INNOVATION DRIVES FASHION FORWARD

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EXCLUSIVE | Devialet CEO: China Is Expected to Become the Second Largest Market

October 25,2019

Founded in 2007, Devialet is considered a very young brand in Europe, but it has grown rapidly in recent years. Andy Rubin, the " Father of Android", is a huge fan of Devialet and believes that Devialet is a game-changer in the audio industry.

Now Devialet has officially entered the China market with the establishment of concept stores and flagship stores in Beijing and Shanghai.

At the concept store in Beijing, Devialet CEO Franck Lebouchard and Luxe.CO had a good talk about the brand's past, present and future in China.

Behind this young brand, there are a bunch of big shots: Billionaire LVMH Chief Bernard Arnault, electronics manufacturing giant Foxconn through its European investment arm Ginko Ventures, automobile manufacturer giant Group Renault, Andy Rubin's venture capital fund Playground Global, successful music artist Jay-Z, Qatar sovereign wealth fund Future French Champions, CM-CIC Investissement, French government investment fund BPI France, and the investment funds that LINE's parent company, Naver, and its subsidiaries participated in.

As of October 2018, Devialet had raised a total of 125 million euros.

Image above: Franck Lebouchard, CEO of Devialet

Luxe.CO: What do you think about Devialet that attracts many famous investors?

Franck Lebouchard: The sound quality, musicians like Jay-Z, who is also an entrepreneur, is very particular about the sound quality of sound equipment. After using our product in 2012, he decided to invest in the brand, and he was one of our first investors. And Bernard Arnault, himself is a music lover, and he also loves our products.

Like Foxconn, Qatar sovereign wealth fund Future French Champions and BPI, these investors appreciate that the products we are making are about speakers and music ---- the emotional goods which everyone can relate to. So far, I have not met anyone who says they don't like music. Everyone can talk about music, it's a potential market, and that's what they're looking for.

Luxe.CO: In terms of financing, are you interested in attracting Chinese investors in the future?

Franck Lebouchard: We've had Chinese investors come to us before. In the future we may be open for the Chinese investors.

Luxe.CO: We know that you have a rich experience in theater, cinema and manufacturing industry, what made you choose Devialet?

Franck Lebouchard: These industries all have the similar feature: Bring emotions to people. The cinema industry is also to convey emotions -- in the cinema, you will cry, you will laugh, you will be afraid, you will share the beautiful moment with friends, it is about experience, emotions and sharing. Music is the same -- when you enjoy your favorite music with pure and perfect sound quality, you can hear the emotion behind it. Throughout my life, I have been delivering these strong emotions.

"We Focus on Sound, and Only Focus on Sound."

Devialet created the world's first sound system that combines analog and digital technology, and created several audio products based on this technology. So far, Devialet has been awarded more than 160 patents and has racked up 76 international awards for sound and design. 

In addition, the brand currently owns two factories in France, and all the hardware and software of the products are independently designed and developed by the internal team in France. Devialet's team currently has 500 people, 100 of whom are engineers, according to Franck Lebouchard.

Although Devialet's currently core business is audio, it has formed a partnership with its investors Renault group and Foxconn group to use Devialet's acoustic technology in Renault's cars and Sharp's televisions. Devialet's technology is also likely to appear on mobile devices, as well as more software-based services for music -- Jay-Z's company, the music streaming service Tidal, has a deal with Phantom in streaming media. 

In addition to the hardware capabilities, Devialet has taken pains to create its brand image. Devialet has long opened outlets worldwide, in addition to the traditional wholesale and multi-brand channels such as Apple Store and Harrods Department Store. The brand will set up a special listening space in the store for consumers to experience it in person. At the same time, the store will adopt high standards of design to form a complete experience with the products.

Image above: Devialet's concept store in Beijing

Luxe.CO: In the face of well-known competitive brands in the audio industry such as BOSE and B&O, what kind of differentiation strategy did Devialet develop for Global market and China Market? 

Franck Lebouchard:  In my opinion, we are different from the whole industry, we focus on audio and only focus on audio. We're not trying to go that fast, and we're not going to open 1,000 stores in China. We are also careful in choosing partners, focusing on pure voices and a few partners.

Luxe.CO: As the CEO of Devialet, what are your priorities right now?

