Annual Report

2018

1

Annual Report

2018

2

ISSN 1421-7384
The annual report is also available in French and German in paper or electronic format, upon request.
© Fédération de l’industrie horlogère suisse FH, 2019

3

Table of contents
The word of the President

4Highlights of 2018

6

Swiss made – The revised Ordinance

8

WebIntelligence 2 – Fight against counterfeiting on the Internet

9

Training the authorities - Significant progress in Mexico11
Access to markets – Mercosur and the United Kingdom

13

Data protection – New regulation

15

Panorama of the 2018 activities

16

Improvement of framework conditions18

Information and public relations22

The fight against counterfeiting

26

Standardisation32
Legal, economic and commercial services33

Relations with the authorities and economic circles

34

FH centres abroad

37

The Swiss watch industry in 2018

38

Watch industry statistics

40

Structure of the FH in 2018

44

The FH in 2018

46

The General Meeting47

The Board

48

The Bureau and the Commissions

49

The Divisions and the Departments

50

The network of partners

51

The word of

5

the President
Export results reported by
the Swiss watch industry
in 2018 were in line with
forecasts. Their total value
reached CHF 21.1 billion,
an increase of 6.3% compared with 2017. This
growth is mainly attributable to the Asian markets and to the UnitedStates, while Europe lagged behind. The signs ofa slowdown, economic
indicators and uncertainties on several levels suggest thatcautious optimism should be the order of the day in 2019.
The FH has been involved at every stage in the Brexit process,which was a significant focus of our attention in 2018, and took
part in the discussions seeking to defend the interests of the
Swiss economy. For our sector, free trade with the United Kingdom must be maintained – whatever the final scenario may be– since it is one of the most important markets for our industry.
Turning to external economic policy, we welcome the free-trade
agreement with Indonesia and hope that the negotiations now
underway with Mercosur will prove successful.
The fight against counterfeit copies of Swiss watches remains
a priority and the FH is making sustained efforts to eliminate
their sale, in particular on the internet and social media. Since
2012, the FH has had a powerful digital investigation tool called
WebIntelligence at its disposal. This software enables detailed
technical information to be gathered about a website, together
with relevant content data for a sophisticated criminal analysis.
In light of the many technological developments that have takenplace, the FH has been obliged to adapt its system and has
introduced a new release of its software: WebIntelligence 2,

developed entirely in-house. The FH now has the benefit ofa high-performance, comprehensive tool to continue to fighteffectively against counterfeiting.
Even though counterfeiting has shifted largely onto the internet,
in reality, unlawful copies of watches are still in circulationand have to be impounded; hence the importance of a commitment on the part of the customs authorities. Accordingly,
the FH organised training for nearly 140 employees of the
Mexican Public Prosecutor’s Office. I should point out thatthese training seminars are one of the recurring tasks of theFH, precisely in order to raise awareness on the part of theauthorities and support them in their task of detecting anddestroying counterfeit copies.
When it comes to raising awareness, the FH also emphasised data protection in its legal seminar. Last but not least, it
continued to implement the new definition of “Swiss Made”,
in particular by publishing a revised version of its Swissness
guide on its website.
For further details and to find out more about the activitiesof the FH, I cordially invite you to read this annual report for2018. It describes all the actions and operations conductedby the FH on behalf of its members in particular and the Swiss
watch industry in general.
I would like to take this opportunity to thank our members fortheir support and all the FH personnel for their dedication.

Jean-Daniel Pasche

Highlights

7

of 2018
The FH actively pursued its main objectives in 2018. The
industry’s top-level association continued to answer countlessquestions put by its members about the Swiss Made concept,
in particular by publishing a new edition of its guide. It also
kept the list of materials that are not available in Switzerland
up to date. In the fight against counterfeiting, the FH strengthened its digital tools by developing WebIntelligence 2, itscustomised software for monitoring sites on which counterfeit
watches are sold. A further step was taken in cooperation withthe customs and police authorities by holding an important
training seminar in Mexico and giving many other presentations across the world and online. On the subject of access tothe markets, special attention was paid to Mercosur and theUnited Kingdom in 2018. At the same time, the FH made a
careful study of the new General Data Protection Regulation.

8

Swiss madeThe revised OrdinanceFollowing the entry into force of the revised Ordinance governing use of the designation “Swiss” for watches on 1 January
2017, the FH has completed complex implementation work.
However, the number of requests made by FH members
remained high in 2018. Be that as it may, the nature of thequestions has evolved, referring very often to details and finepoints of interpretation to which the text of the Ordinance gives
no immediate and clear answer.
Precisely in order to respond to delicate and difficult requestsof this kind, the FH had already drafted a guide for users of the
Swiss Made designation in the watch industry in 2016. Since
then, with the tendency for questions to become increasingly
sophisticated and benefiting from the experience that had
already been gathered, the FH has gradually supplemented
its guide. A revised version of the guide was published in
September 2018. The new wording (Version 5) reflects theinterpretation placed by the FH on the provisions of the Ordinance and on all aspects of Swissness legislation applicableto the watch industry. Among other things, the exclusion of
the cost of materials that are either not available at all or only
available in insufficient quantities in Switzerland has beenclarified – who can exclude them, how and at which point
in time? Various ways of including the watch case in the calculation of the production costs are also outlined. The newversion of the guide, which can be viewed on the FH internet
and extranet sites, is also available in English and German.
Turning to materials that are not available in Switzerland, theFH is responsible for managing the relevant list. When calculating the production cost for Swissness purposes, the costsof these materials – which could theoretically be produced
in Switzerland but whose manufacture is either non-existentor insufficient on Swiss territory – are not taken into account.
When information about the non-availability of a particularmaterial is made public by a branch, the manufacturer isentitled to assume that it can exclude the cost of the materials
included on the list from its production cost calculation – inan amount equivalent to the defined rate of non-availability, ofcourse. It goes without saying that this exception cannot be
invoked if the raw material is available in Switzerland and at
the same time also on more favourable terms abroad. Although
the relative rate of new notifications of materials has slackened
somewhat, the public list, which can be accessed directlyon the FH website, evolved significantly in 2018. Seven of
the 27 materials currently included on the list were added in2018, including grade 2 and 5 titanium, up to the stage of asemi-finished product of the plate, bar and strip type; 95%of these materials are not available in Switzerland. An initialmodification of the rate of non-availability originally specified
has also been made for monocrystalline synthetic sapphirematerial of the pear, ball, block and plate type. This material
is used to make components in monocrystalline synthetic
sapphire, which for their part are, on the contrary, deemed
to be 100% available in Switzerland. The reduction from 15%
to 10% of the rate of non-availability of monocrystalline synthetic sapphire material is explained by the increase in production capacities following the inauguration of a new facility
in Switzerland.
The FH is, of course, also active in the protection of the Swiss
Made label for horological products. Each year, it contests
many proven infringements at world level, in particular byformulating opposition to the registration of trademarks thatincorporate unlawful Swiss geographical indications following its own investigations and after addressing warnings tocompanies that make unlawful use of Swiss indications andas a last resort, by reporting such unlawful actions to theauthorities. To become more effective in Switzerland, the FH
Board decided in 2018 to set up a group of technical experts;
this will enable the FH to call upon the services of specialists
in support of complex Swiss Made investigations. The newgroup, made up of independent neutral experts, will be thefinal link in the investigative resources available to the FH. It
will become operational once the FH Board has appointed
experts, which is due to happen in February 2019.
2019 will see another important stage in the application of
the Swiss Made Ordinance, with the entry into force of therequirement for technical development of the watch headand movement to take place in Switzerland. At the sametime, temporary exemptions such as those relating to foreign
watch cases and watch glasses held in stock by manufacturers before the entry into force of the revised Ordinance orthat allowing the initial introduction onto the market of products manufactured under the old law, have now expired. Fullapplication of the text of the Ordinance will make the FH still
better equipped to pursue its daily fight against unlawful useof the Swiss Made label in 2019.

