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Swiss watchmakers turn pessimistic as smartwatch threat looms

ZURICH — Swiss watchmaker executives are the most pessimistic in four years as an increasing minority see a threat from smartwatches as the strong franc and a drop in demand in China buffet the industry, a Deloitte report showed.

A technician works on the mechanism of a handmade wristwatch at the Montblanc luxury watch factory in Le Locle, Switzerland. Photo: Bloomberg

A technician works on the mechanism of a handmade wristwatch at the Montblanc luxury watch factory in Le Locle, Switzerland. Photo: Bloomberg

ZURICH — Swiss watchmaker executives are the most pessimistic in four years as an increasing minority see a threat from smartwatches as the strong franc and a drop in demand in China buffet the industry, a Deloitte report showed.

Deloitte found 41 per cent of executives were negative about 12-month prospects while 14 per cent were positive, according to the study, released today (Sept 15). That's the first time gloominess beat optimism since the market researcher began the annual study in 2012.

"The Swiss watch industry is at a turning point," Deloitte said.

Swiss watchmakers have struggled with a shrinking Chinese market since the country's government started discouraging exuberant spending among officials in late 2012. The surge in the franc this year has also spoiled the mood, with 69 per cent of executives citing it as the biggest risk for the industry.

Brands have scrambled to add electronic functions to their products as the Apple Watch arrived in Swiss stores in June. Compagnie Financiere Richemont SA's Montblanc brand introduced an "e- Strap", while Swatch Group and Mondaine have also announced smart devices. Apple is also looking to add a touch of luxury to its smartwatch, evidenced by its collaboration with Hermes to make bands for the Apple Watch.

A separate survey by Research Now showed that more than 60 per cent of Chinese consumers plan to purchase a smartwatch in the next year.

The percentage of watch executives considering smartwatches to be a growing competitive threat rose to 25 per cent this year from 11 per cent last year.

Deloitte's survey was conducted with more than 50 watch executives earlier this year. The Research Now survey encompassed 3,000 participants in China, France, Italy, Japan, Switzerland and the US. BLOOMBERG

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