‘Swiss Made’ Standard Could Be Lucrative for Swatch

Tougher criteria for use of the “Swiss made” label on watches could benefit the Swatch Group, the world’s largest watchmaker, say Swiss press accounts, citing a report by UBS (United Bank of Switzerland).

On June 28, the Federation of the Swiss Watch Industry FH agreed to ask the Swiss government to strengthen “Swiss made” criteria, including greater use of Swiss-made components in mechanical movements (80 percent) and quartz watches (60 percent). Swiss watchmakers would have to “massively increase their orders from Swiss suppliers” to comply, if the proposal is enacted, said the French-language newspaper Le Temps.

The Swatch Group not only produces 17 watch brands but also is an important supplier to the Swiss watch industry, especially in movements, holding about 75 percent of the Swiss components market. UBS estimates the Swiss watch industry in 2006 imported over $1.1 billion worth of foreign-made components. Substituting Swiss-made components for many of those, as required by the proposed criteria, could generate $887 million annually. The Swatch Group could capture up to $683.2 million of that, says UBS, significantly increasing its profitability and stock value.