9

WebIntelligence 2Fight against counterfeiting on the Internet
After a little over a year of development, the FH’s new software for monitoring counterfeit sales sites, WebIntelligence 2,
was launched in the summer of 2018. This large-scale
project was intended to replace the old WebIntelligence 1
system, developed between 2011 and 2012 in partnership with the “Engineering and Information Technology”
department at the Bern University of Applied Sciences.

used as evidence in possible legal proceedings. The system
independently determines whether the investigated site isselling counterfeit goods and, if so, takes appropriate action.
WI2 therefore automates the entire investigation process, thesending of letters of formal notice, as well as analysis and thus
allows the Internet Unit not only to save time, but also to obtaina significant reduction in this illegal activity.

Many technological developments have taken place in recent
years in the field of the Internet. The liberalisation of domainname extensions between 2012 and 2013 by ICANN (Internet
Corporation for Assigned Names and Numbers), as well as theadvent of internationalised domain names and the increasinguse of content distribution networks are good examples. Thesedevelopments have radically changed the landscape of digital
investigation and major adjustments were necessary for the
FH to be able to continue tracking sites dedicated to the saleof counterfeit watches.

Based on its 13 years of experience in investigation and development, the Internet Unit has designed this tool internally,
thus ensuring that its specific needs are in line with the software’s functionalities.

WebIntelligence 2 (WI2) is a digital investigation tool that collects all the technical information related to the existence of a
website as well as relevant content data for advanced criminal
analysis. All this data is systematically stored in order to be

The new WI2 system, which went into production in August
2018, has already issued more than 40,000 formal noticeemails at the end of the year. It has also proven its value on
numerous occasions in legal proceedings. For example, WI2
automatically generated several hundred pages of reports asevidence for proceedings against a host of counterfeit sites. It
also made it possible to compile all the information from several counterfeiters’ networks in order to target a large numberof domain names to be entered.

10Then, since the letters of formal notice can be parametrised,they are configured to best meet all the criteria required by eachtechnical intermediary. In addition, they are generally written in
the language of the recipient. This high level of customisation
has also greatly contributed to improving the response andcollaboration rate of the technical intermediaries contacted.
These various aspects make WI2 a complete and efficient
tool that greatly increase the effectiveness of the FH’s online
anti-counterfeiting efforts.

11

Training the authorities
Significant progress in Mexico
As the leading export market for the Swiss watch industry in
Latin America, Mexico is also a prime target for counterfeiters
who flood the country with flagrant copies of Swiss models
or timepieces that display the Swiss Made label unlawfully.
For many years, the FH has been actively involved in a campaign to stamp out the practice in this part of the world. All
the initiatives have been systematically obstructed by many
cumbersome administrative practices, in particular, extremely
stringent formalities relating to the evidence to be produced
to determine the fraudulent nature of the impounded goods.
Long and fastidious negotiations conducted at government level
finally led to the signing, in November 2016, of a cooperationagreement between the FH and the Mexican Public Prosecutor’s Office (PGR) with a view to strengthening cooperation forthe prevention of counterfeiting in the horological sector. Thisagreement makes express provision to improve the exchange
of information, set up training sessions organised by the FH for
PGR experts and simplify the procedure for providing evidence.
The PGR’s services have now waived the requirement for theoriginal timepieces to be presented as a basis for comparison.
The FH had previously suspended its operations in the country
because of this totally unrealistic constraint. The PGR’s services
now base their judgment on identification data sheets preparedby the FH to distinguish between real and counterfeit products.
Following this essential step forward, the FH was able to resume
its operations in 2018 and strengthen its preventive activity in
Mexico, in particular through actions to impound and destroy
unlawful watches.
The training course organised in August 2018 was directly
inspired by the terms of the agreement. It was preceded by amajor information campaign conducted by the different departments involved at the FH, acting in close cooperation with theservices of the Swiss Embassy in Mexico. This work led to thedrafting of a guide to the identification of counterfeit items forthe exclusive use of Mexican officers.
Nearly 140 Federal public servants drawn from all parts of thecountry were designated by their line managers to attend thetraining. Because of the large audience, the seminar was heldin the main auditorium of the Public Prosecutor’s Office in
Mexico City over a period of three days, from 14 to 16 August
2018, with five sessions of four hours each. At the end of the
training course, each of the participants was handed a “diploma”
by the Director of the Criminal Investigation Agency, certifying

their newly acquired competences. This Federal agency, whichis part of the Public Prosecutor’s Office, took charge of thelogistical organisation of the training course with rigour andcompetence. During the three days, no technical incident, delay
or failure of any kind interfered with the smooth running of thesessions – not even the many storms that break out at this timeof the year on these high plateaux.
The FH regularly organises a great many training seminars every
year. The Mexican session was in a sense, an outstanding illustration of a process that is slow to put in place and difficult toimplement on what is an important market for the Swiss watch
industry. Unfortunately, the complexity of the process is not
specific to Mexico. In general, and for all kinds of reasons,effective cooperation with the authorities of a country is neverself-evident. However, it is an essential piece on the chessboardof the fight against counterfeiting.
Every day, globalisation brings new opportunities for the participants in world trade, while at the same time opening up manyloopholes of which the counterfeiters take immediate advantage.
That is the paradox facing the authorities of every country inits brutal complexity: they must do everything in their power
to enable authentic products to circulate freely, while rapidlyintercepting unlawful items.
Counterfeiting is an activity of organised crime. The responsemust therefore call upon highly professional resources,
which requires close cooperation between the public andprivate sectors. The aim is to detect counterfeiting at theearliest opportunity and identify the distribution network wellupstream, so as to remove unlawful products from the commercial circuit before they even reach the market. To that

