The stars of tomorrow are still struggling to shine. At a time when the world is in the throes of change, and the balance of economic power is shifting away from the western economies, the new world order hasn’t yet made its mark on watch sales. Figures published by the Federation of the Swiss Watch Industry (FH) reveal that Swiss watch exports are almost completely dominated by the so-called mature markets. Of the branch’s ten main markets in 2012, eight are developed economies. Adding Hong Kong to China brings this figure to nine.
Ups and downs
What has happened to countries such as Brazil, India, Indonesia, Mexico or Russia, even Malaysia and South Africa, held up as the main levers for growth in the industry? Brazil, weighed down by excessively high import duties, doesn’t even make it into the top 30 markets. India, with a population of 1.2 billion, ranks 25th, on a par with Belgium and well below Austria. Indonesia has virtually fallen off the radar, even trailing Greece.
Mexico performed slightly better, even though exports of Swiss timepieces to the country fell by 5.7% on last year. Russia again fails to live up to its potential by taking 15th place. With a population of 150 million, it was beaten by Saudi Arabia which has five times fewer inhabitants. Nor does Malaysia’s 27th place reflect its capacities. As for South Africa – which put the S on BRICS – it failed to make it into the top 30 destinations for Swiss watches.
Better standards of living
What can be gleaned from this? Admittedly, purchases made by tourists outside their home country, the Chinese being a case in point, slightly skew the picture but not enough to give a distorted view of countries overall. While the watch sector isn’t a precise and reliable indicator of the global economy’s state of health, the underlying suggestion is clearly that there is still great untapped potential. As reassuring as this might be, implying opportunities for future growth, the risk of waiting too long and letting others get there first is very real. It’s time to adapt to what will be the new world order.
China's GDP per capita is currently 16.6% that of the United States; this will rise to 60% over the next fifty years.
In 2016 or thereabouts, China will become the world’s leading economic power ahead of the United States, says an OECD report. By around 2025, the GDP of China and India combined will exceed that of the major seven OECD economies. Despite ongoing and significant inequalities, the OECD considers that these changes will globally improve quality of life for everyone in these fast-growing regions. In poorer countries, income per capita will more than quadruple within the next half-century. China’s GDP per capita is currently 16.6% that of the United States; this will rise to 60% over the next fifty years. India will shift from the current 7% of US per capita GDP to 27%. Indonesia will leap from 9% to 26%. South Africa will go from 22% to 29%, and Brazil from 23% to 40%.
Surprises in store
Will this new balance of power spill over into watch sales? Will the top 30 destinations for Swiss watch exports be completely different in 50 years’ time? Let’s hope so, with the China-Hong Kong-Taiwan triad leading the way, followed by Russia, India and Brazil, with Mexico, Thailand, Indonesia and South Africa not far behind. Countries that will all weigh far more heavily than in today’s rankings. The United Kingdom, Spain, Austria, South Korea and the Netherlands will, in all likelihood, have dropped out of the top 20. Expect some surprises when the new line-up is revealed.