After a record year in 2008 the Swiss watch industry faced serious headwinds from the global economic crisis in 2009. Yet there are signs of a change in fortune for Swiss watch makers. In November 2009, watch makers reported their best month so far for the year with sales of 1.4 billion Swiss francs. That was, however, still down about 10% on the year before but a huge improvement over some months earlier in the year where sales where down by 40 percent to 50 percent.
The turnaround, though, is happening at the cheaper end of the market. Figures released by the Swiss Watch Federation showed that sales of platinum watches were down by about 26% (by value) and gold watch sales were down by 19%. The biggest gain was in Swiss watches costing between 200 Swiss francs and 500 Swiss francs.  These include many military style watches. Sales of these sorts of watches was up by about 20%. That will help the lower end of the market and the mass producers of quartz watches such as Swatch. A lot of the growth in demand came from China, where sales of Swiss watches increased by 36%. Major developed markets such as Germany, France and America all recorded drops.

The industry and Swiss government aren’t sitting around waiting for things to improve but are being proactive. In November the Swiss Federal Council announced its Swissness project to promote Swiss-made watches and other Swiss products. This introduces stricter rules over how much Swiss content there must be in a product such as a watch for it to call itself Swiss. Under the new rules, 60 percent of the value of a watch must come from Switzerland for it to claim to be a Swiss-made watch, which should help reassure buyers of watches that they really are Swiss made, as opposed to be mostly made in Asia and then just given a last polish in a Swiss assembly shop. The move has been a contentious one, even within the industry, as a number of Swiss watch makers have complained they would not be able to compete and might go out of business if they weren’t allowed to call their watches Swiss, even though much of their content and value comes from elsewhere. Yet the industry as a whole, probably rightly, feels that the rules should be tightened and that firms will create more jobs in Switzerland as a result. The brand value of being able to say a that a particular model is a Swiss-made watch must surely be worth more than the small number of low-skilled jobs Switzerland might be able to hang onto by having loose standards and selling what are in fact, if not in law, replica Swiss watches.

Swiss Watch Industry Shows New Signs of Life