Watchmakers Set to Meet High Demand at Baselworld Show

Industry leaders are seeing a rise in global demand despite a sharp slowdown for expensive watches in China at Baselworld, the showcase for watchmakers, which opened on a bright note on Thursday. "We are confident for 2014," Jean-Daniel Pasche, head of the Swiss Watch Industry Federation, told AFP a day before the world's largest watch fair opened to the public.

Francois Thiebaud, who heads the Swiss Exhibitors Committee, agreed.

"The year has gotten off to a good start," he told reporters, pointing out that Swiss watch exports swelled 5.6 percent in January and a full 7.0 percent last month.

In 2013, Swiss watch exports edged up 1.9 percent to a record 21.8 billion Swiss francs ($24.1 billion, 17.8 billion euros).

That marked a record high, but also a significant slowdown in growth, after exports a year earlier surged by nearly 11 percent.

Swiss watchmakers, especially in the high-end segment, have been hard-hit by a drop in demand in China, one of their biggest markets which has driven breathtaking growth for several years.

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But the bonanza suddenly lost its spring last year as Beijing attempted to rein in corruption, including bans on extravagant gifts in business settings, sending Swiss watch exports to the country down 12.5 percent.

Pasche said that the Chinese market appeared to be "stabilising", stressing that the country, with its ballooning purchasing power and appetite for luxury goods, could once again prove a boon for Swiss watchmakers.

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"But this Chinese example also shows us that it is important for brands to be present around the world and not to focus too much on a single market. Markets can go up or down, and you have to be able to compensate for the drops in other regions," he said.

Jean-Claude Biver, head of niche watchmaker Hublot, told AFP that this diversification strategy was already in place and had been the industry's salvation.

- Japanese market speeds up -

"Other markets compensated what we lost in China," said industry veteran Biver, who recently took the reins of the brands owned by French luxury group LVMH.

He expressed confidence that China would roar back in the long term: "Just because there's been a consolidation doesn't mean that China will disappear."

Meanwhile, the long-dwindling Japanese market was on the mend, South America was booming and the United States had returned to growth, he said, adding that he expected Swiss watch exports overall to grow by three to five percent this year.

Last month, exports to Japan alone soared 44 percent, according to the Swiss Watch Industry Federation.

"There is a renaissance and a strong recovery in this market which long was a very big luxury market but that for the past five years showed signs of weakness," Luc Parramon, head of Hermes's watch division, told AFP.

There are also signs that Europe, where tourists are credited for keeping the watch-purchasing market afloat in recent crisis-wracked years, is finally seeing an uptick in domestic demand.

"The growth that we have seen in our industry comes thanks to Europe, which has done relatively well overall. We expect Europe to continue to be a very important market for our industry in 2014 and to continue turning out positive numbers," Pasche said.

Baselworld chief Sylvie Ritter agreed.

"Europe is doing better and better, and we expect more European buyers here than in recent years," she told AFP.

More than 100,000 visitors from around the world are expected to descend on the week-long show to view the offerings of about 1,500 exhibitors, and many retailers will place the bulk of their annual orders here.

But while the year seems to be getting off to a promising start, Swiss watchmakers are grappling with an unexpected, potentially crippling challenge.

Last month, Switzerland, which is not a member of the European Union, voted in a referendum significantly to curb immigration from the bloc.

"We are very worried," Jacques Duchene, head of the Exhibitors Committee, told reporters, stressing that "if we have to limit our foreign workforce, I think that for some groups this will cause enormous problems."

According to Pasche, about half of workers in the Swiss watch industry are foreigners who either reside in Switzerland or commute across its borders.

Source-AFP