The highly anticipated Geneva watch fair, also known as Watches and Wonders, opened its doors on Monday, attracting attention amid the ongoing turmoil in the banking sector. Despite the prevailing apprehension, industry professionals showcased a sense of optimism as they unveiled their latest creations from renowned brands such as Rolex, Patek Philippe, and Cartier. This prestigious event, which will run until Sunday, has consistently witnessed record gains for Swiss watchmakers over the past two years.
The Swiss watch industry experienced a significant increase in exports during 2021, with a staggering growth rate of 31.2%. This boost was primarily fueled by strong sales in the United States and the Middle East. Furthermore, the resurgence of luxury tourism in Europe in 2022 further amplified exports, which soared by 11.4% and reached an impressive 24.8 billion Swiss francs ($27.1 billion). Encouragingly, the positive growth trend has continued into 2023, with exports surging by another 10.6% during the initial two months of the year, according to the Federation of the Swiss Watch Industry.
Nevertheless, the prevailing optimism at the Geneva fair was somewhat overshadowed by the turbulence in the banking sector. The recent takeover of Credit Suisse by UBS, initiated under government pressure, has raised concerns about the possibility of a global banking crisis. This has inevitably triggered memories of the 2008 financial crisis, which severely impacted Swiss watch exports, experiencing a massive decline of 22.3% in 2009. However, industry analysts believe that the current situation is likely to have a muted impact on the watchmaking industry, projecting a growth rate of approximately 10% in exports for this year.
One particular area of concern revolves around the potential effects on the buying public within the banking and financial sector, which represents a significant market for luxury watches. While there may be some impact on domestic business, the negative repercussions could potentially be counterbalanced by the return of tourism. Swiss watchmakers are exploring various avenues to drive export growth in 2023, with a particular focus on the Chinese market. Although the Chinese watch market has been relatively subdued due to stringent zero-Covid rules and subsequent infection surges, experts predict a return to normalcy with the reopening of the Chinese economy. However, challenges persist, as the limited air transport capacity and visa backlogs may delay the return of Chinese travelers to Europe. Despite these obstacles, analysts maintain a high level of confidence in the Chinese market’s potential, considering the substantial savings accumulated by individuals during the period of health restrictions.
In conclusion, the Watches and Wonders fair in Geneva has commenced amidst concerns about the state of the banking sector. Despite the prevailing apprehension, Swiss watchmakers remain resolutely positive about the potential for export growth, fueled by a strategic focus on the Chinese market. While the situation within the banking sector continues to be closely monitored, experts firmly believe that any impact on the watchmaking industry will be relatively limited. As the fair progresses, industry professionals will persistently showcase their latest creations while adeptly navigating the ever-evolving market conditions.
Useful links:
1. Reuters – Geneva watch fair hopes surviving amid bank sector turmoil
2. Luxury Tribune – Fingers crossed in Geneva: creativity prevails
