Swiss watch exports saw a slight profit in July thanks to a strong demand from the United States and Japan, offsetting the further decrease in demand for high-end and luxury watches in the Chinese and Hong Kong markets.
The Federation of the Swiss Watch Industry announced on Tuesday (August 20) that export value in July increased by 1.6% compared to the same period last year, reaching 2.2 billion Swiss francs (approximately 2.6 billion US dollars), with the export quantity remaining around 1.4 million watches.
In July, Swiss watch exports increased by 11%, with exports to the largest market, the United States, growing by 11% and exports to Japan increasing by 26%, surpassing China to become the second largest market for Swiss watches.
Due to the continued decline in China’s real estate value disrupting consumer sentiment, Swiss watch exports to China and Hong Kong continued to decline by 33% and 19%, respectively.
The latest data highlights the surprising resilience of the U.S. market, which has surpassed China as the preferred destination for Swiss watches since 2021. Japan, as a hub for watch shopping in Asia, also continues to import strongly due to its weak currency.
These figures also underscore the depth and persistence of the economic slowdown caused by China. This economic slowdown is wreaking havoc on the entire industry, causing damage to top Swiss watch brands.
In July of this year, Richemont Group, a Swiss luxury goods company, reported a 27% decline in sales in the Greater China region, dragging down overall sales of watch brands such as Vacheron Constantin, Jaeger-LeCoultre, and IWC by 13%.
Swatch Group AG, the owner of Omega, Blancpain, and Breguet, also reported a sudden 30% drop in sales in China in the same month.
Demand for high-priced watches peaked when COVID lockdowns ended, but subsequently weakened. With rising interest rates, economic growth fluctuations, and geopolitical conflicts, luxury watch buyers are cutting back on spending.
The continued strength of the Swiss franc is also harming watchmakers, driving up prices in some markets and causing customers to hesitate. After reaching a new high in exports in 2023, Swiss watch exports in the first seven months of this year decreased by 2.4% to 15.2 billion Swiss francs.
In July, the export value of watches priced at over 3000 francs increased by 5.4%, while watches priced below 200 francs (including the popular Omega MoonSwatch collaboration from Swatch Group) surged by nearly 14%, highlighting the challenges faced by mid-priced Swiss watches.
A spokesperson for Swatch Group stated that Omega watch exports increased by 7% in July, while Swatch brand watch exports grew by 27%, but the spokesperson declined to provide data for other brands.
PricewaterhouseCoopers released a report in February 2023 titled “Insights into the Luxury Goods Market in Mainland China and Hong Kong,” indicating a steady recovery in the global luxury goods market as travel and social activities gradually return to normal. It is projected that by 2025, the global market size will grow to around 447 billion US dollars at an average annual compound growth rate of approximately 11%. The Chinese luxury goods market is expected to reach 816 billion yuan by 2025, capturing about 25% of the global luxury goods market share.
However, for the current Chinese luxury goods market, its heyday may have passed, and the market that was once flourishing is now a thing of the past. Many Chinese businesses have acknowledged the reality that the slow economic growth may persist as a new normal.
(Adapted from Bloomberg’s report)