In age of smartphone, watch makers focus on luxury

[April 25, 2013]  BASEL, Switzerland (AP) -- In an age when many people carry smartphones that can tell the time -- on top of hundreds of other applications -- watch makers are increasingly focused on selling their goods as luxury items.

The world's biggest trade fair for watches, Baselworld, opens to the public Thursday and runs through May 2, offering a spectacle of bling and highly crafted gadgetry.

Tissot CEO Francois Thiebaud told reporters Wednesday that the trends for 2013 are mechanical watches, timepieces adorned with gold, diamond and pearls and "neo-classical trends, which probably reflect a certain calm in the atmosphere."

Jacques J. Duchene, chairman of a committee representing 1,460 watchmakers, jewelry traders and exhibitors from 40 nations, acknowledged the luxury watch industry is out of step with the financial challenges felt by many people and industries around the world.

"In a worldwide business environment, in which there is often no tranquility, solidity or continuity, we are forced to be frank in admitting that the watch industry constitutes an exception," Duchene told a news conference. "Nonetheless, even in the face of all the economic imponderables, we remain optimistic for the current year."

He had good reason for optimism: the Swiss watch industry had another record year, with exports totaling 21.4 billion francs ($22.6 billion) in 2012, up almost 11 percent from the year before.

Business is generally good, but it's still a tough environment in Europe and the United States, said Ulrich Herzog, executive chairman of 109-year-old Swiss watch making firm Oris, which targets what it sees as the growing ranks of affluent middle-class buyers who are willing to spend in the $1,000-$5,000 range.

In emerging markets such as China, India and Brazil "a product in that gap can still attract a lot of people," Herzog said in an interview. "We have people who really look for something which is in their reach, and represents a value."

China also reported $4 billion in exports of watches and clocks in 2012, and said its total sales of $7.5 billion rose by 10 percent. The watch trade fair coincided with China Haidian Holdings Limited announcing Wednesday that it was acquiring another luxury watch maker, Swiss Montres Corum, for 86 million francs.

The Chinese manufacturer already owns Swiss watch brands Eterna and is licensed to make "Porsche Design" watches. Organizers of Baselworld said that one-seventh of the 3,500 journalists registered to cover Baselworld were from China.

Looking ahead to the rest of the year, Herzog said: "It's definitely going to be tougher than last year. You just feel it, that the markets, they're not so freely spending at the moment, because there's some serious problems around, particularly in Europe and also China is a bit different than it was two years ago."

The booths of the watch makers were something of a marketer's fantasyland, with lavish displays.

There was a burgundy-colored 1936 Alfa Romeo race car in perfect condition posted outside Eberhard & Co., while a chrome-colored McLaren sports car leaned by the entrance to TAG Heuer.

Elsewhere, the glass walls of TechnoMarine boasted constant waterfalls, and the Tudor booth had a big screen with a video clip of a motorcycle rider gliding over burning streams of volcanic lava.

Such extravagance belied any struggle against cheaper wrist watches or the ubiquitous smartphone.

"With an incredible degree of perfection, architecture, brand design and product design are all blending in with one another here, allowing the individual brands to come to life and do themselves full justice," said Baselworld's managing director, Sylvie Ritter. "Watches and jewelry are products that have grown closer together in recent years and are now on display side-by-side at this event."

[Associated Press; By JOHN HEILPRIN]

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