Fewer watch exports to China in February
Published: Tuesday, Mar 19th 2024, 12:30
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After a record run in recent months, Swiss watch manufacturers have suffered a setback. In February, fewer watches were exported abroad compared to the previous year for the first time in a long time. The reason for this was the significant decline in business in China.
Overall, the value of watch exports in February 2024 fell by 3.8 percent year-on-year to 2.15 billion Swiss francs, after increasing by 3 percent in January. This leaves a 0.7% drop in export statistics since the beginning of the year, as the Federation of the Swiss Watch Industry (FH) announced on Tuesday.
Sharp decline in China
The association attributes the decline in February to unfavorable base effects in the Greater China region. The bar was set at a high level in China and Hong Kong, which are important sales markets for the industry. After Beijing lifted the strict coronavirus restrictions at the end of 2022, trade in Swiss watches in the "Middle Kingdom" recovered significantly.
Watch exports to China fell by a quarter and those to Hong Kong by a fifth in the month under review. By contrast, exports to the USA, the largest sales market, recorded a further increase (+5.5%), while more watches were also exported to Japan (+5.6%), Singapore (+3.3%), the United Arab Emirates (+8.9%) and France (+6.1%).
The high export figures from the previous year are likely to be difficult for Swiss watch manufacturers to surpass in the coming months. This is because the industry was riding a wave of success in 2023 in the wake of the coronavirus pandemic - the hunger for Swiss timepieces, and luxury watches in particular, was immense around the globe.
In 2023, with the exception of a slight decline in July, watch exports increased significantly month on month, in some cases even reaching double digits. Accordingly, the full year 2023 closed with a record-high export volume of CHF 26.7 billion.
Warning shot
However, Philippe Bertschy from Bank Vontobel notes that the most recent month is now a warning shot for the industry. He had expected slight growth, partly because February 2024 had more working days than the previous year. In view of the uncertain economic situation, UBS experts also expect the luxury goods market to be volatile.
On Tuesday, not only the watch export figures were published, but also the data for total foreign trade. According to these figures, which were published by the Federal Office for Customs and Border Security (FOCBS), seasonally adjusted total exports rose by 0.1% compared to January to CHF 21.2 billion (+0.2% in real terms). This confirmed the stagnation registered on the export side since October 2023.
Meanwhile, imports increased by 2.9% in nominal terms to CHF 18.9 billion compared to the previous month (real: +3.8%). The surplus in the trade balance thus amounted to CHF 2.2 billion after CHF 2.8 billion in January.
Exports were down in most sectors, with exports of raw and basic materials falling by 16%. By contrast, the largest sector, chemical-pharmaceutical products, recorded an increase of 0.7%. In terms of regions, exports to China fell to their lowest level for a year, while those to North America increased.
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