Swiss watches exports to China plunge in February

The value of Swiss watches exports fell by 9.2% on an annual basis in February, down to CHF1.6 billion (€1.5 billion), according to data by Switzerland’s watch industry association published on Thursday. Exports to China in particular took a plunge, after the Covid-19 epidemic ground the country to a halt.

In February, exports towards China, usually the powerhouse for the Swiss watch industry’s growth, fell by 51.5%. The Chinese market, usually one of the top three, dropped in ninth place in the Swiss watch industry association’s monthly ranking.

In a press release, the association indicated that exports to Hong Kong, which have been in free fall since the start of the city’s widespread pro-democracy demonstrations, lost another 42%, “recording the worst monthly fall in the last 20 years.”

“The consequences of the Covid-19 pandemic have started to make themselves felt,” said the Swiss watch industry association, which however underlined that the statistics “don’t yet fully reflect the situation existing in some markets.”

Watches exports are among the indicators that financial analysts and luxury industry professionals monitor most closely to decipher the luxury goods sector’s trend.

The data refers to watch shipments to retailers and not consumer sales, giving an indication of the inventory levels held by stores, based on their consumer demand forecasts and overall confidence. In other words, there is a gap between the time when retail orders are placed and actual consumer demand in-store.

In February, watches exports still enjoyed an upward trend on Europe's main markets, except for the UK, where they fell by 18.9%. Exports to Germany rose by 7.3% on an annual basis, those to France jumped by 12.6%, and those to Italy increased by 5%.

Exports to the USA recorded a 17.8% rise, the country being one of the main markets for Swiss watches, alongside China and Hong Kong.

Since the coronavirus has been officially given the status of pandemic, financial analysts have been extensively revising their profit estimates for the watch industry. The situation is conjuring up the spectre of 2009, a black year for the sector, marked by a huge slump in consumer sales and retail orders.

Following the financial crisis of 2007-2008, scores of retailers resorted to making significant price discounts to clear the inventory they had accumulated as demand dropped.