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Swiss watchmakers brace for slowing Chinese demand

Reuters  |  GENEVA 

By and Sarah White

(Reuters) - Swiss watchmakers are starting to see signs of slowing spending from Chinese tourists, but are still banking on demand shifting to mainland to fuel growth this year, several high-end brands said on Monday.

Investors are on edge over a softening economic backdrop in China, and weak Chinese trade data on Monday sent shares in companies that rely heavily on Chinese customers tumbling.

Some brands like Parmigiani, owned by the and which makes around 3,000 pieces a year, with average prices at 35,000 Swiss francs ($35,714), said they believed it was still a good time to invest in

"People are travelling less, but consuming more domestically so it is the right moment for us to strengthen our local presence (in China)," told at the SIHH industry trade fair in Geneva, adding the label, in turnaround mode, was entering that market "10 years late".

Parmigiani is repositioning itself at higher price points after trying to take a more accessible tack a few years ago.

Chinese customers make up over a third of spending on worldwide, but a falling yuan and measures like cuts in import taxes are pushing more of those shoppers to splurge domestically.

in Hong Kong lost steam in the last three months of 2018, Cartier owner reported on Friday, and others noted setbacks there and in other parts of Greater China, which includes

"We had growth everywhere last year, except for Greater where we saw a dip in demand due to the trade war in October and November," said Edouard Meylan, of independent Swiss label H. Moser & Cie.

"It has recovered since," Meylan said. He added the brand had sold an unusual amount of "big-ticket" watches in December and January, but was still wary of nasty surprises.

"With the shutdown (in the U.S.), the trade war and Brexit, there is a lot of uncertainty at the moment."


Manufacturers of luxury wares from handbags to fancy timepieces have so far played down the chances of a dramatic fallout from a U.S.- China trade stand-off, arguing that appetite from young, middle-class Chinese customers keen to wear branded goods was likely to hold up in the long term.

"We've noticed a small slowdown, but we're still talking about a growth pattern," said Ricardo Guadalupe, of LVMH's brand, which is not exhibiting its watches at the Richemont-dominated SIHH but at a hotel in downtown

Young Chinese clients in their 20s and 30s boosted demand for watches in 2018, Guadalupe added.

"In principle this dynamic is going to continue, unless there is a real catastrophe in terms of the geopolitical relations between China and the United States," he told

Hublot, a stablemate of and at LVMH, does not break out revenues.

But its sales in Greater China - which accounts for 13 percent of its revenues - rose by 60 percent last year, Guadalupe said, helped partly by Hublot's status as a relatively new entrant in China, where it first invested 10 years ago.

That growth could be closer to 10 to 15 percent in 2019 as comparisons get tougher, he added, while is banking on its global comparable sales expanding by at least 6 to 7 percent after 16 percent growth in 2018.

(Reporting by and Sarah White; Editing by Jan Harvey)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 15 2019. 00:28 IST