Telling time for luxury industry selling it

Even although it is considered to be one of the sectors largely benefiting from the China-Swiss free trade agreement, Swiss watches are suffering shrinking sales in the Chinese market, its third-largest export destination in the world.

Latest data from the Federation of the Swiss Watch Industry show that Swiss watch exports to China reflected a clear decrease for the first three quarters of the year, contracting 14.7 percent to 1.03 billion Swiss francs ($1.05 billion), compared with the same period last year.

China is the third-biggest export market of Swiss watches, accounting for 7.7 percent of the country's total watch exports last year. The United States is the second-largest buyer of Swiss products, where sales accounted for 10.2 percent of the total in 2012.

The economic slowdown of the Chinese domestic economy and the downturn in the luxury market are believed to be the reasons for weak sales of Swiss watches in the market. Industry insiders say that because of a tariff cut resulting from the bilateral free trade agreement, Swiss watch manufacturers have to take measures to retain price stability and maintain profitability growth.

China and Switzerland signed a bilateral FTA in July. Gao Hucheng, Chinese minister of commerce, said the bilateral FTA will provide a good platform for Swiss watch companies' development in China and Switzerland will increase the import of Swiss advanced technology in the watch industry. In 2012, bilateral trade between China and the Swiss reached $26.3 billion. Swiss watch exports to China worth 1.653 billion francs.

However, influenced by the sluggish market demand, Swiss watchmaker Audemars Piguet has decided to close six of its 22 retail stores in the Chinese market and said it will slow its expansion in China. Francois-Henry Bennahmia, chief executive officer of the company, said that the golden developing age in the Chinese market has ended.

The New York Times reported that while reducing the scale of operations in China, China's watch imports from Switzerland are lower than two years ago.

Nick Hayek, CEO of Swatch Group, which owns Omega, said that it's natural that the yield from the Chinese market cannot be permanently positive because no one can register a 30 percent increase in a market every year.

"China is Switzerland's largest export market and China is also the world's largest watch and clock production base. But the gap between Chinese watches and Swiss watches is still very obvious. The industrial upgrading in the Chinese watch industry is ongoing," Zhang Hongguang, deputy-director at China Horologe Association, said.