According to the latest figures reported by the Federation of the Swiss Watch Industry (FH), February 2017 showed a continued decline in exports, year over year. The FH report states, "Watch industry exports declined further in the month of February. At 1.5 billion Francs, their value was 10% lower than in February 2016, still in line with the downturn reported for the whole of last year." In addition, analysis of 2016 overall showed significant forces continuing to weigh on Swiss watch exports.
Not all markets posted declines for February – China, for example, saw a modest uptick of 6.7%, year over year. However, the two other largest markets – the USA and Hong Kong – continued to fall. Hong Kong’s decline appears to be slowing, but the USA has seen a dramatic year over year drop of 26.2%. Yes, you read that right: twenty six point two percent.
In its analysis of 2016 exports, the FH said, "The environment confronting the Swiss watch industry remained difficult throughout the year 2016. Swiss watch industry exports fell for the second year in succession. Their value stood at 19.4 billion Francs, 9.9% lower than in 2015. With this result, the industry has returned to its 2011 level and seen an end to the growth of 15% achieved between 2011 and 2014."
In its coverage of the FH report, Bloomberg noted: "The boom years, when exports doubled during the early 2000s, are long gone. The industry is retrenching following the Chinese government’s four-year campaign against bribery, improper gift-giving and extravagance, and the Hong Kong market has been cut in half in the past four years. Richemont spent more than 200 million euros ($215 million) buying back unsold watches last year, and it’s cut about 200 jobs in watchmaking at Cartier, Vacheron Constantin, and Piaget."
Though there has been growth in China proper, the decline in Hong Kong and the USA will continue to contribute to an overall downward trend. Though the drop in exports in 2009 was dramatic, it was followed by a sharp recovery, whereas the current slowdown seems to be more persistent and less apt to rebound. Should 2017 show an overall decline, this will be the first time that there have been three straight years of decline in overall Swiss watch exports since at least 1980. Analysts particularly note overproduction based on unrealistic sales expectations, and subsequent flooding of the grey market, as major issues for the industry.
(Photo: Wikimedia Commons)