Swiss watchmakers say slowing growth in China won’t hurt sales this year

BASEL, SWITZERLAND: Swiss watchmakers are confident they can grow sales this year even in the face of a cooling Chinese economy, executives told Reuters at an industry fair, as demand strengthens in other markets like the United States and Britain.

Switzerland’s watch industry, which relies heavily on Chinese customers, has seen exports – the best available indicator for demand - rise only 2.1 per cent in the first two months of the year, following a 6.3 per cent increase last year.

However, some are confident they will do much better this year.

“We’re aiming for double-digit growth in our watch business this year,” Jean-Christophe Babin, chief executive of LVMH’s jeweller Bulgari, said in an interview at the Baselworld show.

His comments were echoed by independent watchmaker Oris, also banking on a doubledigit increase, while LVMH stablemate Hublot said it had an exceptional year in 2018 and was counting on 7-8 per cent growth this year from a high basis.

Oris said sales in the United States, its biggest market, were growing strongly. That trend was confirmed by retailer Watches of Switzerland, which also reported firm UK demand, particularly for Rolex, Patek Philippe and Audemars Piguet products.

Luxury watch brand Patek Philippe, whose most affordable models cost around 14,000 Swiss francs, said it expected sales this year to be at a similar level to last year as it was again going to deliver around 62,000 pieces.

Its president, Thierry Stern, categorically denied recent speculation the family-owned company could be up for sale.

Swetha Ramachandran, who manages a luxury brands equity fund for GAM, said privately owned brands like Patek or Rolex were seeing better demand than their listed counterparts because they had not given in to the temptation of easy volume growth when Chinese demand boomed a few years ago.

That meant they have avoided the build-up of excess inventory that has hurt some rivals, while protecting the scarcity value of their brands.

“Private players are managing their business for price rather than for volume,” she told Reuters in an interview earlier this week.