Swiss Watches Exports Up 19.3% led by Growth in Asia

The entrance to the main watch hall at Baselworld, the world's largest watch and jewelry fair held in Basel, Switzerland.  Photo credit: Anthony DeMarco

The Swiss watch brand is as strong as ever and shows no sign of losing its luster.

Following the recovery of 2010, watch exports in the first half of 2011 showed a year-over-year increase of 19.3 percent to 8.7 billion Swiss francs ($10.8 billion), according to the Federation of the Swiss Watch Industry (FH). Last year’s level was surpassed by more than 1.4 billion francs ($1.7 billion), placing the sector above 2008 export levels.

All of the Swiss watch industry’s main markets recorded a positive trend in the first half of the year. Asia (24.3 percent) increased at a higher rate than Europe (13.3 percent) or America (16.6 percent). It accounted for 54.4 percent of all Swiss watch exports.

Hong Kong was by far the largest market for Swiss watches for the first six months of the year, up 23.6 percent to 1.74 billion Swiss francs ($2.16 billion). The U.S. was the second biggest market up 19.6 percent for the period to 906.3 million Swiss francs ($1.1 billion). China moved up one place in the ranking after recording a 47.8 percent increase in growth (the highest increase across the board) to 715.1 million francs ($890 million). Singapore, South Korea and Thailand also made strong showings between January and June, the FH said. The Middle East also proved very attractive for Swiss watch manufacturers. Japan continued its gradual recovery and ended the half-year on a positive note despite the earthquake in March. In Europe, the positive assessment allowed for different interpretations according to markets. France continued to be influenced by products in transit and therefore recorded growth higher than the world average. Other markets on the Old Continent showed less marked changes.

All months showed double-digit levels of growth for the period. April and May exports rose by more than 30 percent. However, the FH warned that the strong Swiss franc is having a serious impact on margins for watch companies, forcing many to raise prices. However, even with this concern the industry forecasts sustained growth for the second half of the year.

Wristwatches made up the lion’s share of clock and watch industry exports. Their value amounted to 8.1 billion francs ($10 billion) in the first half-year, an increase of 19.6 percent compared to January-June 2010. This growth was supported by a high volume of timepieces. During the first six months of the year, Swiss manufacturers exported 14 million watches, an increase of 2.6 million units (22.5 percent) compared to the same period in 2010.

Gold watches played an important role in terms of growth by value, while in volume terms, steel and the category of other materials did most to underpin the general increase.

All price segments recorded double-digit growth, both in value and volume terms. The 200-500 franc category (export price) registered an increase of more than 30 percent, according to industry figures. Watches costing less than 200 francs accounted for more than 70 percent of exports in volume terms. Timepieces costing more than 3,000 francs showed a flat progression at a high level.

Other watchmaking products exported by Switzerland also recorded increases. Their overall value rose to 561.4 million francs (15.9 percent). Exports of movements saw their value increase by 9.9 percent, while alarm clocks and other clocks lost ground (-46.4 percent).

Cautious Optimism Fills Baselworld Buoyed by Asian Demand for Luxury

A fractured arm kept me from attending Baselworld this year. Fortunately, I know some of the best writers and experts in the jewelry and watch industry. One of those folks is William George Shuster who has kindly agreed to take time from his busy schedule to write a few stories from the tradeshow. Below is his first report from the event.

By William George Shuster
Special Correspondent

BASEL, Switzerland – Baselworld, the world’s largest and most important watch and jewelry trade show, opened March 8 amid optimistic expectations by many for good business in 2012—but not too optimistic.

“We’re confident about 2012” because of strong business results in 2011, especially in luxury due to China’s appetite for it,” said Francois Thiebaud, chairman of the show’s Swiss exhibitors and president of upscale watch brand Tissot, echoing many vendors, “but we’re not overconfident. The Eurozone crisis and debt problems elsewhere could still have effects [on business].”

