Swiss watch exports slide
|Published
Swatch watches are pictured in a Swatch store in Bern in this file picture. Swatch watches are pictured in a Swatch store in Bern in this file picture.
Zurich - Swiss watch exports slid in July amid plunging shipments to Asia, as Chinese tourists bought more timepieces in Europe and avoided South Korea following the outbreak of a deadly virus.
Exports fell 9.3 percent to 1.9 billion Swiss francs ($2 billion), according to figures released Thursday by the Federation of the Swiss Watch Industry.
Sales to China tumbled 40 percent, compared with a 49 percent increase in July 2014. Shipments were down 20 percent to South Korea and 29 percent to Hong Kong, offset partly by higher exports to Europe.
“The China export number may be shocking on first glance, but it needs to be compared to the extremely high exports of last year,” said Rene Weber, an analyst at Bank Vontobel in Zurich. “Chinese tourists travelled to Europe to buy more Swiss watches, so it shows the strength of tourism in Europe.”
Switzerland’s watch industry has been struggling in China since 2012, when the country began a crackdown on extravagant spending among government officials. Last year’s political protests in Hong Kong, where wealthy Chinese purchase watches and jewelry at lower tax rates than on the mainland, still weigh on the industry.
Swatch Group shares fell 1.5 percent to 376.30 Swiss francs at 9:04 a.m. in Zurich. Investors have increased bearish bets on the biggest maker of Swiss watches to a record. Short interest reached 18 percent of shares outstanding, more than any other company in the Swiss Market Index.
The decline in watch shipments to South Korea came after the country faced an outbreak of the Middle East Respiratory Syndrome, which Weber said kept Chinese tourists away. The country said the virus was no longer a concern on July 28.
The debut of the Apple Watch is an additional cause of worry for the Swiss watch industry, as it may lead retailers to reduce orders of timepieces on concern of rising competition. Shoppers may also forgo a Swiss watch in favor of an Apple Watch as they are in similar price segments.
BLOOMBERG