Just when Swiss watchmakers are struggling with the strong franc, weaker Asian demand, and new technologies such as smartwatches, the last thing they need is a threat from within their clubby ranks. But that’s exactly what’s happening.
The Goldgena Project, led by 40-year-old designer Claudio D’Amore, is a shoestring-budget brand that’s open to using non-Swiss components for mechanical watches. Asian parts make production cheaper, and most watches sold under the ‘‘Swiss-Made’’ label for less than 2,500 francs ($2,500) contain some bits from that region anyway, he said.
Swiss Made is an official government designation certifying that a timepiece is mostly made of parts manufactured and assembled in Switzerland. This distinction is given hefty import in the industry, like an appellation d'origine contrôlée for French wine.
“Swiss-made is a joke,” D’Amore said in an interview in his downtown Lausanne office. The Swiss-Italian has spent 13 years designing watches for brands such as TAG Heuer, Parmigiani Fleurier, and Montblanc.
Goldgena is testing whether consumers are still interested in Swiss-designed watches, without all the glamour hidden inside. Figuring it can cut the price of a timepiece by more than half, the brand is planning to sell automatic watches for as little as $700, compared to the $4,000 starting price for Rolex models. By using a Japanese movement, Chinese assembly, and avoiding middlemen, Goldgena says it can undercut the industry.
Watchmakers are allowed to call their timepieces Swiss-Made if at least half the value of the timepiece’s movement comes from Switzerland and if the watch is assembled in the country. Next year, new requirements will require that at least 60 percent of the manufacturing costs of the entire watch, including the strap and case, are Swiss.
YouTube: Goldgena - First mechanical timepiece
The country’s four-century-old watch industry has been suffering recently. Exports have dropped for 10 months. Switzerland makes about 2.5 percent of the world’s watches each year, but it gets more than half the revenue in the 38 billion-franc market because Swiss-Made timepieces command higher prices, according to Rene Weber at Bank Vontobel AG.
Three companies make the majority of Swiss watches: Swatch Group AG, whose brands include Omega and Longines; Richemont, which makes Cartier and IWC; and Rolex, which also makes Tudor.
Watch Out
Competition is increasing just as smartwatches sap demand for lower-end watches. Websites such as Borrowed Time have popped up, lending people luxury watches to wear to parties. Swatch shares have slumped 27 percent in the past year, while Richemont’s stock is down 34 percent.