BASELWORLD 2016: THE TIMES THEY ARE A CHANGIN’
Journalist and author since 1981
Hopes and fears: the auspices under which Baselworld 2016, the international watch fair, began on March 17 2016. The export statistics for the Swiss watch industry for 2015 and January 2016 augured fairly ill. After 1.9% growth in 2014, in 2015 exports fell by 3.3% to 21.5 billion Swiss francs. 20.266 billion francs went on wristwatches alone, the sum having continually increased since the end of the Lehman Brothers crisis in 2009. Figures for Hong Kong, by far the most important export market, fell by 22.9% over the year and for mainland China by 4.7%. CEOs who had focused their strategy chiefly on an aspirational Chinese clientele promptly came in for a rude awakening.
Anyone who had pinned their hopes on a fresh start in 2016 was also bitterly disappointed. Compared to the same month last year, exports this January fell by a full 7.9%. In February 2016, that downward curve levelled off somewhat but exports were still some 3.3% lower year-on-year. In Hong Kong, the severe downward trend continued. After a 33.1% drop in January, February saw another 25.3% decrease.
Longines CEO Walter von Känel, whom I had the good fortune to speak to in Basel, is of the view that the decrease in exports to Hong Kong is actually much starker than the statistics show. Many of the timepieces that are sent to Hong Kong then leave the former Crown colony and head to mainland China. There sales declined even more sharply - a decrease of 6.8% - than they had in January, which posted a more moderate decline of 1.9% compared to a year earlier.
But if we factor in the goods sent on from Hong Kong, the figures could show positive signs. Happily, exports to Japan, the new shopping Mecca for the Chinese, increased very significantly. Orders from “Old Europe” also increased. But a great number of watches return to the Middle Kingdom on the wrists of Chinese tourists.
Wristwatches costing between 200 and 500 Swiss francs (to export, not retail) were particularly hard hit by declining export figures in 2015. That price range mostly means the smartwatches the Swiss watch industry pushed so hard last year.
Save for a few exceptions, such as the Horological Smartwatch created by the Frédérique Constant group under CEO Peter Stas or the Tag Heuer Connected, which CEO Jean-Claude Biver promoted with such success, Swiss watch brands are fairly underrepresented in this field. This is attested to by the figures: in the fourth quarter of 2015, Swiss manufacturers exported a total of 7.9 million watches. While 8.1 smartwatches have been made internationally.
What I find remarkable is the unfailing, perhaps even evolving, trend for the retro look. If it looks old, it won’t get old. Or the classic simply never goes out of fashion. However, cases now tend to be larger than in the past. They are also truly water-resistant. And for the most part you now look at the dial through scratchproof sapphire crystal.
Divers’ watches remain a feature, even if they are mostly only used for swimming and snorkelling.
I have already discussed bronze as a material for cases on these pages. And we can expect more watch brands to turn to the material with its ageing effect. Nonetheless, bronze, as I wrote recently, will still only cover a niche market.
“Tourbillons,” said Peter C. Stas of Frédérique Constant, “have long since passed their peak. We hardly sell any now.” So pickings are thin, at least when it comes to introductory models. But higher-priced tourbillons are now a consideration as Jean-Claude Biver and TAG Heuer have set a new benchmark with the Carrera Heuer 02T.
A CEO who asked to remain anonymous said that in future there would be much more explaining to do when it came to the price of tourbillons. The 250 Black Phantoms with a COSC-certified in-house automatic winding movement, integrated flywheel chronograph and carbon minute tourbillon, went like hot cakes. But the unlimited edition, retailing for €5,000 less, couldn’t complain of a lack of interest either. The price combined with true value for money is an undeniable selling point.
This brings me to another trend which ran through those spacious exhibition halls like a golden thread: a return to the roots which had made the brands famous in the first place. A perfect example is Chronoswiss, where the good old “Régulateur”, now called the “Regulator”, dominates the new collection. The introductory model is retailing for under €4,000.
The Girard-Perregaux CEO Antonio Calce has ejected about 100 models from the collection. A steel case now sets the tone on the classically round and much loved 1966.
Ebel, Maurice Lacroix and Ulysse Nardin are also going back to their roots. All that ogling at rich and superrich people’s wallets and playing in the wrong league has taken its toll. Knowledge is the first step towards self-improvement.
The same goes for price. For many, moderation is the order of the day. Increasingly often, the pencil is being sharpened ever more keenly before the price is calculated. And price-conscious brands have always set great store by offering their clients more for their hard-earned cash. It should work out well for everyone in the end as retail orders have done those efforts proud. We got quite used to hearing that watches, especially limited editions, had sold out.
After the fair, I wondered repeatedly what future awaited the many niche brands in the upper echelons and at the very top of the price range. Striking five-figure sums for wristwatches with eccentric mechanics, sometimes dubious functionality and an appearance that takes some getting used to are really something. The complaint that it is difficult to find licence-holders and, consequently, clients, particularly in Germany, Austria and German-speaking parts of Switzerland, is all too easy to understand in the circumstances. Asian customers are quicker to fall for such items. I have my doubts as to whether that enthusiasm will last if one day the brand quietly disappears off the market along with customer service and the provision of replacement parts.
One way or another, there are definitely too many brands of watch and consequently too many watches on the market. The Swiss industry alone produced more than 28 million watches last year. For 6% of those, or 1.7 million watches, the export price was above €3,000. Every single one of those watches needs a free wrist or has to force off another timepiece already there. This is not to mention the huge number of Asian watches. What can’t be sold directly will eventually drift into parallel sales structures.
So it is perfectly logical that there should be winners and losers in this game. But watch-lovers can rejoice. In the end, they’re always going to be winners. We need have no fear of monopolies inflating prices. Competition will remain.