Outlook 2017 The world of watchmaking in 2017
With the help of leading watch industry CEOs, we review a difficult year and look for signs of hope in 2017.
Every month this year, the statistics of the Federation of the Swiss Watchmaking Industry (FH) have made for depressing reading. The decline in exports has now been uninterrupted for well over a year and the final figures for 2016 (which will be published on 24 January 2017) are likely to show a decline of more than 10 per cent. Hong Kong has made the biggest contribution by far to the slump, since exports to the city state have dropped by nearly half over the past two years. And yet the main watch export market in 2016 was… Hong Kong. Even with such a massive drop in the market, it is easy to keep the number one position when only six countries in the top 30 export markets recorded growth this year. One of these, the United Kingdom, has leapfrogged both France and Germany this year to make into the top ten of Swiss watch industry export markets.
But this glimmer of hope is hardly likely to last very long. The UK market can thank the Chinese tourists for their ultra-fast adaptation to fluctuations in currency exchange rates, which made Swiss watches purchased in the country much cheaper the minute the country’s citizens voted to leave the EU. Such trade therefore depends directly on the exchange rate and the fickle Chinese tourists who have deserted France (-20% this year) in favour of the other side of the Channel. How long this will last is anyone’s guess, but expect more movement in the UK economy and currency markets in March next year, when the UK is set to trigger the two-year negotiations for leaving the European Union.
Reactions to the other great geopolitical shift of the year – the election of Donald Trump in the United States – are also likely to have an impact on the market. The five-star hoteliers in Geneva, for example, expect more of those fleeing the oppressive heat of the Middle East and Gulf States to shun the United States in favour of another of their favourite destinations: Geneva.
Consolidation or liquidation?
Richemont reacted to the worsening situation with a major reorganization, replacing the group’s CEO with the duo of Georges Kern (IWC), as head of watchmaking, and Jérôme Lambert (Montblanc), as head of everything else. Other companies were forced to take more drastic measures. French watchmaker Péquignet, based in Morteau, announced its bankruptcy in December, at the same time that rumours surfaced that Breitling was looking for a buyer. Will it be successful? There are few groups with pockets deep enough to finance such an acquisition and most of them already have enough troubles of their own. One group that remains conspicuous by its irrepressible watch marketing activities is LVMH. But with Breitling too close in terms of image and product to the hyperactive TAG Heuer, the future of the chronometer powerhouse from Grenchen is far from certain.
So what do the CEOs of the watch brands themselves think 2017 has in store for them and the industry as a whole? And how do they think it will compare with 2016? Find out in our series of articles over the holiday period.
With a clear emphasis on technology and development, IWC Schaffhausen has been manufacturing timepieces of lasting value since 1868. Its philosophy, based on a passion for watchmaking, aims to...Find out more
Montblanc has always been committed to the same values: the pursuit of quality and craftsmanship.Find out more
Over 150 years of watchmaking savoir-faire and technical innovation have made TAG Heuer a global reference in avant-garde sports watches. As it tracked the rise of sports demanding increasingly...Find out more