12

Training seminar in Mexico
end, the officials responsible for inspections must have clear
and precise information. They must also be able to count on
full and close cooperation on the part of the rights holders.
The FH plays an active part in many training seminars aimed
at the authorities and always targeted at the most important
markets. Several times a year, staff members travel within
Europe and sometimes beyond to meet customs and police
officers and give them information enabling counterfeit Swiss
watches to be targeted and identified. Each year, more than
700 customs and police officers and other government agents
benefit in this way from the advice and recommendations of
the FH. In 2018, the FH focused all its efforts on England(Gatwick), Saudi Arabia (Jeddah), the Netherlands, Mexico,
Chile and Spain (Alicante).
These missions do, of course, have a financial cost, to say
nothing of the inconvenience caused by the absence of thestaff members concerned for several days. The possibility ofproviding training courses without resorting to physical travel
would therefore obviously have real advantages. Under theaegis of INTA (International Trademark Association), a firsttest of online training was held in October 2018. Five rights
holders, including the FH, based in Germany, France, Italy,

South Africa and Switzerland, gave their presentations in turnfor 20 minutes to six Dutch customs officers. This first trial
proved very successful and all the participants, both customs
officers and rights holders, were enthusiastic.
In view of the growing importance of online trade, which
involves a vast number of postal consignments sent all over
the world, these training courses given either on-site or online,
will remain a cornerstone of the fight against counterfeiting.

13

Access to markets
Mercosur and the United Kingdom
The Swiss watch industry has one single market: the world. And
the world as it is today probably requires greater efforts thanever before to establish the most favourable possible background conditions for trade in order to defend the interests of
the Swiss economy and therefore also those of our industry.
As a privileged interlocutor of the Swiss authorities, the FH has
always been actively committed to the Confederation’s free
trade policy. In 2018, this was the case in particular in respectof the Mercosur markets on the one hand and the United
Kingdom on the other, against the background of Brexit.

Mercosur
The Mercosur common market (Argentina, Brazil, Paraguay
and Uruguay) has a population of 260 million and represents
3.6% of global GDP. Its market is worth just over CHF 90 million for Swiss watch-industry exports, i.e. a level comparable
to the business done in Malaysia or in Oman. Over 270,000
watches were sent to this market in 2018.
Political change, globalisation and global or regional financial
crises have led the member countries to recognise the needfor real economic integration, both between themselves andwithin the global economy. This change of direction, or perhaps more aptly this need to catch up, was reflected in thecourse of 2017-2018 by a faster pace of negotiations withpartners such as the European Union, Canada and Japan andalso EFTA, with which negotiations on a free trade agreement
had already been opened in January 2017.
With the intention of giving fresh impetus to these negotiations, Swiss Federal Councillor Johann Schneider-Ammann,
accompanied by a delegation including the FH, travelled at
the beginning of the year to the four Mercosur member countries – because one of Switzerland’s objectives is to preventany discrimination against exporters, especially in relation totheir European or Asian competitors.
On several occasions in the course of this mission, the FH
stressed its support for a wide-ranging free trade agreement,
i.e. a text laying down first of all, a stable and transparent legal
framework but also one that is ambitious, notably in terms ofaccess to the markets (abolition of customs duties, eliminationof technical barriers to trade) and protection of intellectual property rights (trademarks, models and indications of origin). These
topics assume their full importance in the case of Mercosur, tothe extent that access to its different markets, more specificallyBrazil and Argentina, remains particularly complex and expensive.

The FH accompanied Johann Schneider-Ammann on an official visit to the four member
countries of Mercosur14

Quite apart from very high customs duties (the Mercosur common external tariff is 20%), a series of other charges and taxes
are also imposed on watches in Brazil. Moreover, the administrative regulations are expensive and fastidious; one of themeven requires a physical stamp to be affixed to each product,
certifying that it has been officially imported, as well as payment of the tax on industrial products. For the rest, protectionof marks and indications of origin remains highly problematic
because of delays on the part of the authorities concerned.
More specifically, a number of opposition procedures openedby the FH on grounds of unlawful use of the Swiss Made designation have now been pending for several years.

United Kingdom
As soon as the result of the UK referendum in 2016 wasannounced, Switzerland defined its Mind the Gap strategy toanticipate the consequences of Brexit, regardless of the final
scenario. The FH has been involved throughout the process,especially in late 2018 and early 2019, when the likelihood of a“no deal” took precedence over other options, although absolute
uncertainty remained the order of the day.
Discussions were therefore rapidly opened with London tosafeguard and even improve the mutual rights and obligations
stipulated until then in the agreements between Switzerland
and the EU, after 29 March 2019.
These negotiations led to the signing of a bilateral trade agreement on 11 February 2019. This agreement, which could theoretically enter into force provisionally on 30 March, covers
access to the market (customs duties and customs security),
preferential rules of origin, mutual recognition agreements on
conformity assessment (MRA) and public contracts, among
other factors. An agreement on the free movement of persons
was also approved by the Federal Council and another on airtransport was signed on 17 December 2018.

Eladio Loizaga Caballero, Paraguay’s Minister of Foreign
Affairs, with Johann Schneider-Ammann and a translator
In Argentina, watches made from precious metals are liable
for an additional luxury tax of 20%, which creates de facto
discrimination against Swiss timepieces.
All these obstacles hamper the development of the local markets and hence of business. A future free trade agreement
would, admittedly, only provide a partial response, but would
self-evidently be an essential first step towards reform andopening up of the world’s fifth largest economic bloc. For several decades now, Brazil and Argentina have been describedas markets with a promising future and it is high time for that
future to become a reality. Looking at the situation realistically,
the fact is that negotiations with the European Union are Mercosur’s priority at present. The early months of the Bolsonaro
presidency should therefore soon give an idea of the real scopeof his liberal policy in favour of international trade.

The issue of logistics, which is one of the most complex, remains
unresolved since a “no deal” with the EU would require therestoration of border controls and customs duties. AlthoughFrance has announced several measures to assure the continued operation of the Port of Calais, the situation remains more
uncertain on the UK side, even if tolerance and flexibility havealready been announced. All this assumes that European and
UK customs authorities would themselves already be able toapply the changed rules on the night of 29 to 30 March, which
certainly cannot be guaranteed.

