By - Press Release
Category - Buy Watches
Posted By - Cash World Gold Buyers
 |
| Buy Watches |
THE average Swiss watch costs $685. A Chinese one costs around $2 and
tells the time just as well (see chart). So how on earth, a Martian
might ask, can the Swiss watch industry survive? Yet it does. Exports of
watches made in Switzerland have grown by 32% by value over the past
two years, to SFr21.4 billion ($23.3 billion). Demand in the biggest
markets (China, America and Singapore) dipped recently, but some of the
slack was picked up by watch-loving Arabs and Europeans.
No one buys a Swiss watch to find out what time it is. The allure is
intangible: precise engineering, beautifully displayed. The art of fine
watchmaking has all but died out elsewhere, but it thrives in
Switzerland. “Swiss-made” has become one of the world’s most valuable
brands.
In the popular imagination, Swiss watches are made by craftsmen at
tiny firms nestled in Alpine villages. In fact, the industry is
dominated by one big firm. The Swatch Group’s stable of brands (Breguet,
Blancpain, Omega and a dozen others) generated watch and jewellery
sales of SFr7.3 billion in 2012. That is up by 15.6% over the previous
year and accounts for one-third of all sales of Swiss watches. In
January Swatch announced the purchase of Harry Winston, an American
jeweller which also makes watches in Geneva.
Swatch’s dominance goes even deeper than this. It is the biggest
supplier of the bits that make Swiss watches tick. It owns ETA, which
makes over 70% of the movements (core mechanisms) put in watches by
other Swiss watchmakers. Another subsidiary, Nivarox-FAR, supplies more
than 90% of the balance springs (which regulate watches).
Many big brands rely on Swatch. LVMH (owner of Bulgari, Hublot and
TAG Heuer) and Richemont (owner of IWC, Piaget and Vacheron Constantin)
use Swatch components. So do the British and German watchmakers that are
trying to break into this lucrative market. Few, however, can match the
precision of a Nivarox balance spring.
Swatch became the watchmaker to watch in the 1980s, when it merged
two weak companies and launched Swatch watches as a relatively cheap
brand (though not nearly as cheap as a typical Chinese timepiece). It
remains dominant, in part, because other firms find it easier to let
someone else go to all the trouble and expense of producing their
watches’ most fiddly and essential components.
But Swatch now finds this arrangement irksome. It supplies parts to
rivals (Swiss and foreign) which then spend lavishly on advertising.
Swatch would like to curb its sales of components, to 30% of the Swiss
total by 2018. The Swiss Competition Commission agreed to modest
reductions in 2012. After lobbying by watchmakers, Swatch will make no
more cuts this year, but next year it will probably try again.
Swatch may be doing the industry a favour. Its actions may prod other
watchmakers to invest more in their own factories. Already, Richemont
and LVMH are buying up smaller component-makers. “Everyone could
actually produce these components,” says a spokesman for the Competition
Commission.
At present only a few high-end watchmakers can do without Swatch: for
example, Patek Philippe in Switzerland and Robert Loomes in Britain.
But such Swatch-shunners typically make only a few (costly) watches each
year. Firms that make larger batches of not-quite-so-pricey watches
still need Swatch. So its retreat from the parts market will cause
turmoil, and probably more consolidation.
Meanwhile the Swiss government seems about to tighten the definition
of “Swiss-made”. Currently, a watch may not claim to be Swiss unless 50%
of its components, by value, were crafted in the cantons. Swiss
watchmakers are trying to get the threshold raised to 60%. That will
create demand for Swiss components even as Swatch curbs the supply. So
watch out: prices will rise even higher.
No comments:
Post a Comment