Japan Becomes a Rising Star for the Swiss Watch Industry
New York Times, January 17, 2017
TOKYO — Once considered Switzerland’s biggest rival in watchmaking, Japan is fast becoming its former foe’s best customer.
Not only has it overtaken mainland China as the No. 3 market for Swiss watch exports worldwide, but Japan has proved more resilient to the swings of the global economy than Switzerland’s top two markets, Hong Kong and the United States.
As the watch trade gathers in Geneva this week for the Salon International de la Haute Horlogerie, all but forgotten is the fact that Japanese quartz technology decimated the Swiss mechanical industry in the 1970s, putting 60,000 Swiss watchmakers out of work. Instead, Japanese demand for Swiss watches — along with the question whether the strength of the Japanese yen will help or hurt business — is expected to be a hot topic at the show, with watch executives eager to focus on positive news amid declining sales.
For the first 11 months of 2016, total watch exports dropped 10.4 percent from the prior year to 17.7 billion Swiss francs, or $17.2 billion, according to the Federation of the Swiss Watch Industry. Exports to Hong Kong plunged 25.9 percent, and those to the United States fell 10.6 percent. The slide in Japan, on the other hand, was a mere 3.9 percent.
With several high-profile watch boutique openings in and around Tokyo over the past six months, plus more scheduled for 2017, Japan is emerging as a mature market with room to grow.
“We’re kind of in start-up mode in Japan,” said Steve Amstutz, vice president and chief commercial officer of Parmigiani Fleurier, a Swiss luxury brand expanding its footprint in Japan. “The market has changed over the past five, 10 years. It went from being an exclusively domestic market to one where there is a travel retail business, meaning overseas foreigners are coming to Japan and buying luxury products from Europe.”
The bulk of those foreigners are Chinese tourists who are avoiding Europe over fears of terrorism. Instead, they are spending their money closer to home, at luxury boutiques in Japan and South Korea. The Japanese have even coined a term for Chinese spending: bakugai, which translates to “explosive buying.”
Guido Terreni, global managing director of Bulgari Watches, said that in 2015, when Chinese tourism peaked, big spenders from China accounted for 10 to 15 percent of the brand’s timepiece sales in Japan.
But there’s more to the Swiss watch industry’s increasingly cozy relationship with Japan than hordes of Chinese tourists. In the Japanese, the Swiss have found arguably their most formidable clients. “It’s a very interesting market, but it’s a very demanding market,” said the avant-garde watchmaker Richard Mille, who opened a boutique in Tokyo’s Ginza district five years ago and plans to open two stores, in Osaka and Kobe, later this year.
“The Japanese love technical details, so we had to do a lot of literature to explain the concept of the brand,” Mr. Mille added.
Elizabeth Doerr, co-founder of the watch blog Quill & Pad, said the Japanese hold a special place in their hearts for the revered independent Swiss watchmaker Philippe Dufour.