15

Data protection
New regulation
In this age of digital technology and big data, data protection
is more topical than ever before. New protection standards
are being introduced, especially in the European Union (EU)with the entry into force of the GDPR (General Data Protection
Regulation) in May 2018. Swiss legislation on the subject isalso being overhauled at present.
The new European regulation is particularly important for
Swiss watch-industry companies because of its extraterritorial application. Every firm that supplies products or services
in the EU or processes European citizens’ data must comply
with the GDPR, even if the company concerned is not itself
based in the EU. A heavily export-orientated industry like ours
is therefore particularly affected by these provisions.
Seeking to ensure that consumers regain better control of theirpersonal data, the GDPR lays down a stringent and precise
framework for data gathering. This can no longer be done
without the knowledge of the person concerned and his or
her specific consent will often be required. A general principleof minimisation likewise implies that only data that are strictly
necessary for the desired purpose can be gathered and may
only be retained for a limited period. The company must be
perfectly transparent about its policy in this area and assure
maximum security as the default solution.
These obligations go hand in hand with stronger consumer
rights. Consumers can now ask a company at any time to
explain whether it holds data about them, and if so, whichdata. They may also ask for such data to be either amended
or deleted. Internal procedures must therefore be put in placeby the companies concerned to enable them to respond tothese requests within 30 days.
The GDPR also lays down tough penalties for companies thatfail to comply with its provisions: administrative fines equivalent to 4% of turnover or €20 million can be imposed in theevent of a serious failure to comply with the regulation.
Although the Swiss text is less stringent than its European
counterpart, it is likely to mirror the main lines of that regulation. The FH is keeping a close watch on progress in thismatter and will keep its members informed of any relevant
new developments.
In view of the significant consequences of these new standards for the watch industry, data protection was the subject
chosen for the 2018 legal seminar held on 27 November at theCongress Centre in Bienne. On that occasion, several speakers

Legal seminar held on 27 November 2018 on the subject ofdata protection
who are experts in the field discussed in turn, the key
principles of the GDPR, its applicability to Swiss companies,
practical aspects of its implementation and certain specificquestions, such as the issue of smart watches. The event
ended with a presentation of the revised text of the Swiss
Federal Act on Data Protection; this was attended by some
50 participants.

Panorama of the

172018 activities
As the leading association for Switzerland’s third-largest
export industry, the FH has many objectives: improving theunderlying conditions of the sector in Switzerland and therest of the world, dealing with the challenge of counterfeiting
and also, for instance, supporting its members and keeping
them, as well as the media and consumers, fully informed.
The following pages present a selection of actions taken by
the Federation in 2018.

18

Improvement of framework
conditions
Defending the interests of the industry at international level
led the FH to make representations throughout the year to theauthorities of many countries (see also the “Highlights” section).
These interventions took place in the context of negotiations on
the review or conclusion of free-trade agreements, either coinciding with official missions (State visits, bilateral mixed commissions and working groups) or in response to current eventsor directly on the basis of specific requests made by members.

The FH supported the motion, which should in the long run
respond to its concerns seeking to guarantee effective verification of consignments that are liable to contain counterfeit
watches. It has already made similar representations to members of the Federal Parliament.

The FH intervened officially in this way in more than 20 markets,
notably including Saudi Arabia, Brazil, Chile, China, Iran, Italy,
Myanmar, Thailand and Russia.
Market access conditions, technical barriers to trade, technicalor administrative regulations, distribution legislation and theprotection of intellectual property rights were among the mainareas of intervention. A few actions undertaken during the year
are outlined below.

International online commerce – Bühler motion
The growth of e-commerce is having a negative impact on thefight against counterfeit copying of watches. Many copies arebeing delivered in this way to purchasers. Checks on these
consignments need to be strengthened, but in fact the exact
opposite is happening. The Federal Customs Administration(FCA) is scaling back its activity to make savings. In reality,
however, there are no real savings to be made because thisverification service is paid for by the FH and the brands concerned. This money then ends up in the Federal Treasury andnot as FCA revenue.
On 27 February 2018, a delegation from the FH Legal Affairs
Commission discussed this issue with Federal Councillor Ueli
Maurer, Head of the Federal Department of Finance on which
the FCA depends. He showed a keen interest in the subject.
On 16 March 2018, National Councillor Manfred Bühler (UDC,
Bern) tabled a motion entitled “International online commerce.
Efficacy of the verification procedures used by the Federal
Customs Administration”. He called upon the Federal Council to simplify the legal provisions governing inspections andprocedures to make their implementation more effective andpermit adequate verification of online commerce. According to
Manfred Bühler, growth of international electronic commerce
may become a threat to Swiss branded products, affecting the
economic viability and innovation capacity of Swiss companies
as well as the security of consumers in our country.

Manfred Bühler, Member of the National Council
In its decision of 15 May 2018, the Federal Council proposed
the adoption of the motion, which the National Council validated on 15 June.
The motion must now be forwarded to the Council of States, inthe first instance to the Commission on Economic Affairs andLicence Fees and then to the plenary session of the Council.
The FH continues to monitor developments.

China
Federal Councillor Johann Schneider-Ammann paid an official visit to China from 5 to 9 September 2018. The FH waspresent and took the opportunity to stress the importance of
free trade and efforts to prevent the copying of Swiss watches.
With just under 1.4 billion inhabitants, China has the largest
population of any country in the world. It is benefiting froma long period of economic growth, admittedly not always on
the same scale, with GDP rising by 6.7% in 2016, 6.9% in2017 and probably around 6.5% in 2018 and 2019. China is19banking heavily on its “Belt and Road Initiative” to strengthencommercial ties with countries along the old Silk Road. In
particular, support is to be given to development in infrastructure, trade and the internationalisation of the yuan. There isalso a determination to strengthen integration with neighbouring states.
China is Switzerland’s third-largest economic partner worldwide, after the European Union and the United States, and its
leading partner in Asia. Switzerland mainly exports precious
metals, jewellery, pharmaceutical products, machinery andwatches as well as optical and medical instruments. It imports
machines, textile products, primary chemical products andhorological products. China is also a country in which direct
Swiss investments remain substantial and are continuing. On
the other hand, direct investments by China abroad are declining, particularly because of the control of outflows from thecountry put in place by the government.
China is the third-largest export market for our industry. After
years of decline, the industry returned to growth in 2017 andthat trend continued in 2018. China and its population areplaying a dynamic role in the current development of thewatch industry.
An impressive Swiss delegation accompanied Federal Councillor
Johann Schneider-Ammann, made up, in particular, of economic representatives as well as scientists and researchers.
The delegation met many Chinese officials, particularly those
responsible for industry: Miao Wei, Minister for Industry andInformation Technologies, Zhong Shan, Minister of Trade, and
Ma Zhengqi, Vice-Minister of Public Administration responsible for market regulation (SAMR), as well as the Deputy
Director-General of that administration.
During the meetings with ministers, the Chinese side
pointed out how highly Swiss watches are regarded by
local consumers.
SAMR is a new administrative body that combines the activities of Chinese state services: registrations and implementation of intellectual property rights including indications oforigin such as Swiss Made, verification of product quality,
anti-trust measures, inspection of foodstuffs etc. It is therefore
an important administrative authority for our industry in thecontext of preventing counterfeiting and unlawful use of the
Swiss Made designation.