Franck Lebouchard: The Chinese market, and the next generation of new products, we now have audio, but no headphones or car audio. I am really looking forward to launching new products.

Luxe.CO: In terms of product innovation, will Devialet introduce more entry level products in the future?

Franck Lebouchard: Of course, we are developing new products, but can't reveal the specific content. Every step we take, we want to offer more affordable products to consumers, and there will be more affordable products coming in the future.

Luxe.Co: What’s your opinion on the future trend of global audio industry? 

Franck Lebouchard: One is smart audio. Many of today's products are smart enough to support voice recognition, Devialet’s future products will be smarter.

Another trend is that as consumers get more chances to listen to more music, they also have higher requirements for music quality. In every segment of the music industry, we can see that the demand for music quality has increased. Devialet has unique acoustic technologies that we hope will be applied to more fields and scenes, such as cars, smart speakers, wireless routers, etc.

Image above: Devialet flagship store in Shanghai

China Is Expected to Become the Second Largest Market

The Global wireless audio market is expected to grow to $17.6 billion, according to a July report by Global Industry Analysts. The wireless audio market in China is expected to grow at a compound annual growth rate of 12.8% over the next few years, with an estimated market size of $4.2 billion.

According to the ‘Wireless Audio Devices Market 2019 Global Analysis, Growth, Trends and Opportunities Research Report Forecasting 2025’, from 2018 to 2025, the global wireless audio market is expected to grow at a compound annual growth rate of 18.36%. Geographically, the APAC region leads the world, driven by the growing middle class in China, India and other Asian countries.

Franck Lebouchard says France is still the brand's biggest market, with the United States second. But given the rapid growth of the Chinese market, China is expected to overtake the US as the second largest market for Devialet next year.

Devialet first entered the Asian market in 2017, and opened its first retail store in IFC in Hong Kong, China. The brand opened two stores in mainland China this year and will open 18 more. But Franck Lebouchard acknowledged that the rapid growth of the Chinese market poses challenges for both the branding team and its supply chain.

Luxe.CO: Why do you decide to enter the China market at this time?

Franck Lebouchard: We entered Singapore, Hong Kong, Taiwan three years ago and Japan one year ago. After that, we spent a year preparing the factory, supply chain, publicity team, etc., and decided that now was the right time to enter the mainland China market. Another reason is that the Asian market is important. Two of the brand's major shareholders are from Asia: Foxconn in Shenzhen and Naver in South Korea.

Luxe.CO: We have learned that Drivepro is Devialet's distributor in China. How did the brand initially establish contact with drivepro and mainland China market?

Franck Lebouchard: Drivepro is not our only distributor in mainland China. We also have Purist Audio. Devialet's first contact with drivepro was in the Hong Kong market, where they are one of the distributors of the brand, and they suggested that we enter the mainland Chinese market. And now after one year of preparation, after we officially entered the mainland China market, we find that there are still many challenges.

Luxe.CO: How is the brand's operations in China compared with in the US and Europe?

Franck Lebouchard: Speed. Usually it took us 8~12 months to open a store in France, Europe and the United States, but in Beijing and Shanghai, we only took 2 months. And in terms of store size, the stores in France, Europe and the United States are 30 to 40 square meters, only one third of size in China. We have to recreate something for China.

In terms of channels, there is no difference in multi-brand store channels, the biggest difference is still the speed. In other countries, we will first open 1 to 3 stores with our partners, and after half a year, we will open 10 stores with good progress, if successful, we will open 20 stores, but in China, we will start with 20 stores, and then we will discuss. It's exciting to grow at this rate, but it's also a challenge for us.

Image above: Devialet's concept store in Beijing

Luxe.CO: Will the rapid changes in the China market have an impact on the brand's supply chain?

Franck Lebouchard: As a matter of fact, it has already affected our supply chain. I contacted my partner this morning and hope that the new product can be put on shelves in mid-October. This is a revolution for our factory in Paris. Arguably, the China market is changing Devialet.

Luxe.CO: What are the other challenges the brand is facing in the China market?

Franck Lebouchard: How to communicate with young consumers. Our customers in other markets are older, but our customers in China are younger. We need to adjust the marketing strategy and the design of the whole store. The team used to prepare a store in a few months, but now it is preparing a store in a few weeks.

 

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