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Swiss watch manufacturers have suffered a setback after the record run of recent months. In February, for the first time in a long time, fewer watches were exported abroad than the year before. The reason for this was the significant decline in sales in China.

Overall, watch exports fell 3.8 percent in value to 2.15 billion francs in February 2024 compared to the previous year, after rising 3 percent in January. This means that export statistics have fallen by 0.7 percent since the beginning of the year, the Association of the Swiss Watch Industry (FH) announced on Tuesday.

Sharp decline in China

The association attributes the February decline to unfavorable base effects in the Greater China region. The bar was set high in the important sales markets of China and Hong Kong for the industry. After Beijing dropped the strict Corona restrictions at the end of 2022, the trade in Swiss watches in the ‘Middle Kingdom’ recovered significantly.

Please note: exports to China fell by a quarter in the reporting month and those to Hong Kong by a fifth. On the other hand, exports to the largest sales market, the US (+5.5%), recorded a further increase, while also exports to Japan (+5.6%), Singapore (+3.3%) and the Arab Emirates (+8.9%)) or to France (+6.1%) more watches were exported.

The high export figures of the previous year will likely be difficult for Swiss watch manufacturers to surpass in the coming months. The industry experienced a wave of success in 2023 in the wake of the corona pandemic – around the world, the appetite for Swiss timepieces and especially luxury watches was huge.

In 2023, with the exception of a slight decline in July, watch exports increased significantly month after month, in some cases even by double digits. The full year 2023 ended with a record volume of 26.7 billion francs.

Warning shot

The past month is now a warning shot for the sector, says Philippe Bertschy of Bank Vontobel. He had expected slight growth, also because February 2024 had more working days than the year before. Given the uncertain economic situation, UBS experts also expect volatile developments in the luxury goods market.

On Tuesday, not only the watch export figures were announced, but also data on total foreign trade. According to these figures, published by the Federal Office for Customs and Border Security (BAZG), total exports increased by a seasonally adjusted 0.1 percent compared to January to 21.2 billion francs (real +0.2%) . This confirmed the stagnation on the export side recorded since October 2023.

Meanwhile, imports rose nominally by 2.9 percent to 18.9 billion francs compared to the previous month (real: +3.8%). The trade balance surplus amounted to 2.2 billion francs, compared to 2.8 billion francs in January.

When it comes to exports, most sectors were in the red: exports of raw materials and basic materials fell by 16 percent. However, the largest division, chemical-pharmaceutical products, recorded an increase of 0.7 percent. By region, Chinese exports fell to the lowest level in a year, while those to North America increased. (rbu/sda/awp)