This 40th annual BaselWorld fair, in Basel, Switzerland, Mar. 8 – 15, has 1,815 exhibitors (608 in watches, 689 in jewelry and 518 in related products and services) from 41 countries. More than 100,000 buyers and visitors from 100 countries are coming, and all is being reported on by more than 3,000 print, TV, radio and Internet journalists from around the globe.

The reason for their interest is obvious: Because Baselworld is, in the words of Show Director Sylvie Ritter, “a microcosm, where the players from the world’s watch and jewelry industry gather for a week.” It is an important bellwether of products, innovations and trends affecting the industry, consumers, and the retail business worldwide for year ahead.

Bullish. The cautiously bullish mood among exhibitors and analysts at the show is based on strong—even record-breaking—results for watch and jewelry exports and sales in 2011, especially in the luxury sector. That’s due largely to sharply rising consumer demand in Asia, especially China, say industry analysts in Basel. These strong business statistics for 2011 came despite many economic problems affecting sales and profits worldwide, they say, including the dramatic debt crisis in many Eurozone countries, the uncertain U.S. economy and the strong Swiss franc (which weaken Swiss watchmakers’ profits). Still, “[even] in this far-from-encouraging environment,” said Jacques J. Duchêne, long-time President of the Show Exhibitors’ Committee and former Rolex SA executive, at the annual pre-show press conference, “one industry has been able to stand up well and even break numerous records—the watch and jewelry industry.”

Indeed, it has. The year 2011 was “historic,” as Duchene put it, for the Swiss watch industry. Their exports totaled 19.3 billion Swiss francs (about $21 billion), an increase of 19.2 percent, making it the best year ever in the industry’s history—rebounding from its worst in 2009. Actual pieces exported were just under 30 million.

Unquenchable. Much of that was led by the seemingly unquenchable demand in Asia for fine watches: Over half (55 percent) of the Swiss exports went to Asia, primarily China, up 48.7 percent. (North America got 14 percent while Europe got 29 percent).

Duchene was quick to point out, however, that the Swiss success is not only due to the Far East. “It’s true demand was very buoyant in Asia,” he said, “but the watch industry has built up a good reputation in all emerging countries and succeeded in creating demand, especially in the luxury-products segment.”

So, “even in the face of a rather unfavourable economic environment, we envisage export growth in 2012,” Duchene said.

The Swiss aren’t the only ones feeling bullish about 2012. Spokesmen for the German, French, Italian, Israeli and Hong Kong delegations (the latter, being the show’s second-largest) also report good sales and export results in both watches and jewelry in 2012, despite the economic challenges, again especially in the luxury sector (and again, buoyed by record Chinese consumer consumption of revelry and watches). They too were upbeat about business results for the industry in 2012. As Gaetano Calvalieri, president of The World Jewellery Confederation (CIBJO) and spokesman for the Italian delegation, noted, “consumers in Asia, especially China, will carry Italian jewelry industry to new heights.”

Even if Chinese consumption slows slightly in 2012, as some reports suggest, “Even a one digit increase in demand this year is more than last year,” said Thiebaud.

"Excellent.” Those in the gem and diamond business also expressed upbeat predictions for 2012.

Eli Avidar, Managing Director of the Israel Diamond Institute Group of Companies, told its annual Baselworld luncheon that 2011 was “an excellent year” for the Israeli diamond industry, which exported $7.2 billion of polished diamond, and has “emerged from the crisis [of the 2008/2009 recession] stronger.” Again, some of this is due to Asia. “There is a steady rise in demand for large diamonds in China and we believe it will go much further,” especially is the international industry invests significantly in promoting diamonds and diamond jewelry in China. He also noted that there are “signs of recovery in the U.S. economy”—unlike Europe, where was no visible increase in diamond demand in 2001 or 2012—and we expect significant rise in demand in diamond jewelry in the U.S. this year.”

William George Shuster is a multi-award winning writer—including three Jesse H. Neal Award, business journalism's highest honor. He has 40 years experience as a journalist, author and editor. He is considered one of the world’s top watch industry journalists, covering the world of timepieces for the past 30 years.