Could the industry-wide obsession with China have run its course? For several years now, watchmaking and jewellery industry leaders have been fixated on markets in the Far East, where the tigers have been roaring with unrestrained ferocity. And who can blame them, given the extraordinary potential of the region, which is inexorably shifting the centre of gravity of global growth. However, the Covid pandemic reshuffled the deck, at least for a while. Although everyone expected the Chinese dragon to rebound in spectacular fashion, its return has proved less vigorous than anticipated, largely due to the prolonged lockdown. Chinese economic growth barely exceeded 5% in 2023, and forecasts for the current year are even more pessimistic, with GDP expected to grow by a modest 4.6%, according to a Reuters survey. Swiss watch export statistics provide a glimpse of this trend: although 2023 ended with a 7.6% increase in shipments of watch products to China compared to the previous year, which aligns with the average across all markets, a comparison with 2021 still shows a decline of nearly 7%.
While the statistics provided by the Federation of the Swiss Watch Industry (FH) do not reflect sales to end customers, they nevertheless point to an unmistakable general trend. Data for the United States is particularly telling, with a 7% increase in exports last year compared to 2022 and, more significantly, a 35% increase over two years. In absolute figures, at the end of last year the United States represented a market worth CHF 4.2 billion in terms of watch exports, compared to CHF 2.8 billion for China. Not long ago, in 2020, this order was reversed, with an all-powerful China occupying first place (CHF 2.4 billion), ahead of the United States (CHF 2 billion) and Hong Kong (CHF 1.7 billion). Crossing the Pacific, the outlook could not be more different. “The trend observed in the United States is consistent with the economic climate and the performance of the stock market. The feeling of wellbeing that can currently be observed there is probably a contributing factor. We have seen a gradual acceleration throughout the quarter, peaking in December,” notes Burkhart Grund, CFO of Richemont, referring to the group’s Q4 results for the 2023 financial year. This provides a perfect demonstration of the positive results from the American market, where the group achieved sales growth of 8% at constant exchange rates, exceeding 10% in December.
The rush to the Big Apple
The Mercury Project’s survey on watch and jewellery retail sales in the United States notes a particularly favourable holiday season for the sector. “In a year marked by concerns about inflation, rising interest rates and household debt, American consumers were back in watch and jewellery boutiques at the end of 2023,” the consulting firm explains. In December alone, sales increased by 5.6% compared to the previous year, after a 3.1% increase in November, helping to boost the last quarter. For 2023 as a whole, the Mercury Project puts watch and jewellery retail sales slightly down by 2.2% to $96 billion, a result very close to the record $99 billion recorded in 2022.
To illustrate its point, the Mercury Project also cites the results of Watches of Switzerland in the United States, up 8% in the last quarter of 2023, as well as those of Walmart, the USA’s number two in the sector, with estimated annual sales of $3.3 billion in 2022. From November 2023 to the end of January 2024, Walmart’s watch and jewellery turnover increased by 4%. The favourable climate in a market that is once again easily the biggest consumer of Swiss watch exports is clearly incentivising investment. Uncle Sam has overseen the opening of countless new stores in recent months, many of them in New York, where everyone is rushing to establish a presence. Cartier has just opened its third point of sale there, while Chanel has launched an exclusive watch and jewellery boutique on 5th Avenue. They are joined by A. Lange & Söhne and Panerai, now on Madison Avenue, as well as Breitling, IWC, Swarovski and Citizen. Breitling and Tiffany have launched major refurbishment projects. In 2024, it’s not just the elections that are causing a buzz!
