Gauteng Business News

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JEWELLERY: Pendulum Swings for Swiss Watch Exports


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Swiss watch export volumes for June matched the peak seen in June 2008, and the industry anticipates that the export record of 17 billion Swiss francs achieved that year could be exceeded in 2011. At the end of June, exports for the year stood at Sf8.7 billion. This dramatic recovery in performance began early in 2010 following a sustained slump in exports which started late in 2008.

“The love affair with watches is very interesting considering that many people use their mobile phones or other devices for keeping track of time,” says BoE Private Clients analyst Barbara Price-Hughes.

She says the global recovery in watch sales is quite widespread, and the increase in exports cannot simply be ascribed to the influence of China, as is the case with much of current demand.

Swiss Watch Demand Increases Through the Financial Crisis

“At the beginning of the financial crisis the industry was struggling to meet global demand, which then collapsed leaving the distribution channels and retail outlets overstocked. But the reduction in inventory overhang is largely a thing of the past, and there is once again a delay in production and waiting lists for some high-end watches.”

Price-Hughes says the demand for the globally recognised status symbols (and the brand is extremely important), can be ascribed to wealth creation. Where people are getting wealthier and have more disposable income, demand is growing, she says.

“If people can afford something exquisite and desirable that reflects their improved status, watches are a very visible symbol of this. So the answer to demand peaking lies with economic growth and per capita growth, both of which do contract at times but the direction is generally positive.”

Swiss Watch Export Rate Grows

In June, the rate of growth in Swiss watch exports moderated to an increase of 10.2% year-on-year, and 19.3% for the year-to-date. Hong Kong continues to be the top export destination, and exports to the US continue to improve. Russia has shown the strongest year-on-year growth, and third-placed China continues to expand, up 79.2% year-on-year and 202% compared to June 2009.

“Africa has been slipping backwards in past years, although in May the number of units shipped nearly doubled compared to the previous May,” says Price-Hughes.

“What is particularly interesting, however, is the growth in India, and to a lesser extent Brazil, both small markets for luxury watches. India of course has the population and Brazil has benefited from commodity demand, but neither are significant destinations for watches currently. There is certainly potential for growth,” says Price-Hughes.

She said that demand is influenced by general economic activity, which meant that “a recession or depression will definitely have a negative impact on Swiss watch exports”.

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