Swiss watch exports took their biggest fall at the start of this year since 2009 as China’s economy stumbled and Hong Kong retailers focused on working off existing stock instead of placing new orders
Swiss watch exports took their biggest fall at the start of this year since 2009 as China’s economy stumbled and Hong Kong retailers focused on working off existing stock instead of placing new orders.
The Swiss watch sector’s exports in March alone fell nearly 17 per cent in real terms, when adjusted for working days, to 1.5 billion Swiss francs ($515 million), data showed on Thursday, the lowest level for that month in five years. It was the fourth consecutive quarterly fall and the biggest since the global financial crisis.
Demand for luxury watches has been hammered by a Chinese government crackdown on bribery, a drop in tourist shoppers to Europe and, at lower price points, the rise of smartwatches.
Manufacturers like Swatch Group, Richemont and LVMH have responded by demanding price cuts from suppliers and taking more production in-house.
“There have been no signs of improvement in Swiss watch exports, in particular into Greater China,” Citigroup analyst Thomas Chauvet wrote in a note to clients. “On the contrary, the mood amongst watch retailers seems to have deteriorated in recent months.”
While China is only the third-biggest export market, Chinese mainland travellers shopping in Hong Kong, Macau, Europe and other destinations lead watch demand.
Fewer Chinese travelling to Hong Kong — paired with high inventory levels at retailers there — led to a 32 per cent nominal decline in the quarter, while declining Chinese tourism to Europe meant sales there largely stagnated.
At 4.7 billion francs, first-quarter exports fell nearly half a billion short of 2015 levels, a 12 per cent drop in real terms, the Federal Customs Office said on Thursday. The drop worsened from January through March, when all but one of the six key markets fell.
“China was clearly negative (-13.7 per cent), undermining the recovery which had begun to take hold at the end of last year,” the Federation of the Swiss Watch Industry said of March, referring to the nominal drop.
