Decline in Hong Kong Market Tempers Swiss Watch Trade Growth

20/11/2019 11:53

A significant decline in Swiss watch exports to Hong Kong in October put a dent in the otherwise positive month, as several of the leading markets recorded strong growth. According to figures from the Federation of the Swiss Watch Industry, Swiss watch exports passed the 2 billion francs (CHF2.03 billion/USD$2.04 billion) representing 1.5% growth compared to the same month last year. Overall growth was hindered by the significant decline in Hong Kong (-29.7%) - which is typically the world's leading market for Swiss watch exports - while the rest of the world generally saw an upturn (+6.5%). 

Among other markets, the United States (+9.5%) continued to post strong growth and there were also significant increases in China (+17.6%) and Japan (+11.3%). Many Chinese consumers buy their watches overseas, but the trouble in Hong Kong has led shoppers to abandon that market, with South Korea and Japan reaping the benefit. They are also increasingly making their purchases on the Chinese mainland. Exports to Europe gained ground (+8.3%) and the performance in the United Kingdom (+12.9%) remained strong, while France (+24.2%) continued to recover well, the Federation writes.

Until the protests began, Hong Kong was the world centre for Swiss watch sales, writes Sam Jones for the Financial Times. In 2018, it powered more than CHF3 billion (USD3.04 billion) of the 21 billion in global sales, and was behind much of the industry’s growth that year. “Asia is the first market for our industry,” says Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry. “More than 50 percent of our exports are destined [to go] there. The events in Hong Kong duly affect our business,” he told the Financial Times. The Federation claimed that the protests in Hong Kong have had a significant impact on global growth, reducing it by five points. As a result, instead of the Swiss watch industry recovering from a challenging 2018, they face a situation where analyst estimates point to a fall from 4% global growth to near zero, and a longer-term contraction in Hong Kong of up to 40%. 

As previously noted, provisional data released this month by Hong Kong’s statistics department for September show that the sales by value of jewelry, watches and clocks, and valuable gifts plummeted 40.8% year on year, following a 47% drop in August.