The Swiss watch industry – the third largest national exporter after chemicals and machines – is powering ahead in 2018, benefiting from a strong world economy and a depreciation of the Swiss franc against other major currencies. If the environment remains stable, 2019 should be another good year, says Jean-Claude Biver, Chairman of Hublot and Zenith.
After a tough year in 2016, “we are returning to much better times,” Biver says. “We’re expecting to see a good 2018. If there are no misfortunes in the financial industry, the economy, the political environment, then we have good prospects for 2019 too.”
Watch industry exports rose 9.5 percent from the previous year between January and August 2018, to 13.8 billion francs, according to figures from the Federation of the Swiss Watch Industry. Growth was particularly vigorous in Singapore and in China and Hong Kong, which are among the most important markets for Swiss watches. Asian nations together account for half of total exports.
Broken down by territory, the figures don’t expose the dimensions of the Chinese market, Biver says. “Every watch that is sold in China equals two watches sold elsewhere, because the Chinese travel a lot and they have the tradition of bringing back a small present,” he says. “If we are strong in China, then we are also strong in every country or city where the Chinese travel.”
Biver says the potential for the Swiss watch-making industry in China is still enormous – even though sales there already total close to 200 million francs a month. “People say that the Chinese middle class will number 300 million,” he says. “Today it is perhaps just 100 million. There is colossal potential for the next 50 years. The same goes for India, Indonesia, Latin America. Luxury markets will grow and grow, because more and more people are entering the middle class.”
Potential risks, he says, are political, financial and economic. “The trade war between the U.S. and Europe and the U.S. and China is creating unrest and disrupting international trade, and it could lead to economic slowdown,” he says. “We have seen weakness in Greece, now we are seeing risks in Italy.”
Innovation and Tradition
He also warns that the industry has to keep innovating while maintaining its roots in tradition. “No tradition equals no future,” he says. “But no innovation also means no future. We need both.” One important area of innovation for TAG Heuer is metallurgy, Biver says – particularly in the colour and weight of watch casing.
“Watches were always white or yellow for centuries – white gold, platinum, steel or titanium; or yellow like gold,” he says. “There were just two colours. Now there are other options like ceramic and ultra-light materials. The young don’t want gold, and they want a super-light watch.”
Being innovative also means adapting to a young generation of millennials – many of whom grow up without wearing watches, he says. “For a German man aged 50, it is almost a matter of course to wear a watch. But many young people no longer wear watches.” TAG Heuer has set up a millennials advisory board and meets regularly with a group of people aged between 14 and 18 to listen to their views.
“I know what older people want because I belong to that generation,” Biver says. “I cannot by instinct know what a young man wants – I have to listen, to learn from the millennials.”