Johann Schneider-Ammann and Hu Chunhua, Vice-Premierof China
The FH called attention to the positive role of free trade. Thisagreement, which entered into force in 2014, is a major step
forward to ensure a measure of legal certainty. It also makes
provision for a 60% reduction of customs duties which will not,however, take full effect until 2023. For the Swiss watch industry,
the priority for the review should be the customs duties applicable to finished watches, the aim being to achieve a further
reduction or even the complete elimination of Chinese duties.
Less than ten tariff headings are concerned here, but theyaccount for more than 95% of the total value of exports to
the Chinese market.
The FH also raised the issue of copies of Swiss watches andunlawful use of the Swiss Made designation. Cooperation
already exists with the responsible Chinese authorities andcounterfeit watches are regularly impounded. The Chinese
administration also acts to prevent unlawful use of the Swiss
Made designation, which misleads local consumers. However,a great deal of work still remains to be done. Following thechanges made to Chinese government bodies, in particularwith the creation of the new SAMR administration, we will
have to ascertain how this new entity will meet the needs ofthe FH in the fight against counterfeit watches and unlawful
use of the Swiss Made designation.

20Free-trade agreements
Negotiated over an eight-year period, the free-trade agreement between EFTA and Indonesia was signed in December.
The agreement will, in particular, improve access to the market (customs duties, technical barriers) and legal certainty
for trade in goods and services. More specifically, customs
duties on watch industry products, currently levied at therate of 10%, will gradually be abolished. Mechanical watches
will be exempt within nine years and other timepieces withinfive. With this agreement, which should enter into force in
2020, EFTA will become Indonesia’s first free-trade partner
in Europe.
The FH continued to focus on the practical application of theagreement with the Gulf Cooperation Council, especially inregard to Saudi customs procedures at Jeddah, Riyadh andDammam airports. These still require the compulsory separation of preferential and non-preferential consignments on
the grounds that combined consignments cannot be processed correctly. Moreover, certificates of origin still have to besubmitted on paper and no simplified procedure is possible.
Lengthy customs clearance delays, cumbersome administrative procedures and added costs are the direct consequences.

Johann Schneider-Ammann and Zhong Shan, Trade Minister
The mission by Federal Councillor Johann SchneiderAmmann to the republics of Central Asia (Azerbaijan,
Uzbekistan and Kazakhstan) provided an opportunity for the FH
to call attention to the importance of tariff barriers to imports
and the excessive number of administrative difficulties the distribution sector has to overcome (including customs procedures,customs clearance delays and bureaucracy). The FH also reiterated its request to the Kazakh authorities for an agreement tobe reached on the mutual recognition of the hallmarks struck onhorological articles in precious metals, modelled on the agreement concluded with Russia in 2013. At present, Kazakhstan
does not recognise Swiss hallmarks; hence the obligation of
inspection and marking.
The free-trade agreement between EFTA and the Philippines,
which entered into force on 1 June 2018, could not be immediately applied by the local authorities for internal procedural
reasons. The situation was normalised satisfactorily at the endof the year, so making the agreement fully applicable from24 October. Customs duties on horological products wereabolished on that date

The agreement with Georgia entered into force normally on
1 May, when customs duties on horological products werealso abolished.
Finally, while the agreement with Ecuador was signed in June,
negotiations with Vietnam made little progress in the courseof the year.
Last but not least, the opportunity for a bilateral agreementwith the United States is back on the agenda since Washington asked for exploratory discussions to be resumed with
Bern at the beginning of the year. Various evaluations will
have to be made first to determine the scenario for possible
negotiations. In particular, we will need to decide whether thearrangement should be wide-ranging, including agriculture,or more limited, bearing in mind the fact that negotiations
between the United States and other partners have reacheda much more advanced stage.

21

Protection of intellectual property
Whenever necessary, the FH took the opportunity of official
missions and other meetings of the bilateral joint commissions
to intervene in favour of the industry’s interests with regard toprotecting intellectual property rights or indications of origin.
While the contexts differ on each occasion, some constantfactors are unfortunately encountered in many jurisdictions.
One such problem resides in the difficulty of obtaining search
warrants, or still more seriously, legislative changes which,in effect, facilitate counterfeiting in Turkey, measures thatlack a sufficient deterrent effect in Vietnam and Thailand, orinsufficient support on the part of the Indonesian authorities, despite the flagrant visibility and very wide availability ofcounterfeit watches.

RoHS becomes universal (or almost)Drawing heavily on European legislation, Brazil proposes toadopt its own legislation on restricting the use of hazardous
substances in electrical and electronic equipment (RoHS).
RoHS concerns the watch industry directly because electronic
watches fall within its scope of application. Logically, therefore, the FH raised the subject of this draft legislation at theninth joint bilateral commission meeting between Switzerland
and Brazil. First, to welcome the fact that Brazil wishes to be
guided by European regulations and so take account of thenecessary harmonisation of rules at international level. As
European rules have laid down a global standard, any disparity at this level would, in effect, merely create real barriers
to trade with the accompanying economic impacts. It should
also be noted that European legislation includes a numberof exemptions that will have to be transposed, in particular
those concerning the possibilities for substitution of materials.
Finally, the FH stressed the importance of perfect harmonisation in respect of evidence of conformity. That evidence, infact, mirrors the European principle of technical documentation, which must be retained by the manufacturer and thenproduced only if an inspection is made by the authorities.
On this point too, the FH strongly encouraged the Brazilian
authorities to adopt a similar approach so as not to create asystem of parallel criteria, which would, by definition, be very
hard to implement.

The Eurasian Economic Community (Belarus, Kazakhstan,
Kirghizstan, Russia, Tajikistan, and some other observerstates) introduced RoHS legislation on 1 March 2018. However, a transitional period was laid down until its effective entry
into force on 1 March 2020; in other words, the products
concerned can be placed on the markets in the meantime
with no obligation of conformity.
The fact remains that, from the watch industry point of view,
this legislation still involves great uncertainty because it does
not clearly indicate whether electronic watches effectively fallwithin the scope of application.
While the supposition of outright exclusion of this type of
timepiece from the scope of application seems unlikely inprinciple, the FH asked for Eurasian RoHS legislation to beat least harmonised as far as possible with existing European
legislation. That request was put initially at the 19 th meetingof the Switzerland-Russia joint committee and then directly
to the Council of the Eurasian Economic Community, basedin Moscow.

