Watch executives are betting on growth in China (Keystone) - Click to enlarge
The majority of Swiss watch executives surveyed by consulting firm Deloitte are positive about new rules requiring at least 60% of a watch’s manufactured costs to be incurred in Switzerland.
According to the Deloitte Swiss Watch Industry Study 2017external link, released on Wednesday, 44% of 60 watch executives surveyed consider the new “Swiss made” rules to be positive compared to 20% who believed they would have a negative effect. The new rules came into effect from January 2017 and raised the minimum Swiss share of a watch’s manufactured cost from 50% to 60%. Companies have a transition period of two years to implement the new requirement.
However, there is a clear divide between the high and low ends of the market. Those at the higher end already meet the 60% threshold and are closer to the 100% mark in terms of indigenous components. This group would like to see even more stringent quality demands. Those at the lower end were most pessimistic about the new Swiss made rules, with 36% thinking they would have negative effect.
When it comes to impact, 47% felt the new rules would not bring production to Switzerland compared to 40% who did.
Chinese return
While watch executives listed a weak foreign demand as one the biggest risks to the industry, they were optimistic about the Chinese market, with 71% expecting growth.
According to Deloitte, a decline in official crackdown on corruption, as well as a doubling of import taxes (30% to 60%) will help boost sales in China. While sales in Hong Kong – Switzerland’s number one watch export market – have stagnated after a major decline, mainland China has seen an almost 20% growth in salesexternal link between January and August compared to the same period last year.
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