“There comes a time when one must choose his camp.” If not, one leaves himself open to retaliation. This is what the author of this warning, Patrice Besnard, the Délégué Général of the French Chamber of Watchmaking and Microtechnics (CFHM), modestly calls “compensation demands.” Besnard, speaking in the name of watch and component parts manufacturers in the European Union, is addressing his partners in the Federation of the Swiss Watch Industry (FH). Watch out, he is basically telling them, don’t fiddle with the regulations, or it will mean war. Economic war, of course. The stakes: the definition of the term Swiss Made, which is to the watch world what the Nile is to Egypt - a benediction.
On the Swiss side, there is an inclination to strengthen the conditions governing the utilization of this term. A 1972 agreement between Switzerland and the European Economic Community established the criteria for using the appellation Swiss Made. To carry this notation, a watch must be equipped with a Swiss movement, be assembled in Switzerland and be submitted to a final check in that country.
Some Swiss manufacturers want to include the cases and bracelets in the list of criteria. In other words, these items must be produced in Switzerland. This would deprive watch producers in the European Union, which today supply cases and bracelets for watches stamped Swiss Made, of an important market (in 2003, a third of the cases, both in value and quantity, imported by Switzerland originated from the European Union; concerning bracelets and straps, it accounts for only a sixth in quantity but a half in value). Jean-Daniel Pasche, President of the FH, confirms that this topic is currently under discussion. So just who is asking for a strengthening of the criteriaı Answer: manufacturers in Geneva and in the Vallée-de-Joux area, or in other words, the Swiss haut de gamme sector. With globalization and the Asian foray into the watch market, especially the Chinese, the Swiss fear a devaluation of Swiss Made. And, as it stands now, there are many Swiss producers, in the low and mid-range market segment, that equip their watches with cases and bracelets made in Asia. Be wary, warn the Swiss watch lords, of producing too much abroad, as it will dilute the image of Swiss Made and weaken our strike force. Over time, we will all be the losers.
It would seem that the message has been heard. At the last BaselWorld, François Thiébaud, the President of the Swiss exhibitors and CEO of Tissot, a brand which, by its own admission, imports a portion of its material from Asia (see Europa Star 1.05), affirmed in an article published in the newspaper L’Impartial (March 31, 2005), that the appellation Swiss Made could only be used in the future for watches that are 100 percent manufactured in Switzerland. Additionally, the local work force would be the winner.
During the BaselWorld period, the mixed watch commission representing the European Union and Switzerland met in Geneva. The Swiss Made topic, which could very well become a crisis, was brought up. The commission is supposed to meet again in September. Between now and then, Swiss manufacturers that are members of the FH will perhaps have chosen their “camp,” as Patrice Besnard has invited them to do.
In terms of jobs, European watchmakers depend on the demand from Swiss manufacturers. But where do the latter market a part of their productionı Answer: in the countries of the European Union. Thus, there is substance behind the threat from the Délégué Général of the CFHM: if Switzerland no longer allows us to deliver bracelets and cases, we will complicate its access to the European market by reintroducing customs duties. “From a legal point of view,” reminds Jean-Daniel Pasche, “it is the Swiss Federal Council that has jurisdiction over changing the regulations of the 1972 accord. Naturally, all changes would involve agreement with the European Union.”
Patrice Besnard poses a question: “What is the position that European watch producers, including the Swiss, can occupy when faced with the formidable rise in power of Asian manufacturers and consumerismı” He leaves this thought with his Swiss partners: “You are not sheltered from the re-purchasing of your brands by Chinese billionaires. Let’s unite our forces against Asia. Make us your favoured suppliers. Choose the European camp.”
It is not only Chinese textiles that provoke terrible migraines.


Source: June-July 2005 Issue

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