The Swiss Watch Industry In 1998: Remarkable Results
In spite of the Asian crisis, the Swiss watch industry enjoyed a remarkable year. According to final figures published by the Customs, exports reached an all-time record of 8.422 thousand million francs, up 1.3% on 1997. This overall result was mainly due to growth in the first seven months of the year, after which the business climate cooled off a bit. While demand from the Far East fell off sharply from the beginning of the year, it was compensated by sales growth in North America and Europe.
The performance of watch companies varied considerably. Some enjoyed improved results while others, more ensconced in the Asian markets, had to confront a very turbulent situation. This contrast looks set to continue throughout 1999.
Products
The drop in volume, which began in 1997, could be stopped in 1998. Swiss watchmakers exported 32.2 million complete watches last year (approximately 700,000 more pieces or 2.2% more than in 1997) worth 7.58 thousand million francs (+1.8%). Exports of steel watches continued to grow strongly. Manufacturers exported over 10 million pieces in 1998 (+20,6%) for 2.82 thousand million francs (+24.6%). Steel is confirming its presence in every price segment and making ever greater inroads into the medium and top ranges.
Watches in precious metals had to face a much less favourable climate as Asian demand for this type of product dropped off sharply. This saw a 2.1% downturn in gold watch exports to 480,000 pieces, representing 2.01 thousand million francs (-4.0%). This downward trend also hit bimetallic watches (gold-steel), with sales dropping 5.1% in quantity and 15.2% in value.
The slump in the Asian market also affected mechanical watch exports, which only accounted for 7.9% of the total, as opposed to 9.3% in 1997. In value terms, they fell to 44.3%, as compared to 46.7% in 1997.
As for other products, Switzerland exported 5.99 million movements, or 3.7% fewer than in 1997, representing a drop in value terms of 1.4% (109.83 million francs). In the components sector, exports grew in value, with the exception of dials and bracelets. Small and large clocks could not stem the erosion of sales that had already begun in 1996 and dropped a further 13.8% in value.
Markets
1998 saw a regional redistribution of Swiss watch exports, with Asia only accounting for 37%, versus 44% the previous year. Moreover, the indirect effects of the crisis (lower oil prices, fewer tourists) brought about a 2.0% drop in demand in the Middle East.
In 1998, the fifteen main markets were as follows (in millions of francs and % change over 1997):
Hong Kong