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Don’t cry for me Argentina!
Economy

Don’t cry for me Argentina!

Tuesday, 10 July 2012
By Manuel Palos
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Manuel Palos

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5 min read

Maradona, tango and a passion for beautiful watches. Argentina is a land of contrasts and connoisseurs of exceptional timepieces. However, increased import duties aimed at boosting national industry mean that Cristina Fernández de Kirchner’s government is trying the patience of international brands.

We could be in Paris, Barcelona, maybe Rome… but this is Avenida Alvear in Buenos Aires. Luxury brands have taken up residence among the imposing palaces, neo-classical and Art Deco buildings of the Argentinean capital’s most upscale thoroughfare. For certain visitors, there is a distinct impression of déjà vu. Indeed, Argentina has always billed itself as Europe’s last bastion in the New World. Unlike São Paulo, Mexico City or Santiago, the North American influence has yet to reach Rio de la Plata’s shores. Argentineans are an altogether different breed, including in their attitude to fine watches.

“The Argentinean aficionado has a culture and an understanding of watches that even Swiss specialists admire,” says Diego Kolankowsky, director of horasminutosysegundos.com and hhmmss.net, two of the country’s foremost websites promoting mechanical watches. “Argentineans understand the intricacies of a watch movement. In terms of design, the trend over the past ten years has been for large cases although smaller watches are gaining in popularity here as in the rest of the world.” An opinion seconded by Fernando Stolovas, director of Chronos jewellers in Buenos Aires, in Tiempo de Relojes magazine: “Argentineans have very similar tastes to Europeans. There’s a definite Italian and Spanish influence.”

Founded just 200 years ago – Argentina celebrated the bicentennial of its independence this spring – the country that gave the world Maradona, Lionel Messi, Evita and Jorge Luis Borges (who rests in peace in Geneva) has always given the impression of a European country stranded six thousand miles from home. Virtually every Argentinean has a grandfather in Galicia or Calabria. During the 1950s, Argentina was the only Latin American country whose economic and human development outstripped that of most European nations. Argentina has come through military dictatorship, the economic restrictions (corralito) imposed by president Carlos Menem in 2001, and the revival of Peronism under the current incumbent, Cristina Fernández de Kirchner. After so many ups and downs, the country is caught between dreams of the past and hopes for the future. Its main priority is to kickstart industry, meaning products sold in Argentina must be made in Argentina. As a result, the country levies heavy duties on imports.

Lionel Messi, brand ambassador of Audemars Piguet © Audemars Piguet
Brands line up to leave

This is a complex issue. “Over the past ten years, watchmaking has benefited from Argentina’s economic growth, as the upper and middle classes have been able to afford sophisticated products. This year, however, the country has adopted measures that will curb imports, mainly because certain agreements are coming to an end in 2012. I think this will be a temporary measure. Indications are that trade will be back to normal by the end of the year,” Diego Kolankowsky predicts.

Despite such reassurances, the luxury market has witnessed several worrying developments over recent months. In April, the country’s largest newspaper, Clarín, reported that Polo Ralph Lauren, present in Argentina since 1999, had made public its intention to leave the country because of import restrictions. Calvin Klein and Ermenegildo Zegna have already made similar announcements, and Armani and Mango are rumoured to be set to follow suit. Hermès is also said to be considering pulling out of the market. Nor is fashion an exception as the government recently announced a new tax on luxury cars.

Argentina suffers from high inflation.
Moisés Naím

Companies seeking the government green light must manufacture their products in Argentina, which few are inclined to do… a constraint made worse by inflation. “Argentina suffers from high inflation, slowing economic growth, ballooning subsidies, price controls, capital flight, decaying infrastructure and a less than welcoming environment for foreign investors,” Moisés Naím wrote in the Financial Times in April. This came as the European Union challenged Argentina at the World Trade Organization after it seized Spanish oil company Repsol YPF.

Watchmakers keep the faith

A majority of Argentineans support government policy, although some raised their voice in protest when measures were introduced to limit dollar transactions so as to promote the peso. None of this has dampened spirits in the watch segment. In June, Hublot unveiled the new King Power Maradona at Simonetta Orsini’s in Buenos Aires, a launch attended by the football legend himself. Breitling cut the ribbon at its store on Avenida Alvear in January. Jaeger-LeCoultre continues to sponsor an Argentinean polo squad, as does Piaget which also has a high profile in the game.

“The state of the luxury market is very much linked to the state of the economy overall. Argentina is in a period of exceptional growth, thanks to natural resources and industrial production, and should remain so for some considerable time. On an international level, Argentina trades primarily with solid economies such as China, India and Brazil rather than with the ailing European economies,” adds Diego Kolankowsky. “The most prosperous brands are those which invest in projects with a high public profile. Piaget and Jaeger-LeCoultre are associated with polo. Other watchmakers have chosen football, such as Audemars Piguet with Lionel Messi, and Hublot with Diego Maradona. Some, such as IWC, prefer to organise seminars or sponsor original events such as Chopard’s classic car rallies. All these initiatives show that there is far more to watchmaking than simply making watches, and this is what makes it so attractive to the public.” As far as Argentina and fine watches are concerned, if any tears are shed, chances are they will be tears of joy…

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