Swiss watch industry calls on authorities for help

The Swiss watch industry has been hit by a drop in its exports to China. On Tuesday, the industry called for state support measures, in particular from the country's central bank, to offset the strength of the Swiss franc on currency markets, which is undermining the industry's competitiveness.

The Swiss watch industry has seen three years of spectacular growth between 2021 and 2023, but is now facing a drop in demand in China, one of its key markets. In the first half of 2024, Swiss watch exports to China fell by 21.6%.

In a joint statement, the Swiss Watch Industry Association and the Swiss Watch Federation have called for “concrete measures from the authorities” to support the sector, which employs some “65,000 people” in the country, according to the statement.

“The Swiss watch industry is currently experiencing a difficult period,” the two organisations said in a statement, stressing that several watch companies have had to resort to temporary layoffs, extend the summer closure of factories and even lay off workers.

The Swiss organisations noted that slowing demand and falling exports have particularly affected the industry's supply chain and entry-level and mid-tier watch brands, while the “continued strength of the Swiss franc” adds an additional complication as it weakens their competitiveness.

They also argued that since inflation in Switzerland is “well below” the 2% target, “the Swiss National Bank has room to intervene in the foreign exchange market.”

The two organisations also advocate a “reduction in administrative burdens” and measures to improve the “regulatory framework” for exports, in particular through free trade agreements that open up new markets.

Swiss watch exports reached an all-time high in 2023 at CHF 26.7 billion (EUR 28.4 billion at current exchange rates) thanks to very strong demand in the three years following the pandemic.

Demand was boosted in particular by so-called “revenge” shopping, as some consumers used savings made during lockdowns to buy more luxury items, including Swiss watches.

In China, too, demand picked up after the abandonment of the zero-Covid policy, but the scale of the recovery soon proved disappointing as domestic demand was hit by slowing economic growth, property market shocks and youth unemployment.

On Thursday, the Swiss Watchmakers' Federation will publish its export statistics for August. In July, watch exports fell by 1.6% year-on-year, with exports to China down 32.8%.

Zurich, September 17, 2024 (AFP)