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When watchmakers face political risk: selling watches in the USSR

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April 2022


When watchmakers face political risk: selling watches in the USSR

Political risk has always been an issue for multinational companies in certain countries, as the recent closure of luxury stores in Russia shows. This is not the first time a frost has descended on relations between Russia and the West. It is worth looking at the relationship between watchmakers and the Soviet Union during the Cold War, through the Europa Star archives.

T

he closure of luxury stores in Russia as a result of the war in Ukraine is a reminder of the major challenge that political risk represents for multinational companies in certain countries. This phenomenon is by no means new; it dates back to the earliest days of business globalisation. Expansion into the Russian market is an excellent example of the need to adapt to political conditions. Which watch companies developed activities in the Soviet Union during the Cold War? What were the foundations for their expansion, and what were the challenges? The Europa Star archives help to answer these questions.

Initially, Swiss watchmakers developed specific strategies to make their brands known in the USSR. Cooperation with Soviet cosmonauts was a first opportunity to establish themselves in this highly protected market. In 1964, the Geneva-based company Camy Watch supplied Soviet cosmonauts with precision watches. They were presented as chronometers, although the firm did not obtain any official certificates at the time. Yuri Gagarin is said to have been a Camy user. However, in 1975, during the joint Apollo-Soyuz mission, it was Omega watches that were worn by the American astronauts and the Soviet cosmonauts.

In 1964, Europa Star mentions the models by Geneva brand Camy worn by Soviet cosmonauts Yuri Gagarin and Gherman Titov.
In 1964, Europa Star mentions the models by Geneva brand Camy worn by Soviet cosmonauts Yuri Gagarin and Gherman Titov.
©Europa Star 1964

Sports sponsorship was another important way to try to build brand awareness in the Soviet market. Several companies offered their watches to Soviet sportsmen at events held outside the communist bloc. In 1966, for example, Enicar supplied watches to members of the Soviet national football team participating in the World Cup in Great Britain. The USSR finished fourth after losing to Portugal in the third place playoff.

In 1966, the legendary Soviet goalkeeper Lev Yashin and his teammates received Enicar models during a visit to Switzerland.
In 1966, the legendary Soviet goalkeeper Lev Yashin and his teammates received Enicar models during a visit to Switzerland.
©Europa Star 1966

In 1983, it was Aubry Frères who offered Doxa watches to Soviet footballers when they visited Switzerland for a friendly game.

In 1983, Soviet footballers received Doxa watches.
In 1983, Soviet footballers received Doxa watches.
©Europa Star 1983

However, it was primarily through sports timekeeping that a few brands were guaranteed real media exposure on Soviet territory. Swiss Timing, which at the time included Omega, Longines and Heuer-Leonidas, won the contract for the Moscow Olympics in 1980. This was an opportunity for these three brands to strengthen their reputation among the wider Russian public.

In the face of competition from local brands, Swiss Timing (Omega, Longines and Heuer-Leonidas) won timekeeping contracts for the Moscow Summer and Lake Placid Winter Olympics, both held in 1980. Our editorialist sees this as “proof of the supremacy of Swiss horological products in both the communist and capitalist countries.”
In the face of competition from local brands, Swiss Timing (Omega, Longines and Heuer-Leonidas) won timekeeping contracts for the Moscow Summer and Lake Placid Winter Olympics, both held in 1980. Our editorialist sees this as “proof of the supremacy of Swiss horological products in both the communist and capitalist countries.”
©Europa Star 1978

In a tense geopolitical climate, Swiss Timing timed the 1980 Winter Olympics in Lake Placid, USA. The Moscow Olympics held in the summer of the same year were boycotted by around fifty nations, including the United States, in protest against the USSR's invasion of Afghanistan.
In a tense geopolitical climate, Swiss Timing timed the 1980 Winter Olympics in Lake Placid, USA. The Moscow Olympics held in the summer of the same year were boycotted by around fifty nations, including the United States, in protest against the USSR’s invasion of Afghanistan.
©Europa Star 1978

The impact of these various events was minimal, however, as the Soviet Union remained largely closed to Western products. According to Swiss foreign trade statistics, the USSR consistently accounted for less than 0.1% of total Swiss watch exports. Advertising efforts had no effect.

The Soviet Union had its own watch industry, which was protected by import duties. National watch production rose from 16 million pieces in 1960 to almost 40 million in 1980, making the USSR the world’s third-largest producer after Switzerland and Japan. The Europa Star archives bear witness to this tremendous growth.

In 1982, Soviet watches were exported to more than 100 countries, as this advertisement boasts.
In 1982, Soviet watches were exported to more than 100 countries, as this advertisement boasts.
©Europa Star 1982

The special charm of the watch made in the USSR, “A breeze from the East”
The special charm of the watch made in the USSR, “A breeze from the East”
©Europa Star 1989

The end of the communist regime and the break-up of the USSR was a turning point in the horological history of the region. The adoption of economic liberalism and the opening of borders represented a major political risk for the Soviet watch industry – one that would prove fatal. Russian watch production collapsed to 4.8 million pieces in 2000 and virtually disappeared over the following decade. A few niche brands still survive, but they are not significant in terms of market share.

The fall of the USSR also marked the collapse of the local watch industry.
The fall of the USSR also marked the collapse of the local watch industry.
©Europa Star 1992

Visit to the Moscow Watch Salon in 2004, as some Russian brands try to relaunch
Visit to the Moscow Watch Salon in 2004, as some Russian brands try to relaunch
©Europa Star 2004

Today, Raketa is the Russian brand with the highest profile on both the national and international markets. But the current geopolitical situation makes its future uncertain (read our recent interview with its director).
Today, Raketa is the Russian brand with the highest profile on both the national and international markets. But the current geopolitical situation makes its future uncertain (read our recent interview with its director).
©Europa Star 2012

For Swiss watchmakers, the regime change was an opportunity to finally regain access to the market, which had been closed since 1917. Watch sales accelerated and Swiss watch exports to Russia rose from barely one million francs in 1990 to a peak of 280 million in 2013. Swiss brands now dominated the Russian market, and in 2006 Europa Star launched a Russian-language edition.

Between 2006 and 2013, Europa Star published an edition for the Russian-speaking world from Ukraine, to cater to the strong interest in watches in the area. But that was before war hit the country. A Russian-language website still exists.
Between 2006 and 2013, Europa Star published an edition for the Russian-speaking world from Ukraine, to cater to the strong interest in watches in the area. But that was before war hit the country. A Russian-language website still exists.
©Europa Star 2007

A Blancpain advertisement for the Russian-speaking world
A Blancpain advertisement for the Russian-speaking world
©Europa Star 2006

An editorial in Russian in Europa Star
An editorial in Russian in Europa Star
©Europa Star 2006

European sanctions following the annexation of Crimea put an end to this rapid expansion. Exports fell below 200 million, experiencing a brief revival in 2021, before the war with Ukraine broke the momentum. The unpredictability of the Russian regime illustrates the crucial importance of evaluating political risk for companies operating in unstable environments.

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