subir imagenThe new law is expected to enter into effect on Jan 1, 2017. From then on, all "Swiss Made" watches will have to be manufactured in compliance with the new industry ordinance: the “Swiss Made” designation will no longer apply to the just watch movement,
but will apply instead to the entire watch (with a possible exception of the strap/bracelet), whereas at least 60% of the watch’s manufacturing costs will have to be realized in Switzerland, with the watch, of course, also being assembled there. A jump from 50 to 60 percent may not sound like much – especially if we consider that it will have taken nearly an entire decade for the legislative organizations to conceive, approve, and implement the updates – but it will make a difference.
Practically, only half of the value of the movement is presently to be created in Switzerland, with no limitations being made to the origin of any and all other components, including crucially important parts such as the case, dial and hands. That changes if a manufacturer intends to mark not just the dial, but also the case as "Swiss Made": my understanding is that the case cannot be marked as such unless it meets similar requirements as the movement. With the new legislation – which now requires 60% of the cost of the entire watch to be incurred in Switzerland – a jump in the amount of Swiss made components finding their way into Swiss watches is therefore to be expected.
The question is how suppliers and Swiss watch brands will prepare for this development and what this will mean in terms of pricing and quality. Given that we still have over two years for the new legislation to take effect, we will be able to witness the changes this incurs on the manufacturing practices of the watch industry – and especially those competing in the low-mid price segments. Over the course of the past five or so years we have seen how deeply the severe reduction in the supply of ETA movements have affected the industry as a whole – those cut off from these supplies had to find alternative sources and/or develop their own movements. This new legislation will cut back on the quantity of purchasable components from outside of Switzerland, in some ways having a similar effect as what we have seen happen with sourced movements. Brands will have to look for new suppliers or start creating their own components.
Ultimately, watch companies in the middle to high-end segment will not be heavily affected, those competing in the "affordable Swiss watch market" – say, in the sub-$1,000 range – will however likely have to raise their prices somewhat once they will be forced to switch to generally more expensive, albeit also higher quality, Swiss suppliers.
ABTW
