Swiss watch exports collapsed in April. The number of timepieces shipped from the landlocked country fell 81 percent year-on-year– dropping across all price categories. There was no other possible outcome – factories and dealers were shut, the economy was in free fall and online wasn’t cutting it (despite lotus-eaters’ happy talk). But China’s recent recovery promises a bright future, right?
China began reopening the country in March. Luxury goods analysts predicted a wave of revenge shopping: well-heeled consumers expressing their freedom from COVID confinement by buying luxury goods. At the same time, travel bans would stimulate domestic luxury goods consumption.
As the stats from fhs.swiss reveal, that’s exactly what happened. In March, Swiss watch exports to China rose 10.5 percent year-on-year.
The Chinese market accounted for a third of all Swiss watch exports for the period. Even so, the increase was nowhere near enough to make up for February’s 50 percent drop.
And beware the ides of channel stuffing. Exports do not equal sales. The industry press is silent on the subject, but we’d like to know how much inventory US and Chinese watch dealers are carrying, how much of it arrived in March, and under what payment terms.
Meanwhile, note: the Chinese March bump was anomalous. The market is sliding again. Sales in Hong Kong – the traditional shopping outlet for rich mainlanders – were down 83 percent in April. That’s after the pre-COVID plunge caused by civil unrest and China’s tax crackdown.
The Swiss watch industry’s China syndrome is not great. China is supposed to be the Swiss watch industry’s salvation. Instead of a lifeline compensating for Coronageddon around the world, China is melting down, subject to the same real-economy pain that the rest of the world is experiencing.
But perhaps the darkest cloud on this horizon comes from the Federation of the Swiss Watch Industry, the organization providing these stats. Here’s their note above the bad news:
The details of this widespread decline are not particularly interesting – except for China – insofar as it reflects an exceptional situation rather than a trend in demand.
Any Federation members that share this dismissive delusion lack the mental fortitude needed to survive Coronageddon and the concurrent smartwatch crisis. If May’s Swiss watch export numbers look anything like April’s, even the shills will stop saying there’s nothing to see here. And the real pain will begin.