Much like the Swiss Exhibitors’ Committee, which represents the interests of the Swiss watch industry at Baselworld, the Hong Kong Trade and Development Council (HKTDC) represents the interests of some 150 exhibitors from the region at the show.

Swiss watch exports to Hong Kong were down slightly last year. How much do you think this was due to events in Hong Kong and do you expect exports to pick up again?
Recent reports indicated that overall sales of Swiss watches in Hong Kong declined by 7 % during the first three quarters of 2013. In 2014, total value sales for watches reached USD 2.33 billion, with a continual decline of 3% over the previous year. Economic uncertainty has certainly had a dampening impact on demand for luxury watches from mainland Chinese consumers. Simultaneously, Hong Kong watch retailers have had difficulties in combating the high rental costs that continue to be a significant factor in staying competitive with other countries.
We also see the trend that Chinese consumers are exploring newer and niche brands to express individualism and they prefer lower-key designs, whereas women are more attracted by quartz analogue watches. Mid-range mechanical watches registered the largest current value growth rate of 6% in 2014 compared to a downtrend in high-end mechanical watches. Furthermore, Chinese consumers in general changed preferences towards more affordably priced watches. Therefore popular niche brands still report moderate sales growth whereas sales for most high-end watch brands were showing a slower movement compared to the robust growth of previous years.

"Hong Kong watch retailers have had difficulties in combating the high rental costs that continue to be a significant factor in staying competitive with other countries."

Stephen Wong

Future prospects predict that a continued slowdown in China’s economy is expected to lower sales of watches in Hong Kong. Social tensions and economic issues are also having some impacts on luxury product retail sales in the city. Thus, sales are expected to see a stagnant CAGR (Compound Annual Growth Rate) to reach USD 2.34 billion by 2019.

How many exhibitors do you have in the Hong Kong Pavilion and from which areas of activity?
There will be a total of 151 exhibitors, of which 83 are from the jewellery industry, 49 from the watches & clocks sector, nine from the watch parts sector and 10 from the packaging sector.

Stephen Wong

Stephen Wong, Regional Director Europe at HKTDC. © HKTDC

What are the main differences between Baselworld and the Hong Kong Watch and Jewellery Show for these exhibitors?
If we look at the watch industry, both shows have a number of similarities, e.g. the ambience at our Salon de TE, where we have a special focus on international brands and new Chinese brands. Here at Baselworld the exhibitors target mainly Western markets, whereas at the HKTDC Hong Kong Watch & Clock Fair there is an additional particular emphasis on product design and branding focusing also on the demand and taste of the Asian customers.

What are their main objectives for coming here?
One of the main objectives for participating in Baselworld is to promote the image of Hong Kong´s watch and jewellery industry as a leading exporter of both industries worldwide. Also, we are present at Baselworld since 1986 with the largest national pavilion and a number of companies have joined us for many years. During this time they have moved up market from OEM to OBM. Some companies have also invested in the research and development of movements to reduce their reliance on imports and overcome the constraints of standard movements to product design. A number of our exhibitors have build-up long-standing relationships with European buyers, which they want to meet at the fair to show them their new collections.

"Sales are expected to see a stagnant CAGR to reach USD 2.34 billion by 2019."

Stephen Wong

What are the current trends emerging from the Hong Kong watch industry?
According to the on-site survey conducted during HKTDC Hong Kong Watch & Clock Fair 2014, both buyers and exhibitors expect quartz and smart watches to lead the market, while fashion watches, smart watches and leisure style watches will have the highest market potential. As for product development, most buyers and exhibitors plan to introduce smart functions to their products, and promote timepieces by brand licensing and offering limited edition collections.

Do you see a threat to the Hong Kong Watch Industry from the smart watch trend? Are Hong Kong manufacturers already embracing this trend?
In 2014 we added an extra zone for wearables, dedicated to smart watches, to the HKTDC Hong Kong Watch & Clock Fair, which was a hit among buyers. According to the on-site survey, in terms of product segment, fashion watches would enjoy the biggest market growth in 2015, already followed by smart watches. Since Hong Kong has strong design capabilities and a strong electronics industry for developing apps for watches, the industry will definitely be able to catch up and compete in this sector.

What is your general outlook for Hong Kong based exporters in 2015? Do you share the same concerns as the Swiss industry in terms of economic downturn and currency exchange problems?
The general outlook for Hong Kong based exporters seems – according to the conducted on-site survey during the HKTDC Hong Kong Watch & Clock Fair – positive for 2015. With the Watch and Clock Industry thriving, there is a growing trend towards selling and procuring products via the Hong Kong platform. We have for example set up our Small Order Zone to meet the needs of the majority of the SME buyers to source in quantities of 300 or less.  Concerns regarding an economic downturn and currency exchange problems do not seem to be too much of an issue for the Hong Kong based exporters, but they certainly are monitoring the situation closely in order to stay competitive.