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The Swatch Group’s beginnings in China

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October 2021


The Swatch Group's beginnings in China

What lies behind the Swatch Group’s strong presence in the Chinese market? What were the main stages of its expansion in the country? The Europa Star archives provide some answers to these questions, and shed some light on the factors behind its growth.

I

t’s commonplace these days to emphasise watch manufacturers’ dependence on China. Over the past twenty years, Swiss watch exports to the country, as well as the growth in Chinese spending around the world, have increased significantly.

The Swatch Group, which has a particularly strong presence in China, is a case in point. Since the company publishes the value of its sales in Greater China (including Hong Kong and Taiwan), we know that the share of this market rose from 23% of the group’s turnover in 2008 to 36% in 2019 – and then to a peak of 44% in the year 2020, which was heavily impacted by COVID-19.

What’s behind the Swatch Group’s strong presence in the Chinese market? What were the main stages of its expansion there? The Europa Star archives provide some answers to these questions and shed light on some relevant growth factors.

First of all, it’s important to note that the Chinese watch market experienced significant growth between the two world wars, before declining sharply in the post-war period. The arrival of the Communist government in 1949 put an end to hopes of recovery. By the early 1950s, foreign watch retailers had abandoned Shanghai, and Hong Kong became the new centre of the watch trade in the region.

In the early 1950s foreign watch retailers left Shanghai, and Hong Kong became the new centre of the watch trade in the region.

 In the 1950s, English names disappeared from Shanghai's watch stores. The market in mainland China closed down, and import activities relocated to Hong Kong.
In the 1950s, English names disappeared from Shanghai’s watch stores. The market in mainland China closed down, and import activities relocated to Hong Kong.
©Europa Star 1957
In the 1950s, Hong Kong established itself as a commercial stronghold for watch sales in the Far East and to mainland China.
In the 1950s, Hong Kong established itself as a commercial stronghold for watch sales in the Far East and to mainland China.
©Europa Star 1951

The career of Marc Croset, Omega’s representative in China in the 1920s, provides a striking example of how the situation evolved. His success led him to leave his employer to found his own business in Shanghai, The Croset Agencies, which contributed to the growth of Omega and Tissot sales in the country. However, the company transferred its activities to Hong Kong in 1948-1949. Renamed Omtis, it continued to represent Omega’s interests in the region and ensured a permanent presence in China – notably through smuggling.

Swiss importer Marc Croset, who represented Omega and then Tissot in China for several decades, left Shanghai for Hong Kong at the end of the 1940s. There, he helped to cement the brands' reputation in the Far East and as far afield as Australia.
Swiss importer Marc Croset, who represented Omega and then Tissot in China for several decades, left Shanghai for Hong Kong at the end of the 1940s. There, he helped to cement the brands’ reputation in the Far East and as far afield as Australia.
©Europa Star 1951
Hong Kong watchmakers were invited by Omtis (founded by Marc Croset, Omega and Tissot's representative in the region) to visit Switzerland in the 1960s.
Hong Kong watchmakers were invited by Omtis (founded by Marc Croset, Omega and Tissot’s representative in the region) to visit Switzerland in the 1960s.
©Europa Star 1964

However, by that point, Swiss watch brands had all but disappeared from the Chinese watch market. The opening of technical watch maintenance services (servicing and repair) would provide the opportunity for an eventual return to the country. In 1980, the two major rival manufacturers Longines and Omega each opened their own centres in Shanghai. This also gave them a visual presence on the city’s streets. The same year, in Beijing, a shared maintenance and sales centre was opened under the aegis of the FH.

The installation of technical centres for watch servicing and repairs would provide the opportunity for Swiss manufacturers to return to China.

The way was paved for Swiss brands to return to Mainland China by the opening of technical centres, such as this Longines service centre in Shanghai, from our 1980 archive.
The way was paved for Swiss brands to return to Mainland China by the opening of technical centres, such as this Longines service centre in Shanghai, from our 1980 archive.
©Europa Star 1980
In the same year, Omega also opened a technical centre in Shanghai. Residents of Mainland China once again saw store windows advertising Omega, Longines and Tissot.
In the same year, Omega also opened a technical centre in Shanghai. Residents of Mainland China once again saw store windows advertising Omega, Longines and Tissot.
©Europa Star 1980

Thus, when Swatch Group was founded in 1983, the new company was already present on Chinese territory. The watch market had not yet been liberalised, and business growth was minimal. In 1992, the Chinese government adopted a policy that encouraged investment by foreign companies. Two years later, Nicolas Hayek set out his strategy for expansion in China in an interview published in Europa Star. He explained his intention to open a large production centre there – an ETA subsidiary was inaugurated in Shenzhen in 1996 – and to launch an entry-level ‘Made in China’ watch on this market.

In 1992, the Chinese government adopted a policy encouraging investment by foreign companies. Nicolas Hayek outlined his strategy for expansion in China to Europa Star.

In an interview with Europa Star from 1994, Nicolas Hayek explained his ambitions for Swatch Group in China. Of note was the idea of launching a mass-produced brand at low cost, specifically for the Chinese market (read the full interview in our online archive).
In an interview with Europa Star from 1994, Nicolas Hayek explained his ambitions for Swatch Group in China. Of note was the idea of launching a mass-produced brand at low cost, specifically for the Chinese market (read the full interview in our online archive).
©Europa Star 1994
Few people remember that ETA set up in Shenzhen in the mid-1990s to compete with Seiko and Citizen's movement manufacturers.
Few people remember that ETA set up in Shenzhen in the mid-1990s to compete with Seiko and Citizen’s movement manufacturers.
©Europa Star 1994

Business grew only slowly during the 1990s, however. Swatch Group was unable to establish itself in the mass market, and luxury watches still represented only a small niche. It was mainly after 2000 that China emerged as the new Eldorado for Swatch Group. In 2004, the unveiling of an Omega clock displaying the countdown to the opening of the Beijing Olympic Games was a perfect illustration of this shift towards luxury.

It wasn’t until the 2000s that China began to emerge as the new Eldorado for the Swatch Group.

Often categorised in the mid-range elsewhere, all the Swatch Group brands were considered luxurious in China, as representatives of some of the brands noted in the columns of Europa Star. Thanks to this strong image, the potential for growth was enormous.
Often categorised in the mid-range elsewhere, all the Swatch Group brands were considered luxurious in China, as representatives of some of the brands noted in the columns of Europa Star. Thanks to this strong image, the potential for growth was enormous.
©Europa Star 1997
In the 2000s, the marketing offensive of Swiss watch brands around the world, and in particular of heavyweight Omega in China, relied among other things on celebrity ambassadors.
In the 2000s, the marketing offensive of Swiss watch brands around the world, and in particular of heavyweight Omega in China, relied among other things on celebrity ambassadors.
©Europa Star 2008

The basis for conquering the Chinese market was no longer simple, cheap watches for the masses but luxury brands such as Omega, with its ambassadors and boutiques, as well as its business partner Hengdeli, a distribution company. As for ETA’s Chinese subsidiary, it closed its doors around 2005, as the Swatch Group concentrated its industrial activities in Asia within a gigantic production unit in Thailand.

Faced with price erosion in entry-level movements, ETA brought its Asian activities back to Thailand: henceforth, the Chinese market would primarily focus on luxury.
Faced with price erosion in entry-level movements, ETA brought its Asian activities back to Thailand: henceforth, the Chinese market would primarily focus on luxury.
©Europa Star 2005

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