When the Bavarian Hans Wilsdorf founded Rolex in the distant 1905 in London – and not in Geneva, where it is based today – it is certain that he could not perceive the size, the dynamics and the perspective of the new company, a company that is synonymous with luxury, of the high social and economic status and ultimately of the history of watchmaking itself.
Throughout the course of the 20th and 21st centuries, a Rolex has always graced the hand of powerful and famous personalities, such as Steve McQueen, Winston Churchill, Martin Luther King, Che Guevara, John Kennedy, Marlon Brando, and more recently Cristiano Ronaldo et al.
As prominent as all of the above are, the company behind Rolex is just as secretive. The reason for the “Hans Wilsdorf” Foundation, which owns 100% of the shares of the gold-bearing company. And when we say goldsmiths, we mean it to the absolute extent, as – according to various estimates – Rolex has an annual profit of more than 1 billion dollars.
And all this almost tax-free, since the foundation in question reportedly reinvests a large percentage of these profits – rumored to be as much as 90% – into various non-profit activities, thereby achieving huge tax breaks.
In addition to the financial aspect, a veil of mystery surrounds the production itself. Namely, how exactly these sophisticated and luxurious wristwatches are made. Each one is a separate masterpiece, as it is – to a large extent – handmade. The whole construction process, however, requires almost 12 months. That is, a whole year!
The “legend” even has it that if one wishes to become a watchmaker in Switzerland, one must assemble a disassembled Rolex watch before receiving one’s degree. Surely, if Wilsdorf found out, he would swell with pride in his creation. As well as the fact that the “crown” of Rolex is one of the most recognizable logos worldwide. But let’s take things from the beginning.
From London to Geneva
Although Rolex is today a purely Swiss company, its foundation takes place several kilometers further north – specifically in London. The 24-year-old (then) Wilsdorf, captivated by the art of watchmaking, decides to start a business together with his – later son-in-law – Alfred Davis. The two men take the first step in 1905, active in the import – export of precious stones and also in the manufacture of watches.
Gradually, however, they realized that the big money and professional establishment would come solely from production (not from marketing) and so they began to focus on it by hiring some of the best watchmakers of the time. After the end of the First World War, England’s economic situation is not the best possible, while high tariffs are a permanent “hangover”.
Therefore, in 1919, two important events take place that change the fate of Rolex: on the one hand, it is decided to relocate the company to politically neutral and economically strong Switzerland, on the other hand, Wilsdorf buys Davis’s share, making him the one and only shareholder of Rolex. During the war – let’s not forget that we are in World War I – the ever restless and innovative Wilsdorf realizes something that would mark the history of watchmaking worldwide. Until then, watches went into a trouser pocket or jacket.
This, however, was completely inconvenient for a soldier on the battlefield. Thus, many people start tying watches to their wrists. And this is precisely what inspires “Mr Rolex” to create something that did not exist until that moment: wristwatches. So, while the business begins to flourish and the wristwatches sell out, the sudden death of Wilsdorf’s second wife, Florence, comes to disturb and turn the life of the famous watchmaker upside down.
Having no children – and therefore heirs – he remains completely alone. And the question of what will become of all that he built, begins to dominate his thoughts. The solution is provided through the “Hans Wilsdorf” Foundation, which was founded in 1945. Fifteen years later, when Wilsdorf himself breathed his last at the age of 79, 100% of the Rolex shares became the property of this foundation, based in the canton of Geneva. Somehow, to this day, Rolex belongs to the charitable and non-profit foundation “Hans Wilsdorf”.
And now the unanswered questions begin. Since it is a private foundation, Swiss law does not require the publication of financial statements or other information related to ownership status. So, apart from the names that make up the board of directors and some charitable actions, everything else is completely unknown to the public: from the exact amount of Rolex’s income to the way the Foundation’s management members are selected.
The charities
According to information, a large percentage of the profits from Rolex watches – some sources say as much as 90% – is reinvested in scientific research and development or donated to various charitable causes or channeled to non-profit institutions. In short, money from luxury watches goes back to society.
Typical is the collaboration with “National Geographic”, but also with the organizations Mission Blue – Monaco Blue Initiative, etc. The Swiss, in fact, know that the Rolex foundation donates much more than it usually announces.
One of the reasons why the basic orientation of Rolex is the rich philanthropic activity – grants in scientific research, sports and cultural events, support of social projects, etc. – is due to Wilsdorf himself. And this, because at the age of 12 he was orphaned and forced to grow up in his uncle’s house, which made him quite sensitive.
