Swiss Luxury Watch Exports – US toppled from its traditional No. 1 spot
For the last 10 years, the US has been the largest market for Swiss watch exports. With the value of exports to the US declining 3% from the previous year and Hong Kong growing by 10.9%, Hong Kong became the largest market at the end of 2008. The US fell to second place but it is still a market twice as large as Japan in third place. Japan is followed closely by the fourth and fifth largest markets, France and Italy respectively. China as an export market for Swiss watches gained an enormous 43.1% in 2008 when compared to their 2007 results. China was followed by the United Arab Emirates and Saudi Arabia with gains of 27.6% and 24.0% respectively Spain showed the biggest decline with 13.5%.
The strong growth of Swiss watch export markets seen in 2007 continued into 2008 and even though in the final quarter exports declined by 7.8% due to the Global Financial Crisis, the year ended with the total value of exports increasing by 6.7%. 2008 therefore was surprisingly being another record year on the strength of the results of the first three quarters and followed the 2007 record year.
The top 15 markets for Swiss watch exports in 2008 with the percentage variation against 2007 and the total value in million US dollars are:
1. Hong Kong ($2,405, +10.9%)
2. USA ($2,111, -3.0%)
3. Japan ($1,053, -4.5%)
4. France ($1,008, +15.1%)
5. Italy ($932, +2.5%)
6. Germany ($814, +10.2%)
7. China ($736, +43.1%)
8. Singapore ($698, +16.8%)
9. United Arab Emirates ($600, +27.6%)
10. United Kingdom ($571, -2.7%)
11. Spain ($403, -13.5%)
12. Russia ($259, -9.7%)
13. Taiwan ($258, +5.1%)
14. Thailand ($236, +11.8%)
15. Saudi Arabia ($213, +24.0%)
The outlook for Swiss watch exports continues to be pessimistic after the decline seen in the last quarter of 2008 and the results of the first two months of 2009. The Federation of the Swiss Watch Industry has released the January and February 2009 results showing exports to the US almost halved (47.5%) compared to the same month in 2008 and the combined result for the first two months was a decline of 38%. The US market has shown the biggest decline while others have not been affected as severely with Japan being the next worst result with a decline of 13.5%.
It wasn’t doom and gloom across the entire price range. Exports of watches with an export price of more than 3,000 francs (USD $2676 at the time of writing) increased in 2008 by nearly 20%, in contrast to watches with export prices below 3,000 francs. The number of watches exported priced below 3,000 francs and particularly between 500 (USD $446) and 3,000 francs (USD $2676) fell when compared with the 2007 results.
In hard economic times, luxury items such as watches become purchases that are more difficult to justify for middle income earners while high income earners still have enough discretionary income to afford a high end luxury watch. So as was expected, the higher end of the luxury watch market held up in a generally declining export market while those watches in the lower end suffered the most. This trend has continued on into the first quarter of 2009 and only time will tell whether the market for luxury watches will show signs of recovery by the end of 2009.
Having seen sustained growth in the value of Swiss watch exports year on year, some of the declines being experienced in 2009 can appear alarming. However it should be remembered that 2008 was a record year for exports and even though the market in a number of key markets, adjustments are being made by the Swiss watch industry to ensure a healthy long term future.