ATA Carnet
The ATA Carnet is a highly appreciated tool to cover temporary
admissions or transit of goods (samples, professional equipment etc.). Today, just under 80 countries recognise the useof this Carnet. The Swiss watch industry is a major user andthe FH regularly asks the authorities of certain countries tojoin the international convention regulating its use. In thecourse of 2018, this was the case for emerging countries suchas Vietnam, Myanmar and various republics in Central Asia.
While it is true that the process of admission to the convention
often proves long and cumbersome, it does, nevertheless,more often than not result in a satisfactory outcome, as was
the case with Qatar last year.

22

Information and public relations

2018 General Meeting
The FH remains a key point of contact for the media, which
regularly ask questions about developments in the industry or
specific matters concerning watchmaking. The implementation of the new Swiss Made designation and the interpretationof the text of the revised ordinance have been the subject ofmany interviews and articles, as has the current situation of
the watch industry. For its part, the FH regularly circulatespress releases.
Over and above regular contacts with the watch industry press
and many requests made at exhibitions dedicated to the sector– the SIHH in January and Baselworld in March – the Chairman
granted interviews to Swiss and international media organizations. He also gave a number of lectures, in particular to the
SIHH 2018 in Geneva, the Federal Institute for Higher Vocational Training Studies in Geneva, the Cartier Watch Industry
Institute in La Chaux-de-Fonds, the Rotary Club in Granges, theSino-Swiss Forum Free Trade Agreement in Sankt-Gallen and
an official delegation from Saudi Arabia to the FH.

General Meeting
The 2018 General Meeting was held in Schaffhausen on 28
June in the presence of delegates and members of the FH
and numerous guests. The latter included Councillor of State
Cornelia Stamm Hurter, head of the Schaffhausen Cantonal
Finance Department, Peter Neukomm, President of the Cityof Schaffhausen, National Councillors Thomas Hurter (UDC,
Schaffhausen) and Philippe Bauer (PLR, Neuchâtel), together
with Mario El-Khoury, Director- General of the Swiss Centre
for Electronics and Microtechnology (CSEM), who was theday’s lecturer.

Berner Dictionary
The FH continued its work on the update of the Illustrated Professional Dictionary of Horology, widely referred to as the “Berner
Dictionary”. The objective is to review and update thousands

23of definitions and drawings, while also incorporating new words
and definitions. The project is being led by the FH with the helpof a standing group of experts, whose members are as follows:
Bernard Muller and Marlyse Schmid, designers and authors ofbooks about watchmaking, François Klopfenstein (ETA), Antoine
Simonin, former WOSTEP Director and publisher of books about
watchmaking, and Pierre-Alain Vuille, a former ETA staff member.

Watch industry statistics
The Swiss watch industry exports some 95% of its output.
As a reliable barometer of trends in the industry, the monthly
statistics published by the FH are a rich source of detailed
information. Gathered and compiled by the Federal Customs
Administration on the basis of export declarations, these data
enable the brands, in particular, to compare their performancewith the average and study precise trends. They are also thebasis for drawing up medium-term forecasts. Last but notleast, they provide answers to the many questions put by
analysts, journalists and students.
Watch industry statistics are the starting point for a more global
analysis of the market. This is published quarterly in the economic magazine Tendances (Trends). Many subjects are monitored continuously in order to highlight the general context andfactors influencing the progress of business. The major changes
confronting the industry also receive special attention. In 2018,
Tendances called attention to trends in the luxury market, tourism, smart watches, e-commerce, the rapid growth of the preowned market, changes in consumption patterns, duty-freesales and the challenges facing the retail trade.

Revue FH
True to its aims, the Revue FH continued to keep membersof the Federation and its many subscribers informed throughits 20 published issues. Among the topics covered were thelatest Swiss and international developments, news from watch
industry companies and sub-contracting, new products,
watch shows, museum exhibitions, auction sales, extracts
from the Register of Commerce and so forth. A special dedicated section described the different activities of the FH,
including presidential missions and travel, training provided
for the customs and police authorities, prevention of counterfeiting in the field and on the internet, and monthly watch
export figures. The publication is always highly appreciatedby its readers and advertisers alike.

The Chairman addressing the FH members and delegatesat the general meeting

WebsiteRegarded as a reference for matters relating to the watch
industry, the FH website was popular with visitors in 2018. Of
the millions of pages viewed, the statistics and the Illustrated
Professional Dictionary of Horology (Berner Dictionary) generated substantial traffic. Visitors also regularly viewed the News
section, which reports on the latest developments at the FH,
watch companies and new products launched on the market.

Presence at Baselworld
The World Watch and Jewellery Exhibition opened on 22
March and ran until 27 March. For its 101st event, Baselworld brought together 130 Swiss watch brands out of a totalof 650 exhibitors. Despite the fact that the show was open
for two fewer days than in 2017, the number of buyers andjournalists remained unchanged.

24

Thanks to its active cooperation with the Committee of Swiss
Exhibitors, the FH was present to serve as an interface withprofessionals and answer questions put by the media andpublic. Located in the press centre, the Swiss Exhibitors
Committee stand provided a particularly useful platform formeetings and dialogue.

watch.swiss

After Singapore in 2017, the FH continued to promote the Swiss
watch industry to the Asian public: from 6 September to 10
October, watch.swiss was present at the celebration organised
to mark the 15th anniversary of Taipei 101, one of Taiwan’s
most prestigious department stores. Longines, Rado, Tissot,
CK Watch, Swatch, Omega and Blancpain all took part in theevent. On the fourth floor, the Watch & Jewelry Salon offeredvisitors the opportunity to appreciate an elegant setting in which
contemporary artworks were showcased alongside exceptional
timepieces by Audemars Piguet, Breguet, Bvlgari, Chaumet,
Chopard, Hublot, IWC Schaffhausen, Officine Panerai, Piaget
and Roger Dubuis.
Finally, shortly before the Christmas season, watch.swiss visited
Frankfurt Airport in Germany. Fraport is the world’s thirteenthbusiest airport, number one in Germany and among the mostimportant in Europe. The area chosen attracted a large number of departing and arriving passengers as well as the people
accompanying them. 54% of them lived in Germany and 60%
were travelling to destinations in Europe, allowing the FH toreach both German and foreign consumers.

