The grand dance of the hypocrites

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October 2011

Who, besides perhaps the directors of the Federation of the Swiss Watch Industry, really wants to enforce the rules regarding the Swiss Made label? Well, frankly, no one! Contrary to what is shouted from the roof tops—a way to proclaim their own virtue—a large number of watchmakers feel that the widespread ambiguity surrounding the criteria defining what is, and what is not, Swiss Made is quite advantageous. Conveniently, it leaves ample space for all sorts of small deals between cronies (and sometimes between those with less than honourable intentions).

The battle for stricter conditions in order for a watch to be labelled as “Swiss Made” is like not seeing the wood for the trees. But this isn’t even where we should be looking, as some individual initiatives are starting to show. A few examples immediately come to mind. The small brand Hautlence has chosen to replace “Swiss Made” on its dials with the term “Horlogerie Suisse”. This change is obviously not because the brand cannot meet the Swiss Made criteria. On the contrary, Hautlence timepieces largely exceed these standards since its watches are 90 per cent Swiss. In this particular example, the brand’s latest and highly complex model is Swiss in all respects except for its unique sapphire crystal. No manufacturer in Switzerland dared to make this particular crystal, and Hautlence found only one company that was up to the task, and that company was Chinese.

Bédat & Co. have registered their own certificate, the AOSC® (Appellation d’Origine Suisse Certifiée, or Swiss Certified Label of Origin), which guarantees that the watch has been assembled in Switzerland using a case, movement, dial and hands manufactured in Switzerland.

Another example is Patek Philippe. When the brand decided to create its own quality label, the Patek Philippe Seal, the venerable company broke new ground. After all, it is not the Swiss Made label that confers quality upon a watch —it is the brand itself that must prove it can match its own reputation and provide the quality expected by its consumers. Thus, we are seeing the slow exit of the term Swiss Made, which is losing its validity after having been open to different interpretations for so long. (And increasing the percentage to 60 or 80 will not change things much.)

But, the real reasons for the Swiss Made fight lie elsewhere, namely in the fierce battle over the supply of mechanical movements, a battle that is giving rise to many different manoeuvres. One example was seen in a recent article in the prominent Swiss newspaper, Le Temps, which denounced the practices of Sellita that, horror of horrors, sells Swiss Made mechanical movements to Hong Kong at the rate of “several tens or even several hundreds of thousands of pieces” (note the absolute imprecision in the numbers). This practice has been used by everyone, including the Swatch Group. Large numbers of these movements come back to Switzerland in the form of kits, with the case, dial, and hands made in China, and the final product receiving the Swiss Made label.

Watch industry observers see, in this attack on Sellita, an underwater torpedo launched by the Swatch Group with the aim of destabilising a competitor, whose growing size has begun to be a little more than worrisome. (In 2011, Sellita produced 800,000 in-house movements.) Starting in 2012, the Swatch Group will begin reducing the number of movements and assortments that it supplies to third parties. This reduction is provisionally authorised by the Swiss COMCO (the Competition Commission) pending the final conclusion of a report that will determine if this cutback is “an abuse of its dominant position” or not. While waiting for the next developments, which will take several years more, Sellita’s rising strength is visibly disturbing to the largest players in the watch arena.

In 2009, the announcement by Nicolas Hayek of the reduction in supply to third parties was thought to be healthy for the industry as a whole, since it would force the so-called “manufactures” to finally invest in their production capacities. It is essential, therefore, not to block the path of those companies that are rising to this challenge. Otherwise, it is the entire industry that may suffer.

Source: Europa Star October - November 2011 Magazine Issue