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Fear of price jump in Swiss watches unfounded
THE fear that the prices of Swiss luxury watches would shoot up in Singapore with the rise in the Swiss franc has turned out to be unfounded.
Prices are instead falling in the wake of the release of the latest Swiss watch export figures, which indicate that demand dipped in Singapore last year.
Swiss timepieces, led by Rolex, flew off shop shelves here in mid-January, when the Swiss franc surged 16 per cent against the euro on the back of the Swiss central bank's surprise removal of a three-year cap on the exchange rate between the Swiss franc and the European currency.
In Singapore, the exchange rate went from one Swiss franc to S$1.35 to a franc for S$1.55, prompting some retailers here to warn that buyers could expect to pay much more for that high-end Swiss watch they have been eyeing.
The Hour Glass executive vice-chairman Jannie Chan was quoted in a newspaper report as having said that the prices of Swiss watches had essentially risen 20 per cent with the Swiss currency's appreciation. The retail chain was not planning to raise prices at that point, she said, but added that it would have to replace its stock when it ran down - and that its new stock could cost more.
A month on, the Singapore dollar has regained some of its losses - with the exchange rate at a Swiss franc to S$1.46 on Friday - and none of the major Swiss watch brands have announced price hikes in Singapore.
In fact, Cortina's chief operating officer Jeremy Lim said that the suppliers he spoke to at the Salon de la Haute Horlogerie watch fair, held in the Swiss city of Geneva just after the Swiss currency shock, had said they had no plans to increase prices in Asian markets.
Japan seems to be the exception. Bloomberg news service reported that Rolex raised the price of its steel Submariner Date with black bezel by 8 per cent to US$6,800 from Feb 1, in Rolex's first price hike there since November 2013.
But a Rolex spokesman reportedly said the price rise came from the Japanese yen's weakening against the Swiss franc, not because of the move by the Swiss National Bank.
Geneva-based Patek Philippe, the watch industry's equivalent of a Rolls Royce, on Thursday upped its prices in Japan by 5 per cent in response to the liberation of the euro-franc exchange rate.
In a move to realign its world-wide prices disrupted by the removal of the franc-euro exchange rate cap, Patek Philippe told its retailers that it was following in the footsteps of the Swiss luxury group Richemont, which owns brands like Cartier and Piaget, to also increase prices in the eurozone.
Cartier has already made known that its prices will go up 5 per cent there; Piaget's chief executive officer Philippe Leopold-Metzger told The Business Times that he intended to bump up prices in the eurozone by 8 per cent.
Patek Philippe said early this week that the prices of its timepieces have gone up 7 per cent in Europe. Only in Britain will its prices stay unchanged.
In other markets, however, it has lowered its prices; in the Americas, it cut prices by 7 per cent this week.
In a statement, Patek Philippe USA president Larry Pettinelli said: "Based on the unexpected decision of the Swiss National Bank on Jan 15 not to defend the euro at the 1.2 level, Patek Philippe was forced to make some difficult decisions regarding worldwide pricing. Pricing adjustments were made in an effort to protect retailers and our clients, and ensure there is less of a disparity between the global markets."
Patek Philippe is lowering prices by 5 per cent in its home market in Switzerland. In Hong Kong, the biggest market for Swiss luxury timepieces, its watches are now 7 per cent cheaper; in the Asia-Pacific, their prices are 3 per cent down.
The newly announced price changes cover the main Patek Philippe collections, but will not apply to the models in its special 175th anniversary edition, which includes the US$2.6 million Grande Master Chime. They will also not affect the ultra high-end pieces such as the minute repeaters and split-second chronographs.
Current price changes are valid through June 2015, barring further currency shifts, said Patek Philippe president Thierry Stern in a letter to retailers dated Feb 9.
In Singapore, Patek Philippe has cut prices by between 3 and 15 per cent.
Meanwhile, the Federation of the Swiss Watch Industry has released figures showing a drop in demand for Swiss watches in Singapore in 2014.
Swiss watch shipments here dipped 1.4 per cent from 2013 to 1.2 billion Swiss francs in 2014; in December alone, exports to Singapore - Switzerland's seventh biggest market for timepieces last year - dropped 3 per cent.
Globally, Swiss watch exports grew 1.9 per cent last year, the same as in 2013. Shipments to Hong Kong fell by 2 million Swiss francs, and those to China, the third largest market, by 3.1 per cent.
Swiss watch exports to the United States, the second biggest market, jumped 6.2 per cent last year; they rose 15.2 per cent in Japan, the fourth largest market for watches made in Switzerland.