Xigaware

The Hong Kong market for Swiss watch exports grew by 10.9% during 2008 while the US market shrunk by 3% which was enough to see the US toppled from the number one spot it has held for the last decade. Although the US market fell to second place, Japan, the third largest market is only half the size of the US. Europe is first represented on the list until France appears at number four and is followed closely by Italy in fifth. Compared to 2007, the biggest gains in the value of Swiss watch exports were 43.1% for China, then the United Arab Emirates with 27.6% and Saudi Arabia with 24.0%. In contrast, Spain had the biggest decline of any of the markets in the top 15 with a decline of 13.5%.

Somewhat surprisingly, 2008 was still a record year for Swiss watch exports with the total value of exports 6.7% higher than 2007, which itself was a record year. The final result doesn’t tell the whole story however with the final quarter of 2008 showing a 7.8% decline as the Global Economic Crisis started to hit home for most markets.

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%.

As not all markets have been declining to the same extent (with some markets still growing), not all price ranges of Swiss watch exports have been affected the same. Higher priced exports fared much better in 2008 by growing 20% when compared to their 2007 results. Watch exports with a value of USD $2676 (at time of writing) grew while watches priced between USD $446 and $2676 fell.

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.

It is worth remembering that 2008 was a record year after a number of record years for the Swiss watch industry so declining sales after sustained growth is not an immediate recipe for diaster but most believe that it is unlikely that any export records will be achieved for some time into the future.

If you enjoyed this post, make sure you subscribe to my RSS feed!