As part of its mission to promote the sector, the FH works
regularly to educate consumers across the world about thewatch industry using an exceptional tool: watch.swiss. As aninteractive, fun travelling exhibition, watch.swiss immerses
its visitors in the unique world of the Swiss watch industry.
Visitors will be fascinated or surprised by turn, learning how
centuries of history have conferred their unique character on
Swiss timepieces and discovering the genius of watchmaking
through timepieces with additional functions (‘complications’).
Thanks to a giant postcard, visitors can have their photos taken
in front of a landscape of their choice, while an astonishinginteractive work bench gives them an opportunity to feel what
it is like to be a watchmaker. For those who wish to broaden
their knowledge, a great deal of further information is available
on the dedicated website www.watch.swiss.
In April, the FH took part in large-scale awareness-raising
campaign directed at Russian consumers. Organised incooperation with the Swiss Embassy in Russia and the Swiss
Business Hub, the purpose of this operation was to enable
the general public to discover or rediscover a wide range of
Swiss products. Over a ten-day period, Swiss Days attracted
wide attention in St Petersburg. The chosen venue, Raduga(meaning rainbow in Russian) is a well-known shopping andleisure centre in the city. watch.swiss was present, alongside
four watch houses: Certina, Hamilton, Longines and Rado.

watch.swiss in Poland

25

watch.swiss à Francfort

watch.swiss in the Czech Republic

26

The fight against counterfeiting
Scope of activities
In 2018, the FH pursued many activities to prevent counterfeiting on behalf of the members of the Anti-Counterfeiting
Group (GA) and the Internet Unit. We are reporting only themost salient points here, as a separate detailed report on thesubject is available to interested readers on request.

Seizure operations on the markets
In the course of 2018, FH services (in Bienne and HongKong) dealt with over 2,757 cases across the world, ranging
from the seizure of small postal packages to large scale operations in assembly workshops and on storage premises. In
total, these widely differing cases involved the confiscation ofsome 1,110,000 counterfeit watches. Details of a few major
operations conducted during the year are set out below.

Mexico2018 saw the resumption in practice of FH activities in Mexico,after an interruption of more than four years due to procedural obstacles. The cooperation agreement signed in 2016
between the FH and the Mexican Public Prosecutor’s Office
had already been a significant step towards the resumptionof activities there. However, we still needed to organise a test
raid to make sure that the new procedure which had now been
set up would work smoothly.
The little island of Cozumel, lying off the coast at Playa delCarmen, was chosen as the target for this operation. Many
tourists disembark every day at its major port for cruise liners,
making it an ideal location for counterfeiters. The island’s
main avenue is lined with many jewellery stores and fraud
unfortunately flourishes here. Some boutiques were displaying
counterfeit watches alongside fake jewellery. The situationis all the more damaging as official retailers of luxury watch
and jewellery brands can be found just a short distance away.
Many complaints had been recorded by the local consumer
protection office, but they had never been followed up by
action. The decision was therefore taken to intervene, with thesupport of the Federal authorities to make this raid a success.
On 26 September 2018, four teams from Mexico took simultaneous action in previously identified jewellery stores. Even
though the number of pieces confiscated was relatively low,
this raid marked a turning point in local counterfeiters’ activity because it was the first operation of its kind undertakenon the island.

PolandThe small town of Wolka Kosowska lies south west of Warsaw.
Known mainly for its Chinese Trade Centre, it is neverthelessalso a hub for counterfeiters.
At nightfall, a big municipal car park is regularly transformed
into a market for counterfeit products. Makeshift stands set
up in the back of vans or even on the ground come to life fora few hours, enabling vendors of counterfeit products from allover the country to obtain wholesale supplies here.

Trial raid at Cozumel, Mexico

However, the configuration of this market makes it a difficult
target for raids. It is very open, so allowing the fraudsters
to make their escape easily and each intervention therefore
requires long and thorough preparation with the support ofaround a hundred members of the police force. As a partnerof the FH for many years, The Dutch company, REACT, which
has been a partner of the FH for many years, took part in the27whole process through its local branch, from the preparatory
stage to the inventory of seized goods.
A number of large-scale operations were conducted here in
2018; they enabled nearly 40,000 counterfeit articles, including some 300 fake Swiss watches, to be confiscated.

The Balkans
The Balkan countries outside the European Union – Albania, Macedonia, Serbia, Kosovo, Montenegro and BosniaHerzegovina – are a major market with their 18.5 million
inhabitants and a land area of 205,000 km2. To increase thenumber of counterfeit items seized here while reducing costs,
an action programme was put in place in cooperation with
REACT, starting in September 2018.
Market studies have already been performed in several towns,
notably Skopje in Macedonia and Belgrade in Serbia. This step
enabled problem markets to be identified and the necessary
measures to be taken in cases where justified by the situation.
Initial results are expected in the course of 2019.

PakistanAt the end of 2017, the Swiss State Secretariat for Economic
Affairs and the Federal Department of Foreign Affairs reported
seizures by the Pakistan customs authorities to the FH, a firstaction of this kind clearly linked to the entry into force of new
customs regulations on intellectual property. In view of thedeclared quantity (1200 pieces) and to encourage the local
authorities to act against counterfeiting, the FH decided totake follow-up action, despite the cumbersome and complex
administrative steps that had to be taken. In the end, thanks
to the support of the Director for Intellectual Property in thecustoms administration, the goods were sent for destruction.
Two other raids took place in June and September 2018 andthe FH intervened once again; as a result the goods wereabandoned by the importer.
However, one last case required the deployment of more substantial resources because the importer referred the matterto the High Court of Sindh; it claimed that the actions takenby the customs authorities were unconstitutional. In view of
the number of pieces seized (some 45,000 counterfeit Swiss
watches), the FH briefed local lawyers to plead this case, which
they did successfully. However, these proceedings made simplified legal action impossible and cases had to be brought in
the appropriate civil court in order to secure an order for theitems to be destroyed. A decision was handed down in favour

Pop-up stand in Polandof the rights holders but its enforcement is proving more complicated than expected because the importer is continuing touse every possible means to recover its goods. In other words,
no end to the legal case is yet in sight.

Hong Kong Watch & Clock Fair
The first week in September traditionally sees the opening of
the Hong Kong Watch and Clock Fair. The organiser hosted
830 exhibitors for the 37th edition of the event. Coming from25 countries, they covered the whole range of watch industry products from finished watches to marketing accessories
including specialist tools and a range of presentation casesand packaging, all on display in a colourful show which wasin some ways reminiscent of a souk or bazaar. Paradoxically,
it is also this aspect which enhances the charm of the exhibition and makes the distribution of the exhibitors particularly
attractive. This is a Far Eastern touch, in other words - spicy
and sometimes even too highly seasoned for the visitor toappreciate. In the section dedicated to manufacturers of luxury watches, astonished visitors come across such “prestigious brands” as ANPASSA, ARBUTUS, GOODYEAR, FOUETTÉ
or RENE MOURIS. Hard to understand! Be that as it may,the 37th edition clearly failed to attract enough exhibitors tofill all the halls of the Convention Centre in Wanchai. Vast
spaces, which had not been taken up by potential exhibitors,
were converted into rest and relaxation zones or cafeterias,
so discrediting to some extent the official figures announced
by HKTDC, the event organisers.

