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interface news reporter | huang shan

interface news editor | lou qiqin

production cuts have become a consensus in the swiss watchmaking industry.

johann rupert, chairman and founder of the listed swiss richemont group, said at the annual shareholders' meeting that the luxury watch industry must reduce production to cope with the reduction in demand for expensive timepieces.

richemont group owns cartier, vacheron constantin, iwc, a. lange & söhne, panerai and other well-known swiss watch brands. bloomberg news reported that johann rupert said at the conference that due to the decline in demand in mainland china and hong kong, global watch demand "has passed the boom period."

after three years of crazy growth, swiss watch exports have been declining since 2024. in 2023, swiss watch exports set a record of 26.741 billion swiss francs (about 216.895 billion yuan), a year-on-year increase of 7.6%.

but in fact, starting from the fourth quarter of 2023, the swiss watchmaking industry began to show a trend of weak growth, and exports have plummeted since 2024. in the first seven months of 2024, swiss watch exports fell by 2.4% year-on-year. in terms of production, the number of watches exported from switzerland in the first half of the year fell by 8.4% year-on-year.

except for the us market, the export volume of swiss watches to all other regions in the world has declined to varying degrees compared with 2023. among them, the far east region where greater china, japan and south korea are located has seen the largest decline, recording a year-on-year drop of 21.4%.

in the 2023/34 fiscal year (12 months ending march 31, 2024), richemont's professional watchmaking division recorded a year-on-year sales decline of 3%, accounting for 18.7% of richemont's revenue. in the second quarter of 2024, richemont's professional watchmaking division's sales decline further widened, recording a year-on-year decline of 14% at actual exchange rates.

in its financial report, richemont group pointed out that the sharp decline in its professional watchmaking business was due to the particularly significant decline in the chinese mainland and hong kong and macao markets, while the outstanding performance of the japanese market partially offset the decline in the european and asia-pacific markets.

as the 2024 half-year results are released one after another, many swiss watchmaking companies, including richemont group, have mentioned the reasons for the decline in market demand on different occasions. on the one hand, the strong appreciation of the swiss franc against the us dollar has suppressed manufacturers' profits, forcing high-end brands to further increase prices; on the other hand, consumers have become more cautious in spending after the high inflation period. the combination of factors has led to a decrease in watch consumption.

it is worth noting that although japan has diverted some luxury watch consumers from mainland china, hong kong and macao due to the depreciation of the yen, the consumption driven by exchange rate and tax exemption factors has not been beneficial to the profits of these swiss companies.

earlier in 2024, swiss swatch group chairman hayek also said that chinese consumers' cautious attitude has lasted for a year, and he expected the difficulties in the chinese watch market to continue until the end of 2024. the swatch group owns high-end watchmaking brands such as omega, blancpain and breguet.

the result is a reduction in watch production. “(watchmakers) should be cautious about simply pursuing production.” this is the clear statement made by johann rupert at the annual shareholders' meeting.

regarding the restraint in production by swiss competitors such as rolex, patek philippe and audemars piguet, the richest man in south africa said: "we have always had a close relationship with those independent watchmaker competitors. we understand what they are doing. they are limiting production, which is a very responsible behavior."

with the sharp drop in market demand, the top priority for watch brands is to find ways to reduce inventory rather than continue to increase production. once a watch brand delays or reduces orders, its upstream suppliers will face the situation of suspension of production.

the jura mountains are one of the core areas of the swiss watchmaking industry. the watchmaking workshops of many well-known watchmakers such as audemars piguet, jaeger-lecoultre, vacheron constantin, breguet, and blancpain are located here, and there are also a large number of suppliers gathered here.