Switzerland: The Reinvention of Watches

Those who ride at Zurich Airport in Switzerland have a small appetizer of all that is famous in the Alps. In the alleys, small cubicles sell chocolate. In the monorail, between the boarding terminals, you can hear bells ringing. But for those who travel there with money – by the way, most of it is stored in the country, a tax haven – what attracts attention is shops with traditional Swiss watches like Tissot watches, Rolex watches or Breitling watches, famous for the price, quality, and luxury they represent.

It’s easy to fool a shop window and forget that the Swiss watch industry is undergoing a moment of transformation. The Swiss watchmaker originated in the 16th century Protestant reformation. Huguenot craftsmen – mostly Calvinists – escaped persecution in France to Geneva, carrying watchmaking in their suitcases. The novelty is seen as a diversification opportunity for Swiss goldsmiths. With a stable society and visitors with a lot of money to spend, this industry naturally develops from generation to generation. Until smartphones and smart watches life arrives, and all stability goes into space.

According to data from the Swiss Watch Industry Federation, 2018 saw a 3.3% decline in watch exports – the third best-selling product in the country after chemicals and machinery – closed the year at 21.5 billion Swiss francs. Estimates for 2019 are also not too encouraging. Between January and October this year exports are estimated to be 10% lower than 2018.

There are several causes for the decline in this industry, which goes beyond competition with electronics manufacturers. The main ones come from Hong Kong and China, respectively, the first and third production destinations. The economic slowdown in these two markets has an impact on watch consumption. Other reasons for the decline in sales in the region are a series of actions taken by the Beijing government against corruption – Patek Philippe, which is $80,000, however, is more difficult to track down as bribes – and increased barriers for Chinese to visit Hong Kong, where watches are sold at cheaper price. Add to this the fact that South Americans, including Brazilians, have reduced their international travel, a problem for the flashy shops of Zurich Airport.

With the Golden Egg dead in China and there being no signs that other markets will increase their purchases in the coming years, traditional brands are starting to bet on smart watches and other cellular services.

One company that is eyeing this step is Swatch based in Bern with an annual revenue of $8.5 billion. The manufacturer partnered with Visa payment company when it launched the Bellamy model 3 years ago. Through online tools, you can upload credit to your watch, which functions like a prepaid card. The difference is, thanks to wireless technology, it is possible to complete a purchase without having to touch the clock on the card machine. Bellamy Swatch is a very friendly, uncomplicated, and universally accessible payment solution. More news will come in the future, always to meet the needs of consumers in a fun, easy and direct way.

This is related to the crisis of other watchmaking in the past, known as the “quartz crisis”. Swatch was founded in 1983 in response to the invasion of Japanese digital quartz watches, such as Casio and Citizen, in the entry segment in the 1970s. Made entirely of plastic and with an interchangeable colored bracelet – the advantage of fashion to make monochrome costumes, the swatch model was a rapid success, especially in the United States.

In addition to its visual appeal, Swatch’s success is based on the development of strong technology. To compete with the prices of Japanese devices, manual labor has been replaced by robotic processes. Another important innovation is the reduction of components needed for analog watches: from 91 parts normally used in mechanical watches to only 51.