The CDC has instructed Americans to avoid all nonessential travel to China, Seventeen Chinese cities – more than 50 million people – are on lockdown. The coronavirus outbreak’s economic impact is already enormous. Export stats from the Federation Horlogère Suisse indicate that our previous analysis was right: the Swiss watch industry is set to take a major hammering . . .
In 2019, Asia accounted for 52.9% of Swiss watch exports’ total value. As we reported before the coronavirus outbreak, pro-democracy protests sank sales in Hong Kong – once the major market for Swiss watches – by 11.4%. Increased sales in China (+16.1%), Japan (+19.9%) and Singapore (+14.6%) just about made up for the loss.
With the coronavirus forcing the Chinese economy to a virtual standstill, disrupting its neighbors’ economies, Asian watch sales are coming to a crashing halt. Watches are, after all, a luxury item – this is not the time when people buy luxury goods. Not that they can in those 15 cities on lockdown.
China’s “open” major population centers may eventually be quarantined – American officials are warning that the public health crisis is far worse than the PRC is willing to admit. That would put a big ding – make that a bigger ding – in financial markets and consumer confidence worldwide.
If something similar happens in Japan and Singapore – where Swiss watch sales were up 19.9% and 14.6% in 2019 – the industry’s 2020 crash will be catastrophic. If the virus spreads around the globe, it will sound the death knell for many storied Swiss watch brands.
This calamity couldn’t have come at a worse time. The Swiss watch industry is already getting nailed by the smart watch crisis – failing to find an answer to the Apple Watch’s complete, continued and growing dominance of the worldwide watch market. Most prominently at the bottom end.
The evidence of that struggle is plain to see. In 2019, Swiss quartz watch exports fell 17.4%. The five-year stat is staggering: exports of Swiss electronic watches have dropped by 34.5%. Do the math: the decline is accelerating.
The Swiss watch industry was in a precarious position before this public health crisis. While the overall worldwide value of Swiss watch exports rose 2.6% last year, the number of units exported fell 13.1%. With the coronavirus outbreak and the smart watch steamroller rolling on, industry players may soon consider 2019 the “good old days.”
As always, watch this space.