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On September 11, Johann Rupert, chairman and founder of Richemont<\/strong><\/b>, set the tone at the annual general meeting of<\/strong><\/b> the Swiss luxury goods group, which comprises a majority of watch and jewellery houses (Cartier, Baume & Mercier, IWC, Jaeger-LeCoultre, Vacheron Constantin, Van Cleef & Arpels…).<\/strong><\/b><\/p>\n <\/p>\n Hard hit by the downturn in the Chinese and Hong Kong markets, global demand for watches \u201chas passed the boom stage\u201d,<\/strong><\/b> he told shareholders. And \u201cwe have to be prudent in simply trying to maintain volume\u201d.<\/p>\n <\/p>\n And in the face of adversity, competitors seem to be putting away their weapons.<\/p>\n <\/p>\n \u201cWe maintain close relations with our competitors, we know what they’re doing, and they’re acting very responsibly<\/strong><\/b> by limiting their production,\u201d he said.<\/p>\n <\/p>\n Good news, and no doubt a realization that the situation is serious…<\/p>\n <\/p>\n <\/p>\n Indeed, the export statistics published each month by the Swiss Watchmaking Federation have been anxiously scrutinized<\/strong><\/b> since the start of 2024. And it’s not the improvement of the last two months, July and August<\/strong><\/b>, after five months in a row of decline, that is bringing a smile to the faces of those involved in the industry.<\/p>\n\n <\/p>\n Swiss watch exports certainly confirmed their rebound in August (+6.9%<\/strong><\/b> to 1.95 billion Swiss francs (2 billion euros)), following an upward trend in July (+1.6%).<\/strong><\/b><\/p>\n <\/p>\n Yes, but…industry players are not getting carried away.<\/p>\n <\/p>\n There are still a number of signs that they are holding back.<\/p>\n <\/p>\n Despite this increase, which brings the eight-month total to 17.1 billion francs, the trend remains negative (-1.4%)<\/strong><\/b>, as does the outlook<\/strong><\/b> for the end of the year,\u201d stresses the Swiss Watch Federation.<\/strong><\/b> Companies in the sector deplore the lack of medium-term visibility<\/strong><\/b>, prompting them to be extremely cautious<\/strong><\/b> for the future, and in many cases to reduce their activity<\/strong><\/b> \u201c.<\/p>\n <\/p>\n <\/p>\n The sector’s Achilles’ heel are the Chinese and Hong Kong markets, respectively the second and fifth most important destinations for Swiss watchmakers. In the Middle Kingdom, sales continued to fall in August, down 5.9%<\/strong><\/b> to 179.1 million Swiss francs, extending a negative run of seven months.<\/p>\n <\/p>\n Exports to Hong Kong<\/strong><\/b> fell by a further 11.1%<\/strong><\/b> to 132.4 million Swiss francs in August.<\/p>\n <\/p>\n In both markets, post-covid revenge buying was short-lived. Consumers are now more parsimonious,<\/strong><\/b> alerted by sluggish growth, a sluggish housing market and a worrying youth unemployment rate.<\/p>\n <\/p>\n These setbacks were offset this month by the dynamism of the four other main markets<\/strong><\/b>: the United States<\/strong><\/b>, the leading customer for Swiss watchmakers (+7.6%<\/strong><\/b> to 320 million Swiss francs), Japan<\/strong><\/b> in third place (+14.4%<\/strong><\/b> to 143.2 million Swiss francs) and Singapore<\/strong><\/b>, the sixth largest customer (+9.3%<\/strong><\/b> to 124.7 million Swiss francs).<\/p>\n <\/p>\n <\/p>\n In most other countries, sales of Swiss watches also grew, with \u201csometimes sustained increases\u201d. This was the case in the United Arab Emirates (+26.9%), Italy (+17.6%) and South Korea (+14.2%).<\/strong><\/b><\/p>\n <\/p>\n In Europe’s top three markets, however, growth was less marked: +3.5% in the UK, +2.9% in Germany and just +0.7% in France.<\/strong><\/b><\/p>\n <\/p>\n The same two-speed evolution can be observed in terms of categories.<\/p>\n <\/p>\n Value sales of precious metal wristwatches<\/strong><\/b> drove growth, soaring by 21.2%<\/strong><\/b> to 743.3 million Swiss francs. Bimetallic timepieces (+12.7%<\/strong><\/b> to 346.8 million Swiss francs) were also dynamic. Steel products, on the other hand, declined by 7%<\/strong><\/b> to 615 million Swiss francs.<\/p>\n <\/p>\n In volume<\/strong><\/b> terms, sales of watches in precious metals (+3.7%) and bimetallics (+2.6%)<\/strong><\/b> rose more modestly, while those in steel<\/strong><\/b> again fell (-10.5%).