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Swiss Watches(HKTDC Enterprise, Vol 02,2008)

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The world's leading market for Swiss watches Is continuing to tick along steadily

Asia absorbs an astounding 44% of Swiss watch exports in value - far ahead of both Europe (34%) and the US (21%), an industry expert told the latest Asian Watch Conference.

The President of the Federation of the Swiss Watch Industry (FH), Jean-Daniel Pasche, noted that Asian clients were "connoisseurs" and demanding consumers. "It is an ongoing challenge for Swiss brands to satisfy them and meet their expectations," he admitted.

Two-way trade in watches between Switzerland and Asia has expanded robustly over the past decade, with the value of Swiss watch exports to Asia rising 61% from 3.6bn Swiss francs in 1997 to 5.8bn Swiss francs in 2006.

Asian watch exports to Switzerland grew even more, increasing 100% over the same period, from 550m Swiss francs in 1997 to 1.1bn Swiss francs in 2006.

These figures make Asia by far Switzerland's leading watch supplier. "We import all types of watchmaking products, including finished watches and components such as cases, dials and watches," Mr Pasche explained.

"In fact, 50% of Swiss watch imports come from Asia - more than from Europe."

He pointed out that tiny Hong Kong ranks ahead of Japan and the main European markets and is second only to the US in its consumption of Swiss watch exports. "Between 1997 and 2006, Swiss watch exports to Hong Kong rose 36% from 1.4bn to 1.9bn Swiss francs," Mr Pasche revealed.

Swiss watch exports to the Chinese mainland have also progressed rapidly, rising 740% from 48m Swiss francs in 1997 to 404m Swiss francs in 2006. "Hong Kong and China together are now the Swiss watch industry's leading market," Mr Pasche declared.

However, Swiss imports of watchmaking products from Hong Kong have see-sawed as production has relocated to the mainland. "The reduction in Swiss watch imports from Hong Kong has been replaced by an increase in Swiss watch imports from China," he added.

Nor has the relationship between the Swiss watch industry, Hong Kong and China been confined solely to imports and exports. "Firms in Hong Kong have bought Swiss brands to develop or strengthen them on world markets," Mr Pasche remarked.

The FH President said international laws and regulations covering a multitude of areas, from batteries, electronic waste and the processing of leather to recycling and the use of hazardous substances such as mercury, lead and cadmium, made it imperative that the worldwide watch industry work together as a lobbying group.

"We are aware of concerns regarding the environment and public health - indeed, we share them since we wish to offer products that are healthy and safe," Mr Pasche insisted. "However, we must ensure that this body of legislation remains proportional to the desired objective and to the nature of watchmaking products."

He maintained that legislators must realise that a watch is not a car: the quantities of a substance in a watch are minute compared to the total quantities of substances involved.

"For example, the European Union has now banned the use of lead in the solders of electrical circuits for watch movements - although the quantities involved are miniscule," he argued. "We must therefore take a stance to ensure that these regulations take into account the special features of the watch industry."

Standardisation is another area in which watchmakers should work together. "ISO standards specific to watchmaking facilitate trade in watches since they lay down harmonised technical references at a world level," Mr Pasche observed.

Some Asian watch industries are already collaborating "very closely and very effectively" in the ISO TC114 committee's drafting of ISO watchmaking standards. "I believe that we could further expand this collaboration for the benefit of the global watchmaking industry," Mr Pasche claimed.

He was equally optimistic that a joint solution could be reached in discussions to revise the ISO standard on water-resistance, despite prevailing differences between countries.

"Water-resistance is a fundamental characteristic of a watch, and it is therefore necessary to be able to give it a common and precise definition to avoid confusion in the market," Mr Pasche said. "This is in the interests of all watch manufacturers."

He urged watchmakers to continue to build consumer confidence by providing products that measured up to buyers' expectations. "Brands that will last and grow are those that are genuine and consistent in their policy and the messages they convey."

This was especially relevant given the long-running battle against counterfeit timepieces. "When the consumer reads 'Swiss made' on the dial of a watch, he expects that the watch will have been made in Switzerland," Mr Pasche said. "If this is not the case, he is disappointed and deceived."

It is precisely this consumer confidence that must be protected, as it is the only way that a brand has - and can retain - value. "If we lose consumers' confidence, the watch industry as a whole will suffer the consequences," Mr Pasche concluded.

BIGGER AND BETTER

Bigger, bulkier watches are the most obvious trend in Swiss watches, with manufacturers making ever larger models to differentiate them from unisex versions.

More and more women are also seeking men's watches, according to Federation of the Swiss Watch Industry (FH) President Jean-Daniel Pasche. "It is not rare to see watches with diameters of between 45mm and 50mm," he observed.

Round watches remain favourite but square shapes are gaining favour, a wide range of colours is available and women prefer white bracelets while men favour black.

New materials that are lighter and stronger than gold or steel are increasingly being used for cases, bezels and bracelets. "This solves the weight problem of larger watches while enhancing their performance," he said, noting the use of silicon and diamonds in watch movements.

Some brands are also creating their own materials, such as Zenith's zenithium, while others are trying to reduce mechanical friction to eliminate or reduce reliance on lubricating oils.

Gold and steel are still favourites, but materials such as rubber, titanium, platinum, palladium, ceramics, tantalum, aluminium and magnesium are resulting in watches that are stronger, lighter, anti-allergenic and more comfortable.

In terms of watch types, the chronograph has become a fixture in virtually all watch collections. "The sports watch continues to enjoy success, to the extent that brands with a more sober tradition are also adopting this style," Mr Pasche said.

"However, classic watches also remain the embodiment of Swiss watchmaking and are the hallmark of our flagship brands with their habitual characteristics: round cases, Roman numerals and engine-turned decorations."

The watch's inner workings are also becoming more visible via a transparent back cover or apertures on the dial. "This aesthetic refinement is accompanied by meticulous decoration - for example, the engine-turning of dials," Mr Pasche said.

Watch companies are also paying more attention to their female clientele and creating women's models that are not just female versions of men's watches but totally different timepieces created solely for them.

"Companies are discovering that women are equally interested in mechanical watches, chronographs and complicated watches," Mr Pasche said. "The Swiss watch industry's continued success will rest on both the diversity and quality of products such as these."

TEXT BY ANDREA PAWLYNA