Yves Bugmann readily acknowledges that he became president of the Federation of the Swiss Watch Industry at a difficult moment.
During a recent interview at the headquarters of the federation, a nonprofit trade organization, he grabbed his black-rim glasses before pointing at some of the quarterly watch export statistics displayed on his computer screen. “We come from two tremendous record years in 2022 and 2023,” he said. “Export volumes were up; the export value was 26.5 billion Swiss francs, and we reached 65,000 employees.
“2024 is much more complicated.”
As many watch brands do not report revenues, export figures compiled by the federation are routinely used to indicate the state of the market.
According to Mr. Bugmann, the main problem has been a decline of 21.6 percent in exports to China in the first half of 2024, compared with the same period in 2023, and a decline of 19.9 percent to Hong Kong in the same period (the federation tallies exports to Hong Kong separately from those to mainland China).
He said the reduced demand in China was linked to a general decline in its consumer confidence and the country’s problems in the real estate sector, where sales were down and millions of homes had been paid for but not delivered. “But other markets like Japan and the United States are performing quite well, or very well,” he said, stressing that sales differ from brand to brand.
Oliver Müller, a watch analyst and the founder of LuxeConsult, which collaborates with Morgan Stanley on an annual watch industry report, was less diplomatic. “The export statistics don’t say anything about sellout: final clients buying watches,” he said, adding that he expects sales to decline an average of 5 percent across all Swiss brands this year.
“Of course, the big ones — Rolex, Patek, Audemars Piguet and Richard Mille — will do OK. They will also compensate the stagnation with price increases. But beyond that field of champion brands, some brands are down 30 to 40 percent when you look at sellout.”
Still, he added, “on average the Swiss watch industry has had a 4.2 percent growth per year since 2000. This is sustainable — you can’t expect two-digit growth year after year.”
And he noted that there had been a spike in the low-price segment, a category that had been stable in recent years, but with just half the exports it had in 2015. “Some brands do a very good job to reach out to Generation Z,” he said. “Just look at the Tissot PRX and the MoonSwatch, which is responsible for Swatch’s 60 percent growth in 2023.”
Experimenting With Materials
“A watch is a nonessential product, you don’t need a watch to survive,” Mr. Bugmann said. “But from the long-term perspective I am still very confident for the Swiss watch industry, because we have very interesting products.”
He cited the continuing experimentation with materials such as ceramics, titanium and bimetal (gold and steel). Those advances as well as the annual production increases in the number of high-end artisanal watches in precious metals are examples of what Mr. Bugmann calls the industry’s “unique position of history and brand value.”
Mr. Bugmann, a lawyer by profession, grew up in the village of Döttingen, a small community in the northern German-speaking part of Switzerland. It now has about 4,300 residents.
As most of the watch industry is in the French-speaking west of the country, he knew little about watches until he began studying law and intellectual property rights at the University of Zurich. “My watch interest started when I got to know about its exceptional, centuries-old history, and then I learnt about the designs, the brands that make watches so important in Switzerland and on a worldwide level,” he said adding that over the years he really has come to love watches and has amassed a modest collection that he said is “all Swiss, of course!”
After earning a master’s degree in law, in 1999 he started working as lawyer at the Federal Institute of Intellectual Property in Bern, Switzerland, dealing with trademark, patent and design issues.
Twenty years ago he joined the federation to head its legal division, directing the work of 18 employees against counterfeits; application of the Swiss Made designation, which indicates that a timepiece was substantially made within the country; and other topics. (The team now numbers 20.)
The federation was established in 1982, the result of a merger of the Swiss Federation of Watch Manufacturers’ Associations (founded in 1876 with a different name) and the Swiss Chamber of Watchmaking (founded in 1924). It now represents 435 companies, or about 90 percent of all Swiss watch brands and industry suppliers.
The federation’s 44 employees are divided among three offices: 40 in Bienne, two in Hong Kong and two in Tokyo. They provide legal, economic and commercial services to members in Switzerland and abroad, while also trying to coordinate policies and laws for their benefit.
Harmonizing national laws that affect the watch industry has been one of the federation’s key focuses, Mr. Bugmann said: “If rules are different in different countries, it becomes difficult to export watches.”
As an example, he cited Reese’s Law, U.S. legislation signed in 2022 by President Biden that requires products such as quartz watches to have secure battery compartments and battery packaging to have stronger warning labels. (Reese Hamsmith was an 18-month-old in Texas who died after swallowing a button battery from a remote control.)
In the European Union, however, the tendency is to make battery swaps as easy as possible to ensure consumers do not throw away products at the end of a battery cycle.
“It is a headache when you must make different products for different markets,” Mr. Bugmann said. “But of course we comply with Reese’s Law — our members implemented this in a very short time frame.”
Work Against Fakes
Watch brands account for 170 of the federation’s 435 members, and one of them is Oris, an independent maker known for its environmental efforts.
“We use the federation’s legal services, especially when it comes to export, and we support their work against fakes,” said Rolf Studer, Oris’s co-chief executive.
Mr. Studer said he had noticed that the availability of fakes seemed to parallel the state of the industry. “After the pandemic, it is now back to normal, and it seems like fakes are also gaining speed again,” he said. “Lately we have seen really good-quality fakes of Oris Aquis.”
Mr. Bugmann agreed that the quality of fakes had improved, “but there is still a huge gap from counterfeit to Swiss watches, especially when looking at the movements. Then you can clearly distinguish a real watch from a fake watch.”
Apart from the obvious theft of intellectual property, he also stressed that sellers of fake watches are often linked to organized crime and money laundering. To fight fakes, Mr. Bugmann said, the federation has a unit dedicated to closing online channels that distribute them, including on Alibaba, Instagram and Facebook Marketplace.
He said the unit intercepted more than a million fraudulent online offers each year and — together with local law enforcement in countries such as China, Saudi Arabia, United Arab Emirates and Turkey — seized and destroyed millions of fake watches annually.
Many such efforts were developed in tandem with Juerg Herren, the head of legal services at the federal intellectual property institute and vice president of the nonprofit organization Stop Piracy. “Yves? The first words that comes to mind is he’s a very kind guy — but don’t let that fool you,” Mr. Herren said. “Because he is an excellent lawyer, extremely confident and good with people. He is very, very diplomatic, but he knows what he wants.”
Mr. Herren, who was born and raised in Bienne, said the work of the federation — especially its industry statistics — had been a constant topic around town for decades because people wanted to know whether they would still have jobs tomorrow.
“Watches are of an emotional importance to Swiss people,” he said. “You think watches, chocolate and mountains when you think of Switzerland.”
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