Luxury Goods Rule @ BaselWorld 2006

Springtime 2006 in Switzerland was unseasonably chilly, with recurring rain and even snow. However, inside the international watch trade fairs held there annually, business was hot, and their halls were as crowded as beaches in summertime. Vendors in both Basel and Geneva—the two hubs of the major shows—reported strong sales, especially in upscale and luxury watch lines, auguring continuing strength in that segment.

Of course, it isn’t all watches. BaselWorld, while the world’s leading watch trade show, also caters to the fine-jewelry market, with twice as many vendors as for watches, and is an increasingly important arena for the diamond and gem trades. Here is a recap of this year’s BaselWorld highlights. (See p. 284 for a report on Geneva’s watch shows.)

The BaselWorld 2006 watch, clock, and jewelry fair (March 30– April 6)—the world’s largest and a bellwether of those industries’ economic health—had its best-ever attendance and, according to its post-show report, was “extremely successful,” topping results for 2005, also a record year. Much of the success was propelled by business in luxury watches and jewelry. “There is sustained high demand for luxury goods,” said René Kamm, chief executive officer of MCH Swiss Exhibition, the show’s owner/operator, and BaselWorld 2006 provided “positive stimulus to the [worldwide] watch and jewelry industry.”

Many exhibitors agreed. Christophe Chaix, sales director of luxury accessories producer Hermès, for example, called his sales figures “very positive indeed.” Francesco Spanedda, marketing manager for international jewelry designer Pasquale Bruni, said, “Customer contacts this year exceeded our expectations.”

“Buying sentiment was strong, much better than last year,” noted Tse Wai Hang, managing director of NGA Co. Ltd., a Hong Kong watch, jewelry, and watchband manufacturer with production facilities in China. “Business appointments were still being tightly scheduled for the fifth or sixth day, which didn’t happen in the past few years.”

In the crowded watch halls, business was generally brisk. “The large majority—both well-established and emerging brands—enjoyed a particularly successful show, with business volume often exceeding expectations.” said François Thiébaud, president of the Swiss Exhibitors Committee. Results were more varied for jewelry exhibitors. Some were very busy, and others reported slower traffic, which some exhibitors blamed on the world’s many annual jewelry fairs, each mirroring similar jewelry trends. Still, a number of BaselWorld watch and jewelry exhibitors said that midway through the eight-day show they had already matched their total business from last year’s fair.

“This was an excellent BaselWorld,” said Jacques J. Duchêne, president of the show’s Exhibitors Committee. “Everyone was very pleased with 2005’s event, but thanks to the higher number of visitors, economic prospects for this year have proved even better.”

This 34th edition of the fair was officially opened by Joseph Deiss, Swiss federal councilor and economics minister, and Barbara Schneider, president of the government of the city and canton of Basel, underlining its importance to the Swiss economy and the global watch and jewelry trades. Some 94,200 visitors—5 percent over 2005 figures and a new record—came from more than 100 countries (6 percent from North America, primarily the United States) to see products exhibited by 2,127 companies, which came from 45 nations (104, or 4.9 percent, from North America). A record number of journalists (2,529, up 7 percent) from some 70 countries were also there to cover it all.

There were some clouds over the show. Duchêne and colleagues at the show’s opening press conference said counterfeiting of luxury goods, especially watches, is now a rampant worldwide “evil” and urged world governments to act aggressively against it.

Duchêne also noted that the “high-flying performance” of the Swiss watch industry (up 10 percent in 2005 exports’ value) is due primarily to upper-price watches, while watches in the moderate-price ranges face difficult challenges developing their markets. He said it would be unfortunate if they lose sales because of the attention and support given to luxury watches. “This could have a damaging effect in the medium and long term on our industry as a whole,” he said.

On the plaza outside BaselWorld’s buildings, a small number of peaceful protestors appeared periodically, urging jewelry-industry support for workers in Chinese jewelry factories who labor in allegedly unsafe conditions, respect for human rights in China and Tibet, and opposition to Internet censorship in China.

BaselWorld officially opened the 2006 show in its new First Avenue Hall, an extensively renovated section of the jewelry building that provides the setting for jewelry makers like Carrera y Carrera, David Wan, David Yurman, and Fabergé to present both their fine jewelry and their watches. BaselWorld director Sylvie Ritter noted the increasing overlap between the fine jewelry and watch trades, as evidenced by the number of traditional jewelry brands that are creating their own high-fashion and luxury watches as accessories or standalone lines.

First Avenue also marked the official end of a multiyear reorganization and renovation of BaselWorld’s fairgrounds and buildings that began in 1999 and cost $500 million. “After much hard work, this is a special moment and satisfying finish,” said Ritter.

Meanwhile, another massive project is starting. BaselWorld doesn’t have enough space for those who want to expand, and Building 6, used for international delegations of exhibitors, reverts to its owner in 2011. A new site will be needed. A task force called Messestadt Basel 2012 has been formed to work with local authorities on reorganizing and expanding the fairgrounds’ infrastructure.

Watches and jewelry aren’t the only categories getting more attention. A major makeover of the Hall of Elements building in 2005 underscored the growing importance to BaselWorld of the global trade in diamonds and gems. Key exhibitors this year included some 200 leading precious-stone and diamond dealers and sightholders (such as Dehres, Diarough, Eurostar, Gembel, and Rosy Blue), and there were more buying groups from China, India, and Russia.

BaselWorld’s growing significance to the gem and diamond industries was illustrated by two groups. One was Israel’s diamond industry, which introduced its new brand identity at the annual Israel Diamond Institute breakfast during BaselWorld. Participation by Israel’s ambassador to Switzerland underlined the project’s importance and setting.

The other group was the Dubai Multi Commodities Centre, United Arab Emirates, which promoted Dubai’s facilities to the gold, diamond, gems, and jewelry industries. It also promoted the Dubai brand, which includes the world’s first ISO-certified gem-certification service and the patented Dubai Cut, a 99-facet diamond. “BaselWorld is one of the leading international-trade platforms for the watch and jewelry industry. DMCC’s participation underlines our commitment to growing and developing this industry,” said Ahmed bin Sulayem, DMCC chief executive officer.

Other national groups used that platform too, including French-Spirit, a new group of some 20 smaller French jewelry designers who promoted their creations. China’s growing importance as a fine-watch and -jewelry producer was also on display. Hong Kong had the largest delegation, 333 jewelry and watch exhibitors. Many are based in mainland China or have facilities there. Hong Kong exported $3.3 billion in precious-metal jewelry, pearls, and gems in 2005, a 23 percent increase, JCK was told by Charles Chan, chairman of the Hong Kong Trade Development Council’s Jewelry Advisory Committee. That’s having an effect on traditional jewelry makers. Dr. Gaetano Cavalieri, the Italian jewelry trade’s representative at the show, said development of jewelry manufacturing in low-cost-labor areas like China, Hong Kong, and India “has changed the nature of the global market and affected the Italian jewelry industry.”

And more Chinese firms are promoting their brands to the West. The Guangdong China Industry Co. Ltd., a leading jewelry firm, hosted a special reception at BaselWorld, which it called “the ideal starting point … to introduce the world to the mystique and glamour of Chinese jewelry.” In watches, use of Chinese-made mechanical movements by more Western brands was evident in the growing number of affordable automatic watches, and even those with tourbillons. More Hong Kong and Chinese watchmakers are not only making parts and timepieces for Western clients but also promoting their own brands, such as Chung Nam Watch Co., which has made products for Bruno Banani.