 2: and long End Zone is one of the brands, one

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Speaker 2: of the most established missons that we have. And they

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Speaker 2: released the Odysseus, which is their version of a steel

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Speaker 2: sports watch, and they just released the chronic Craft in

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Speaker 2: Watches and Wonders this year, and that to me is

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Speaker 2: my my grill. But I have a lot more work

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Speaker 2: to do before I can attain that.

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Speaker 1: Okay, lovely stuff. Thank you so much, Ian Vandervel, CEO

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Speaker 1: of watch Finder and Co. Thank you so much for

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Speaker 1: being in the Bloomberg Radio studio. Lovely to have you.