Profits without taxes
Thanks to all these philanthropies, the Wilsdorf Foundation – and therefore Rolex – manages to secure large tax breaks from the Swiss state, with the result that, according to reports, the profits from the sales of the famous watches are almost entirely tax-free. This is, according to the estimates of investment houses, about profits of the order of 1-1.5 billion dollars per year. However, no one is sure of the exact figures, as there are no relevant announcements.
On the other hand, the fact that Rolex is wholly owned by the Wilsdorf Foundation also entails certain prohibitions. For example, shares cannot be sold, while dividends cannot be distributed to outside shareholders. At the same time, as a company, Rolex cannot be transferred or split into different corporate entities. It will remain the property of the institution.
At the moment, the man managing Rolex’s huge profits is named Kostin van Berchem, who has been the head of the foundation since 2013. The board consists of a total of eight members, while employing just 13 employees, whose job is to manage requests for sponsorships and donations. How they all end up in these positions, as we said, remains an unsolved mystery.
Twelve months for a watch
As secretive and special as Rolex’s ownership structure is, so is the production process. For each of the luxury watches, which adorn the hands of the richest and most powerful people on the planet, many working hours are required.
Each product takes 12 months to fully manufacture, followed by a 15-day period during which the watch is subjected to every imaginable and improbable test to check various things, such as time accuracy, water resistance, etc. .a. However, less than 1 in 1,000 watches are estimated to fail the demanding inspection tests.
Almost all components are manufactured in Rolex’s laboratories, which avoids importing anything. In this way, it wishes on the one hand to control the quality and on the other hand to maintain the legend surrounding its products. Besides, it is known that photos and video recording are expressly prohibited in the company’s premises.
Another notable feature is the fact that production is largely done by hand. In other words, although many modern machines are used, the manufacture of a Rolex requires a lot of personal work and the passion of thousands of specialized scientists.
Today the famous Swiss company, which holds the largest share of the global luxury watch market, has four different facilities. Of course, all in Switzerland:
1. In Biel/Bienne, in the canton of Bern, the individual components are manufactured.
2. In Plan-les-Ouates, in the canton of Geneva, the cases and straps are produced.
3. In Chene-Bourg, in the canton of Geneva, everything related to precious stones and the manufacture of dials takes place.
4. In Acacias, in the canton of Geneva, is the headquarters of the administration, as well as the research laboratories.
Steel and gold
And since we mentioned the precious stones, a special mention should also be made of the stainless steel used by Rolex. Unlike most companies in the industry, which source 316L-type steel, Rolex chooses to process 904L steel, which contains higher levels of nickel and chromium. And this – of course – means that, in addition to being more resistant to corrosion, it is more expensive than all the others. At the same time, this particular type is considered one of the most difficult to process, which contributes to the long time required to manufacture a Rolex watch.
At the same time, the gold and platinum are manufactured in Rolex’s proprietary in-house workshop, producing 18K yellow and white gold. In fact, it is the only watchmaker in the world that has its own foundry, while it still holds a first, that of the company with the largest annual use of gold in Switzerland.
Over the years Rolex has become synonymous with innovation and progress. Moreover, it has filed more than 500 patents in its long career, while it has received dozens of awards. Indicatively, in 1910 it became the first company to receive the Swiss Certificate of Precision Chronometry, while in 1926 it obtained the first Water Resistance Certificate. In 1945, the Datejust model became the first wristwatch that also showed the date on the dial. In 1953, the Submariner became the first watch to be water-resistant to a depth of 100 meters. And the list of awards goes on…
What does Rolex mean?
The legend of Rolex is also fueled by the following simple question: What exactly does Rolex mean?
Until the founding of the company of the same name, the word had not been registered, which maintains the scenario that it was invented by the two founders just because it sounded good to them. Another theory says that the word “Rolex” came from the French phrase horlogerie exquise, meaning “exquisite watchmaking” or from the English phrase horological excellence, meaning “excellent watchmaking”. Neither, however, has been confirmed.
Other sources believe that Wilsdorf wanted a short name in which the letters could be understood in any language. He himself, however, before he passed away, claimed that the inspiration came to him while he was on his horse in a street in London and a “genie” whispered the word “Rolex” in his ear.
A few years later, specifically in 1931, next to Rolex was added the company’s emblematic mark, which consists of a crown with five peaks. Today, several decades later, it is considered one of the most recognizable logos worldwide.