<\/strong><\/b><\/p>\n <\/p>\n <\/p>\n Be that as it may, these new statistics do not inspire optimism.<\/p>\n <\/p>\n In August<\/strong><\/b>, the Swiss federation reported a negative trend<\/strong><\/b> for its two major Asian markets, China and Hong Kong, which was \u201cless marked<\/strong><\/b> than in previous months\u201d. Even so, the federation’s \u201cforecasts for the coming months\u201d remain \u201cvery unfavorable<\/strong><\/b>\u201d.<\/p>\n <\/p>\n After three fat post-Covid years<\/strong><\/b>, with record export performances, watch manufacturers are well aware that they are entering a less prosperous period in 2024<\/strong><\/b>…<\/p>\n <\/p>\n After happily spending their accumulated savings during the confinements, consumers<\/strong><\/b>– particularly the so-called \u201caspirational\u201d ones – are facing up to the reality principle. Today, they are more concerned about their purchasing power, which is being eroded by inflation.<\/strong><\/b><\/p>\n <\/p>\n And the Swiss watchmaking industry,<\/strong><\/b> for its part, is dragging its very strong Swiss currency like a ball and chain<\/strong><\/b>, making watches more expensive outside the country.<\/p>\n <\/p>\n <\/p>\n Against this backdrop, they have issued a cry of alarm to their government.<\/p>\n <\/p>\n In a joint press release published on September 17, the Employers’ Convention of the Swiss Watch Industry and the Federation of the Swiss Watch Industry called on the authorities to take \u201cconcrete measures\u201d<\/strong><\/b> to \u201cstrengthen the competitiveness and preserve the economic stability\u201d of their export industry, which is crucial to the country.<\/p>\n <\/p>\n \u201cThe Swiss watchmaking industry is currently going through a delicate situation<\/strong><\/b>, marked by \u201chighly contrasting trends since the beginning of the year\u201d and \u201cvirtually zero visibility, with no prospects of improvement in the short term\u201d, the statement said.<\/p>\n <\/p>\n The context is \u201cdifficult\u201d<\/strong><\/b> for the nearly 700 companies<\/strong><\/b> in the sector, employing 65,000 people<\/strong><\/b>, and \u201cparticularly for subcontractors and those operating in the entry and mid-range segments<\/strong><\/b>\u201d.<\/p>\n <\/p>\n As a result, \u201cmany of them have already had to resort to short-time working, extend summer closures and lay off staff<\/strong><\/b>\u201d.<\/p>\n <\/p>\n <\/p>\n The sector is therefore calling for emergency measures to help it cope.<\/strong><\/b><\/p>\n <\/p>\n \u201cActing on the Swiss franc<\/strong><\/b>\u201d appears to bea priority, as its competitiveness<\/strong><\/b> has beendeteriorating<\/strong><\/b> for several years.<\/p>\n <\/p>\n \u201cWith inflation currently well below 2%, the Swiss National Bank has room for manoeuvre to act<\/strong><\/b> on the foreign exchange market, in a long-term perspective, in coordination with other measures to regulate inflation\u201d, say the trade organizations, also calling for \u2018an ad hoc and more reactive approach to mitigate the volatility of the franc where possible\u2019.<\/p>\n <\/p>\n The Swiss watchmaking industry is also calling for a reduction in the administrative burden on companies<\/strong><\/b>, which \u201cmust remain the objective of the Confederation, cantons and municipalities\u201d.<\/p>\n <\/p>\n On the other hand,it welcomes<\/strong><\/b> recent advances in free trade,<\/strong><\/b> such as \u201cthe modernization of the agreement with China<\/strong><\/b>, the ratification of the agreement with India<\/strong><\/b> and the finalization of negotiations with Mercosur (<\/strong><\/b>Argentina, Brazil, Paraguay and Uruguay)\u201d, giving Swiss exporting companies tangible advantages for their exports. And it expects just as much from the forthcoming conclusion of the Bilaterals III with the European Union<\/strong><\/b>…<\/p>\n <\/p>\n These hopeful signs<\/strong><\/b> should help the Swiss watchmaking industry to bide its time until a better tomorrow.<\/p>\n <\/p>\nA negative annual trend<\/h2>\n
China and Hong Kong: the Achilles heel…<\/h2>\n
Increases of varying degrees<\/h2>\n
Unfavorable forecasts<\/h2>\n
A cry of alarm<\/h2>\n
Emergency measures<\/h2>\n
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