Watch firms in a ‘high-level consolidation phase’

Jean-Daniel Pasche believes China remains a potential growth market Ruben Sprich / Reuters

2014 saw record sales of Swiss watches abroad worth CHF22.2 billion ($22 billion), a 1.9% rise on the previous year. But the spectacular growth seen over the past decade is over, admits Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry.

This content was published on March 19, 2015 - 11:00 Despite a record year for Swiss watch exports, several firms have reported job cuts or having to resort to short-time work during the second half of 2014. Surely these are worrying signs for the watch sector?

Jean-Daniel Pasche: Growth was relatively weak last year which led to difficulties for some firms. But that doesn’t call into question our positive view of the general situation. Over the past decade the Swiss watch industry has become accustomed to double-digit growth. In 2013 and 2014 we returned to more normal growth rates. Watchmaking has entered a phase of high-level consolidation.

External Content How is 2015 looking for Swiss watch firms?

J-D.P.: We are expecting stable exports compared with 2014 but it’s unclear what the consequences will be concerning the Swiss National Bank’s decision to end the Swiss franc peg against the euro. All industry players will not be affected in the same way, but in general the watch sector will definitely feel the impact of the strong franc. Swiss watchmaking enjoys almost monopoly status worldwide, so aren’t the effects of the strong franc being exaggerated?

J-D.P.: I don’t think so. The negative effects can already be felt. Some firms have decided to increase their prices in the eurozone with the risk that they may be penalised by the market. Others have lowered their budgets or investment plans. All this will have consequences. With lower exports expected for the second year running (-3.1%), has China finally lost its golden status for Swiss watch firms?

J-D.P.: No. China remains the third-largest export market for Swiss watches and the development potential is still considerable. But the example of China or the problems of the strong franc show the importance of spreading risks and being active in several markets simultaneously. The United States, South Korea, Japan or even the Middle East all helped stimulate the growth of the Swiss watch industry last year.

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