Swiss watch makers are falling on hard times

Swiss watch makers are falling on hard times

Swiss watch makers will want to forget September as soon as possible: the expensive Swiss franc is pricing the luxury manufacturers out of the market while the competition from the United States is becoming larger.

Expensive franc and lower Asian demand

The Swiss watch industry represented a 22 billion Swiss franc industry last year, but the expensive Swiss currency is currently pricing the country out of the market, with third quarter export numbers at hugely disappointing levels. The Swiss watch federation calls it a "disappointing September" with a "7.9 % export drop", which "casts a shadow on the forecast for the full year 2015".

 

Aside from the expensive Swiss franc, the major drop in Asian demand is also a sizeable problem: export to Hong Kong alone dwindled by 20 %.

 

The Apple Watch could be another threat to the watch makers of the Alps: according to market research firm IDC, 3.6 million of those were sold in the second quarter, although Apple did not reveal any numbers "because of competitive reasons". Swiss sales in Apple's home territory, the United States, dropped 17.6 % in the same time frame. 

 

Swiss watch makers like Swatch (who offer a smart watch with payment service) and even Tag Heuer (who will launch a smart watch in November) have switched strategies to counter the oncoming threat, but it remains to be seen whether that move has come quickly enough.

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