The value of Swiss watch exports has risen sharply since the beginning of the year, driven by demand for high quality timepieces. A situation that pleases the most prestigious brands in the sector, but poses great challenges for the entire sector.
This content was posted on Jun 23, 2022 – 5:01 PM
The ticking of Swiss clocks is unshakable. War in Ukraine, mass restrictions in China, inflation, falling stock markets and cryptocurrencies: no political or economic destabilizing factor affects watch exports. Between January and May, their value increased by almost 13% compared to 2021, which was already a record year for the industry.
The increase in exports mainly affects the top class, i.e. watches with a unit price of over 7,500 francs. Last year, they already accounted for more than 73% of the value of Swiss watch exports. According to the data collected, the total number of exported coins has remained almost stable since the beginning of the year (+2.3%).external link by the Association of the Swiss Watch Industry (FH).
“This enthusiasm for high-end watchmaking is unprecedented,” said Olivier Müller, watchmaking consultant at LuxeConsult, during a roundtable on the future of watchmaking held in mid-June at the Salon des Entreprises et Watchmaking – Jewellery, Microtechnology and Medical Technologies ( EPHJexternal link) in genf.
Speculation and Upscaling
It is positive that many young people are again interested in “Swiss Made” luxury watches, says Olivier Müller. “But on the other hand, we are observing an unhealthy speculative phenomenon, watch purchases made with the sole aim of making capital gains in the secondary market. This creates a lot of frustration for people who really want to buy and wear these watches.”
This interest is mainly focused on the flagship models of the watch manufacturer “Big Four”external link, the four independent brands that generate more than half of the industry’s profits: Rolex, Patek Philippe, Audemars Piguet and Richard Mille. “We’ve seen such enthusiasm for certain second-hand models in the past, but this is the first time that new models have been affected to this extent,” said Romain Rea, watch expert at Geneva auction house Antiquorumexternal link.
At the other end of the watch spectrum, among entry-level and mid-range timepiece makers, the news is less encouraging. In twenty years, the total number of watches exported has halved, from 30 million in the early 2000s to 15 million in 2021. The competition from connected watches and the success of foreign fashion brands (Guess, Puma, Armani, etc.) among trendy brands are boy People are undermining the watch houses that produce watches at affordable prices under the “Swiss Made” label.
Fertile but fragile soil
But in the eyes of Olivier Müller, watchmaking cannot live from the top alone. “It needs a strong industrial base. They need volume to amortize the investment,” he emphasizes.
Like Rolex or the Swatch Group, brands and watch groups that have the financial clout to invest in integrated in-house production (verticalization) have a bright future ahead of them. On the other hand, small independent brands could suffer from the weakening of the industrial fabric. “What constitutes the strength of Swiss watchmaking is the number of highly specialized specialists working in this sector. We need all subcontractors and all freelancers to nourish this fertile ground. The almost unchallenged dominance of a few brands over the entire industry worries me,” says Geneva watchmaker Jean-Marc Wiederrecht.
For his part, Svend Andersen, co-founder of the academy, pointed out that a strong industry benefits everyone, including independent watchmakers who make a few dozen pieces a year for amateurs or wealthy amateursexternal link. “The more similar cars you have, the more people want to drive an exceptional car. It’s the same with watches. We respond to the demand of collectors and collectors looking for an object that will stand out.
Despite all these warnings, the last word, a sign of optimism, went to Kari Voutilainen, a renowned Finnish master watchmaker from the canton of Neuchâtel. “There is something magical about the watch because it is almost the last mechanical object we have. More and more young people are getting interested in Swiss watchmaking again, so I think it has a bright future ahead of it.”
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