#CoronetVirus : A Plague On All Your Watch Houses

Extinction level events do happen the last was a few million years ago for humans, for the watch industry it was the 1970’s and came with a quartz meteorite, recovery was painful and slow, but those that survived were, in theory, were all the fitter for it.

The scientists tell us we are due for another human E.L.E sooner rather than later, take your pick from, Super Volcano, Meteor Strike, Global Warming or Gamma Ray burst, the traditional watchmaking industry also is due another E.L.E, most think from exotic materials like silicon and carbon, which will change the face of the traditional craft, but perhaps something that “this way comes” might have other ideas, on what will cause the next New World Order in Horology

It apparently started in bats and somehow it has crossed over to humans and now it has crossed another “species boundary” into the world  of the mechanical watch

It has been clear for a number of years just how dependent the Swiss watch industry is on China, both sales made in China to the local middle classes and upward and even more importantly sales made in the rest of the world to Chinese Ex-pats and to the booming Chinese tourist trade, worldwide.

I personally know of Authorised Dealers throughout the UK who would attribute 50% or more of their sales to the Chinese and South East Asian tourist market and who depend to such a great extent on this market that the retailers are well known to have deals with local tour operators to ensure that that “bus” stops with them first.

Follow the Scottish Watches Instagram here

Furthermore, we are not just talking about the world of the “Coronet”. Rolex is obviously a big draw and the local Rolex AD is most certainly high on the list of “brand stops” for the tourist class, but more Jewelers worldwide don’t have the Coronet in stock than do, so let us be clear we are talking here about multiple luxury brands, like Longines, Mont Blanc, Breitling and a host of others

https://www.burlingtonarcade.com/

 

Ever wondered who is buying these watch brands in your local highstreet AD to make it worthwhile the dealer stocking them because you can’t think of a single person you know that has ever bought one….China that is who is buying them.

Ever noticed the number of Mandarin speakers your local AD employs, it is not a coincidence.

It is not just one each either, stories abound of ADs, worldwide, who will sell multiple watches to each Chinese tourists, at a pre-agreed discount, who will then effectively pay for their European vacation to Milan, London or Barcelona by profiting from trading back home and making vat reclaims on the watches they buy at discount while on holiday.

It is also not just the world of watches, when you see headlines where luxury brands are funding the fight against Coronvirus, you know it is  “Houston we have a problem” time, though Omega may avoid doing a limited edition for this one

So as China gives so it appears now that China takes away

Who would have thought that something measured on even finer scales than those used by watchmakers would be the source of next day of reckoning for the Swiss Watch Industry.

COVID-19

I have head stories about what it was like during the Quartz crisis, how the panic was palpable, how it felt to be part of an industry that had been stable for decades, in small towns and villages across Switzerland, now facing the unknown with no clue as to how to respond other than going bust, ganging up with others in crisis or simply waiting for the government to sort it all out for you.

Decades after the last biblical proportioned crisis hit Switzerland it looks like another is on its way as the pale horse of plague rides into town.

We know that Chinese Tourist traps worldwide are now entirely void of said tourists as well as the fact that even within China domestic tourism has also ground to a halt.

In Singapore hotel occupancy has dropped from 100% to less than 50%,

 

The Straits Times

 

Flight volumes worldwide have nosedived (sorry)…. I was going to say plummeted but decided against that one also

https://www.hotelmanagement.net/operate/coronavirus-casts-shadow-hospitality-industry-0

 

So as the Chinese have stopped buying is this then great news for your waitlisted Steel Sports (insert brand name here) model?

With due deference and sympathy to those suffering with everything this virus is bringing and the true “First World Problem” nature of the whole watch world, the answer will likely reveal even more issues within the industry than its dependence on Chinese buyers.

How much of your Swiss Watch is Chinese is also about to come to the fore. It has long been suspected that way more than what you might think of that Swiss Watch on your wrist may not be Swiss.

It is clear that following on from the usual Chinese business closures over Chinese New Year, that many manufacturers (and it is not clear how many are working within the watch world) are not reopening or are skeleton staff only at the moment and there are widespread travel bans throughout the core affected areas of China.

At the moment the definition of Swiss-made is very much tied up in value, 60% of the manufacturing cost and final assembly must be Swiss. Now we all know that if you define something like this in terms of costs, that this is where fancy accountants live and breathe and get you to 60% if that is the number you want, to get that stamp of authenticity.

So will that watch you have been waiting for suddenly become more available, I suspect for some it may well do. Said watches rather than shipping in an easterly direction Ex Switzerland may well be diverted more westward, but will this last?

Those like Rolex who claim/appear to be more vertically integrated than most should be best placed to simply keep production lines going and supply stock to where the demand remains

If it turns out that the watch brand you are particularly interested in is more dependant, on Chinese supply than you might think then, your wait could well not be cut short and it could get worse than that.

For sure some brands have moved such a large proportion of their supply chain to Asia that a medium-term closure of industry could well be at least the first and for some the last nail in their watchmaking coffin and we could well start to see business failures following on.

A number of non-Swiss brand watch companies, those that openly say that they are dependant on an Asian supply chain are already telling us at Scottish Watches that they are having issues, so I have little doubt that those that are not so open will also be experiencing what we call here “squeaky-bum-time” so if you hear of anything from your luxury Swiss branded AD then do get in touch. The Microbrand world is certainly starting to feel the pinch.

Now let us face it everything in the watch world is measured, tuned and influenced by Rolex, where they lead most if not all follow, and while others such as LVMH group, Swatch Group, Grand Seiko and Baselworld have all been media active around coronavirus, Rolex have made no comment of any significance that I can find.

Maybe Rolex is immune, maybe it reckons there is such a demand for its timepieces that are unfulfilled, with waitlists worldwide, that the dropping of say 50% of its market in China can be simply replaced elsewhere in the world or that it just forces its ADs to take more stock, whether they think they can sell it or not, Rolex, after all, are always fond of pointing out that they are a B2B business and not a B2C one or maybe just like a virus in Bats morphs to something potentially deadly in Humans a CorovaVirus could be capable of morphing into a CoronetVirus.

If that happens then it could well be a new world order soon.

So while the fight continues against Covid-19 we will wait and see how the contagion spreads in the wonderful world of watches, and while stocking up on canned goods and bottled water for the humans might be a good idea sooner rather than later and don’t think there is any need to yet gather swiss lever escapements and handsets, though a good G-Shock will probably see you through.