Baselworld takes a positive view

Baselworld wouldn’t be Baselworld without the opening press conference, a chance for the various organising committees to hammer home the importance of this major platform for the watch and jewellery industries. With some 150,000 visitors drawn by the 1,500 exhibitors from 40 countries, Baselworld has become something of a gauge of the industry’s health. Particularly Swiss watchmaking: 304 Swiss brands are showing their wares this year, compared with 28 in 1917 for the first Mustermesse for the promotion of the Swiss economy. This year, however, no amount of reassuring words can mask the difficult context that inevitably undertows Baselworld 2016.

Exports under scrutiny

“Economic, geopolitical and commercial uncertainties are being felt across the industry, in every sector,” commented Sylvie Ritter, Managing Director of Baselworld. “As a result, some exhibitors, particularly smaller businesses hit by lower demand, have been forced to reconsider their presence at the fair. Despite this, almost all those who exhibited last year are here again.” With the scene now set, François Thiébaud, CEO of Tissot and President of the Swiss Exhibitor’s Committee, continued with an avalanche of figures that helped put the situation into perspective.

Despite suffering a drop in exports of 3.3% last year to CHF 21.5 billion, Swiss watchmakers have succeeded in limiting the damage, particularly compared with the machinery industry, the country’s second biggest export branch, which witnessed a 7% fall in shipments. François Thiébaud went on to describe the situation since 2009, an annus horribilis if ever there was when the sector plummeted by more than 20% in the wake of the subprime crisis. What does this five-year comparison reveal? Firstly, that Swiss watch exports cumulated a 63% increase in value terms; better still, that sales of mechanical watches took off on international markets, leaping from CHF 8.7 to 16.2 billion between 2009 and 2015.

Swiss watch exports (CHF millions)

2010 : CHF 16,167
2011 : CHF 19,304 (+19.4%)
2012 : CHF 21,426 (+11.0%)
2013 : CHF 21,834 (+1.9%)
2014 : CHF 22,258 (+1.9%)
2015 : CHF 21,522 (-3.3%)
January 2015 : CHF 1,650
January 2016 : CHF 1,519 (-7.9%)

Source: Federation of the Swiss Watch Industry

Potential to grow

“I’m a regular visitor to our sales networks, particularly in China, and am therefore well-placed to see that there really is an economic crisis, that major markets such as Hong Kong are in the throes of recession, that the strong Swiss franc is not without consequences, and that terrorist attacks have had a significant impact on tourism,” said Mr Thiébaud. “In this context, retailers aren’t in the mood to invest in stock. They don’t feel confident so they don’t buy, but this doesn’t mean sales to end customers have come to a standstill.” For François Thiébaud, then, it all depends which end of the telescope you look through. With annual production in the region of 28 million units, Swiss watch brands account for barely more than 2% of global watch production in volume terms. Potential for growth is therefore intact, particularly as smartwatches, despite claims to the contrary, are opening up new opportunities. Says François Thiébaud, “They encourage young people to wear a watch, something they previously may not have considered. Yes, smartwatches can provide useful functions in terms of sport, fitness and contactless payments. They can also be a launchpad towards traditional watches, inasmuch as these are two clearly distinct product categories. In any event, they cannot be blamed for the fall in Swiss exports last year.” Ending on a positive note, and based on the current market situation, François Thiébaud predicts that exports will increase between 2% and 5% for 2016 as a whole, and that signs of an upturn should appear as of April. Let’s wait and see!