Swiss Watch Federation Wants Tougher 'Swiss Made' Criteria
By William George Shuster -- JCK-Jewelers Circular Keystone, 9/1/2007
The Federation of the Swiss Watch Industry FH has voted overwhelmingly to ask the Swiss government to strengthen criteria for putting the “Swiss made” label on watches, using an FH proposal. At least 80 percent of a mechanical watch and 60 percent of a quartz one should be manufactured in Switzerland to qualify, it suggests.
FH says delegates voted 52 to 8 in favor of the proposal at its June 28 general meeting in Biel, Switzerland.
Use of “Swiss made” is defined by a 1971 ordinance of the Swiss Federal Council. It's long been criticized by many in the Swiss watch industry because it addresses only mechanical movements and doesn't include components like parts, bracelets, dials, and cases and because many watches stamped “Swiss made” use foreign-made components that are assembled in Switzerland.
To safeguard the label in world markets and maintain consumers' trust in it, FH officials decided stricter criteria of origin were needed. The proposal says that, to qualify as Swiss made, at least 80 percent of a mechanical watch (calculated by cost) and 80 percent of its movement's components should be produced in Switzerland. (Currently it's 50 percent.) For quartz watches, 60 percent is suggested. Raw materials, precious stones, and batteries would be excluded.
The tougher criteria have critics, including some well-known Swiss brands. One is Mondaine, whose president, Ronald Bernheim, says the proposal benefits Switzerland's biggest watchmakers. (A recent article in the Neue Zuricher Zeitung claimed Richemont Group, Swatch Group, and Rolex were major supporters.) Mondaine and some others contend the proposed criteria would significantly boost costs for smaller watch companies (which buy components outside Switzerland), forcing them to raise prices or even close. Only large watchmaking firms can absorb the costs of more-expensive Swiss-made components, they claim.
FH president Jean-Daniel Pasche recently told the national Swiss newspaper Sonntags-Zeitung that “many large brands fear the [Swiss-made] label is being devalued in the eyes of consumers,” but he denies the proposal benefits them. “Many watchmakers feel it must be strengthened and adapted to the current situation,” he told JCK earlier.
In a post-vote statement, FH called the situation “a delicate matter,” citing problems with the supply of watch components, but also suggested that the only solution was to tighten existing provisions to uphold the value of the “Swiss made” label.
The FH proposal also has been criticized by the European Union as protectionist, said SonntagsZeitung, because changes affecting free trade must be negotiated with it. The Permanent Committee of the European Watchmaking Industry made similar comments. Pasche said criticism is premature, because FH will discuss any changes with European watch associations and the EU, following review and approval, if any, by the Swiss Federal Council. That could take years.
