SHARE
COPY LINK

BASELWORLD

Chinese worries hang over Basel watch show

The world's biggest watch fair is set to open this week in Basel amid growing uncertainty over whether the industry can keep up its momentum and rake in another year of record sales in China.

Chinese worries hang over Basel watch show
Photo: Baselworld

"The question at Baselworld will be to understand what is happening in mainland China," Kepler Capital Markets analyst Jon Cox told AFP ahead of the event, warning that the Chinese market prospects now seemed increasingly fragile.
   
The Swiss watch industry has been on an unprecedented roll over the past 
three years, with sales systematically beating expectations and putting to shame naysayers urging it to brace for the pending crisis.
   
Experts agree that much of the growth can be attributed to the Chinese 
consumer's recent and seemingly insatiable appetite for luxury goods.
   
In 2012, Swiss watch exports soared to historic altitudes, for the first 
time passing the 21-billion-franc ($22-billion) mark, with exports to China accounting for six billion francs, or 28 percent of the total.
   
But since late last year there have been numerous signs that the Chinese 
bonanza is winding down, as growth in the world's second largest economy has slowed.
   
Nick Hayek, the head of Swatch Group, which in addition to the famous 
brightly-coloured plastic watch brand also owns a long line of high-end, luxury brands, like Breguet and Blancpain, cautioned investors at the beginning of March that the growth rates up to 30 percent they had grown accustomed to could not last in the long run.
   
Financial analysts are meanwhile grappling to get a full picture of what is 
happening in the Chinese market, since Asian retailers in recent months have been working to lighten their inventories, possibly skewing the picture.
   
Despite the vibes of uncertainty in the industry, the 1,460 exhibitors, 
including leading watch brands like Rolex, Patek Philippe and Omega, and some of the some of the biggest names in jewellery like LVMH's Bulgari and Harry Winston, which was recently acquired by Swatch Group, are expected to put on a dazzling show.
   
"This year at Baselworld, I think we'll again see a big push on 
technological innovation, with more and more complications on the prestigious watch brands, and on new materials, Vontobel analyst Rene Weber analyst told AFP.
   
A highlight of this year's event, which is expected to draw some 100,000 
visitors, could come from LVMH's high-end brand Hublot, which has partnered with prestigious Italian carmaker Ferrari to make its new Masterpiece LaFerrari.
   
The watch sets a new world record in mechanical movement, only needing to 
be wound every 50 days, or around 1,200 hours, easily beating the previous record of 40 days, the brand told AFP.
   
Hayek of Swatch Group, the world's leading watchmaker, is meanwhile 
tightlipped about the Swatch brand's promised "revolutionary innovation", which will go on display at this week's show.
   
Exhibitors are set to descend on Basel to show off their merchandise to the 
media on Wednesday and to the public starting Thursday and until May 2nd.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

BASELWORLD

Slump in luxury watch exports casts shadow over Baselworld

The world's biggest watch fair will open in Switzerland this week, even as slumping exports of luxury Swiss timepieces appear to dash hopes of a market rebound.

Slump in luxury watch exports casts shadow over Baselworld
Photo: Astrid Stawiarz/Getty Images North America/AFP
Global exports of Swiss watches slid ten percent in February to 1.5 billion Swiss francs ($1.5 billion, 1.4 billion euros), the Federation of the Swiss Watch Industry (FHS) said on Tuesday.
   
The news cast a shadow over the looming Baselworld trade fair, which opens its doors to the media on Wednesday and to the public a day later.
   
The giant gathering in the northern Swiss city of Basel is the highlight of the year for watch and jewellery makers, with hoards of retailers looking to fill their showcases with pricey bling.
   
Investors had been hoping this year's 45th edition would open on a more positive note amid signs that the market was stabilizing and even on the verge of a rebound after two years of deep crisis.
   
Citigroup analyst Thomas Chauvet described Tuesday's export numbers as a “reality check”.
   
He said the figures showed there was “no underlying improvement” in the industry, despite a more “upbeat mood” from senior watch executives, and a more optimistic tone from the FHS in its January release.
   
Exports to Hong Kong, the biggest market for Swiss watches, slumped 12.1 percent last month.
   
And exports to the United States, the second biggest market, plunged 26.2 percent.
   
Most European markets also fell, and sales to Japan tumbled 17.3 percent.
   
Exports to China, however, rose 6.7 percent year-on-year in February.
   
That represents some much-needed good news for the industry — China was the main driver of several years of euphoric growth for Swiss watches, with Chinese consumers' thirst for luxury goods sparking a production boom.
   
But the market suffered a severe hit after Beijing in 2013 began cracking down on corruption by banning extravagant gifts like expensive watches to public officials.
   
And since then the storm clouds have multiplied, with the pro-democracy Umbrella protests in Hong Kong also chipping away at sales, followed by a range of deadly terrorist attacks in European cities frightening off luxury-seeking Asian tourists.
   
In 2016, Swiss watch exports shrank 9.9 percent, after contracting 3.3 percent a year earlier.
   
But in recent months, there were some indications the market was stabilizing.
   
Exports to China gradually inched back into positive terrain during the second half of 2016, and a number of markets around the world put on a healthy glow during the holiday season at the end of the year.
   
Watch makers themselves have also been making increasingly soothing sounds about the health of the market and justifying production hikes.
   
Swatch Group chief Nick Hayek told reporters last week that he was now aiming for “healthy growth”, driven particularly by China's growing middle class, which he said once again appeared hungry for consumption.
   
With such uncertainty, Baselworld, which each year draws around 1,500 exhibitors and some 150,000 visitors, should help gauge the actual state of the luxury watch market.
SHOW COMMENTS