Is a storm brewing? The watch industry in the run-up to the trade fairs

Apart from the Lehman Brothers hiccup in 2009, the annual figures for Swiss watch exports have continued to rise steadily since 2003. An important contribution to this trend has been the sharp increase in consumption in Far Eastern countries, particularly China.

By Gisbert Brunner

Steadily increasing prosperity and an accompanying taste for luxury items in the Middle Kingdom was particularly profitable for Hong Kong. Inhabitants in mainland China were delighted to be able to buy watches and jewelry exempt from customs duty and luxury tax right on their doorsteps. In 2000, Switzerland exported 10.297 billion Swiss francs’ worth of watches. A mere 14% of this went to Hong Kong, and just 0.5% to mainland China. Five years later, total exports had climbed to 12.390 billion Swiss francs, 14.5% of which went to Hong Kong and 2.84% to mainland China. As the Lehman Brothers crisis was dying down in 2010, total exports climbed to 16.166 billion Swiss francs, with Hong Kong claiming a sensational 25.5% of this sum and mainland China 6.8%. Subsequently, although total watch exports by Federal manufacturers continued to rise, these percentage shares declined noticeably.

In 2013, no more than 19% of the 21.833 billion francs’ worth of exports flowed into Hong Kong, while the figure for mainland China dropped to 6.6%. This downward trend continued into 2014, despite total Swiss watch exports reaching an all-time high of 22.26 billion Swiss francs. Hong Kong took 18.5% of this and mainland China 6.3%. Nevertheless, the Chinese maintained their enthusiasm for luxury watches and continued to purchase them frequently. The portents, however, were changing. The main beneficiaries were jewelers in Japan, certain European countries – Italy, France, Germany, England and Switzerland – and the United Arab Emirates. Even so, export growth fell perceptibly in 2014, and this downward trend continued from January to November 2015.

Last October was a particularly bad month: In comparison with the same month the previous year, the Swiss watch industry had to absorb losses of 276.2 million Swiss francs, i.e. 12.12%. The November figures were also down, at 5.6%. Clearly, the worry lines on the faces of Swiss watch CEOs are by no means unfounded. Many of them have recognized the fatal consequences of perpetual price rises. Their reactions will thus be revealed during the upcoming trade fairs in Geneva (SIHH) and Basel.


In light of the latest developments on the Chinese stock markets, the problems in Hong Kong and nearby Macau will not be resolved on their own. In addition, specialist watch retailers have a great deal of capital locked up in stock, which increases the temptation to sell watches off at high discounts. This increasing pressure is leading to demands for manufacturers to take back excess stock. Such requests result in a dilemma: On the one hand, the industry wants to sell new watches, as indeed it must, but on the other hand, excess stock undoubtedly favors gray or parallel market activities, which could have a negative impact on new sales.

So 2016 is likely to reveal which brands can hold their course, not only on calm seas with a fair wind, but also in stormy waters.