Forbes magazine said that the Swiss watch industry is facing a continuous decline, as the latest reports from the Federation of the Swiss Watch Industry indicate that it is suffering from multiple challenges, including declining demand and increasing pressure on prices.
Swiss watch exports in August amounted to 1.2 million units, down 125,000 units compared to the same period last year.
Despite this decline in the volume of exports, the total value increased by 7.8% to reach 1.8 billion Swiss francs (about 2 billion dollars), and this increase is due to the increase in the prices of watches made of precious metals.
Demand falls in China and Hong Kong
According to the magazine, the Chinese and Hong Kong markets are facing major challenges, as Swiss watch exports to China decreased by 5.9%, while Hong Kong witnessed a decline of 11.1%.
The report indicated that the outlook for these markets remains “very negative” for the coming months, with demand for Swiss watches in this region continuing to decline.
This slowdown is attributed to increased caution in the markets and limited vision of the future for manufacturers, which is pushing them to be cautious and even reduce production in some cases.
Despite these challenges, other markets performed better, with the United States seeing a 7.6% increase in demand for Swiss watches, while Japan recorded a 14.4% increase, Singapore 9.3%, the UAE 26.9%, Italy 17.6% and South Korea 14.2%.
Government measures and interventions
In light of these challenges, some Swiss watchmakers have turned to a Swiss government program that allows them to reduce production and put some employees on temporary leave without laying them off.
The Swiss Watch Industry Employers Association has called on the government to take action to support the sector, noting that the strength of the Swiss franc – which has risen by 13.75% against the US dollar over the past two years – has caused prices to rise or profit margins to fall for Swiss watchmakers.
Pressure is also mounting on watch dealers, with Rolex CEO Jean-Frédéric Dufour noting that “the period when all manufacturers were very successful is over.”
He explained that increased production during good times put pressure on watchmakers, which prompted them to offer discounts on watches in an attempt to stimulate demand.
As these challenges persist, the Swiss watch industry continues to face major challenges that require corrective action to restore balance and demand, according to Forbes.
