The last three years have been a rollercoaster ride for Swiss watchmakers. Between 2010 and 2012, the industry grew up to 17 percent per year due to export growth, far above other industrial sectors in the country. Despite the euro-zone crisis and the strength of the Swiss Franc, watch exports hit a record high of more than 21 billion CHF in 2012. But 2012 also saw the market hit a high of its own, and watch exports began a decline in August that lasted nearly a year until this summer.
Credit Suisse now believes that a 2 percent jump in exports in July, and a further rise of 0.5 percent in August, show there is now a period of stabilization–maybe even the beginning of a bounce back for an industry that is not only the most important sector in Switzerland by value, but also a trendsetter for global luxury goods market.
The Swiss watch industry does not only serve European clients, but also Asian clients. This year, the sector saw a 70 percent increase in exports, especially to Hong Kong and Mainland China. China’s appetite for fine Swiss watches has been a boon to luxury watchmakers. The free trade agreement being negotiated between Switzerland and China will reinforce China’s role as the largest export market for Swiss watches in the coming years.
And what about the rest of the world ?
After China, the strongest growth rates for export were with the U.S., Italy, Germany and the U.K. Apparently, Vietnam, India, Russia, Ukraine, Malaysia and Mexico offer a high growth potential,with India and Russia topping that list. Brazil, Argentina, South Africa, Thailand and Turkey should also become more important in the coming years. Due to high import duties and taxes, which create barriers in many countries, the Swiss watch industry is focused on concluding free-trade agreements with these countries.
The geographical shift makes it more challenging. In 2012, the Swiss watch industry imported goods with a total value of 2.1 billion CHF (2.3 billion USD) about one–tenth the value of the industry’s total exports. Import–export ratio for major watch and luxury goods corporations, along with traditional independent brands in the top price segment, should have a favorable forecast for import–export ratio, according to research analysts at Credit Suisse. Analyses show that these brands seem to be best positioned to benefit from global growth economy over the next few years. Overall, markets far beyond the Alps are going to remain key to success.
Source: Swissinfo.ch - Free trade agreement signed with China
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