28

Hong Kong Watch and Clock Fair
The results of the surveillance action put in place by the FH for
the eleventh consecutive year show 31 complaints filed (27 in2017), 19 infringements acknowledged (17), 12 infringements
rejected (8) and no complaints invalidated (2).
It is worth recalling that the assessment criteria had beentightened up in 2017. Since then, the FH investigators havebeen instructed to focus on flagrant cases so that, in the end,
the outcome is much the same. The rate of recognition ofbreaches is also in line with that of previous years, reflecting
consistency in the treatment of complaints.
In addition, despite special attention, the surveillance did notlead to the identification of any unlawful use of the Swiss indication of source. This positive result can certainly be credited
to the awareness raising undertaken in this part of the worldby the FH and directed in particular at the watch industry
bodies which shape policy in Hong Kong.

Actions on the Internet
2018 saw major changes in action against counterfeiting on
the Internet as well as developments with which the FH had
to contend, and which make its mission ever more complex.
The European Union’s new General Data Protection Regulation, which entered into force on 25 May 2018, has a direct
influence on action against counterfeiting on the Internet.
Some registrars (domain name registration offices) reacted bymasking the data published in Whois (protocol enabling users
to look up the registration of a domain name or IP address)
because they were afraid of sanctions. In other words, the fightto close down counterfeiting sites lost an important source of
information. Although some counterfeiters had already beenresorting for many years to the anonymisation of Whois dataor provided far-fetched details, the email address did enablelinks to be established between the different domain names.
Information, even if false, was often identical from one site
to another.
Following the Facebook scandal over data protection, access(via Application Programming Interface: the interface thatgives access to a database and simplifies the interconnectionof different systems) to the Instagram database - owned by
Facebook - was blocked, making the search for offers of counterfeit products on this site far more difficult. Note: Instagram
is one of the social media most popular with counterfeiters
for the sale of their unlawful products.
In parallel with these political and technical developments,
another trend was observed: counterfeiters are tending to makeless and less use of text brands to promote their products. At
a time when advertising content is posted on a massive scale
to internet users, the traditional means of referencing content
by keywords and other metadata are no longer indispensable.
The FH has adapted to these changes and put new proceduresin place in order to ensure that an offer of counterfeit items
can still be detected effectively. In 2018, more than a million

29

offers were deleted from sales platforms and social media.
New platforms have also been added to our surveillance, enabling the defence of members’ interests to be extended tocountries hitherto disregarded in Europe and also in Asia. In
parallel, a procedure to seize assets was launched in orderto hit the vendors where it hurts.
In terms of action against dedicated sites, the FH innovatedwith the introduction of WebIntelligence 2, an entirely new
investigation. Among other things, this enabled proceduresto seize domain names – more than 400 domains – to be
set in motion and evidence to be provided for legal action
against a recalcitrant host responsible for hosting more than
200 counterfeit product sites. For further details, see theHighlights heading, page 9.

Technical analyses
In the year under review, FH watchmakers carried out technical analysis of 279 samples, i.e. 118 fewer items than in2017 (-30%). The outcome of these analyses was recorded in
272 reports on origin, 83 fewer than the previous year (-23%).
The pieces listed made unlawful use of 28 different marks(38 in 2017). The samples examined in 2018 were seized or
acquired in 18 different countries (14 in 2017). The watches
and reports were forwarded to the rights holders and also
to the bodies that had originated the confiscation actions.
In parallel, in the course of the same financial year, the FH
anti-counterfeiting service processed 1309 requests for certificates of counterfeiting, 42% more than in the previous year.
The reduction in the volume of activities linked to technicalinvestigations, already observed in 2017, continued in 2018.
The change in the treatment of customs seizures at the Swissborders associated with the full implementation of the Federal Customs Administration’s austerity programme is now
producing tangible and measurable effects. Using 2016 as
the basis for comparison, there was a very substantial reduction in inspections and confiscations in commercial traffic(-75%) under this programme in 2017 and 2018. It is worth
noting that in the early 2000s, the FH dealt with more than
1000 items a year (1237 in 2003). This changed practicehas been accompanied by another phenomenon that is fairly
widespread in our Western society, namely the increasingly
litigious approach to procedures. With hindsight, we are boundto point out that this approach has been accompanied by amanifest loss of efficiency. This trend also explains the substantial increase in the number of requests for certificates sent

to the FH (six certificates per working day during the financial
year 2018). Consequently, FH watchmakers currently spend
more time writing these certificates than they do analysing
counterfeit watches.
In terms of origin, most of the samples analysed in 2018
came from Asia, mainly either directly from China or in transit
via Hong Kong. While their origin is no longer a surprise, theway in which counterfeit products are delivered raises further
questions. Today, the counterfeiters are quick to benefit fromcompetition between different public and private postal services. CHINA POST (China - public) appears in the majority
of consignments, but we also regularly encounter DHL (Germany – private), ROYAL MAIL (Great Britain - public) and POST
NL (Netherlands - public). The fact that state or semi-stateagencies are involved in the trade in counterfeit products does
come as something of a surprise.
As usual, a substantial majority of the samples involved counterfeit brands and/or models. The remainder consisted ofunlawful indications of source, in other words all the items
that used a Swiss geographical indication (“SWISS MADE”,“FABRIQUE EN SUISSE”, or a derivative such as “GENEVE”)
in a misleading manner or in breach of regulation in force
in Switzerland or in the destination country. In the courseof the year under review, the FH drew up fourteen reportson this subject (39 in 2017), taking a detailed look at fifteen
samples (54 in 2017). For the most part, they were obtainedby test purchases made in order to flesh out existing files.

Package carried from China to Switzerland by Post NL

30

In 2018, the FH continued its collaboration with the Universityof Lausanne. In the financial year under review, researchers in
Lausanne studied the toxic effects of counterfeit watch components. This research, performed in two phases, involved
first an analysis of the chemical composition of a batch ofcounterfeit watch bracelets. In the second phase, a batch of
fake case middles was analysed. A range of sophisticated scientific techniques enabled the presence of metals with insidious effects as well as problematic molecules to be detected,
all this in concentrations that far exceeded the levels permitted
in Switzerland. Obtained after a robust and rigorous scientific analysis, these results are alarming. They clearly showthat the counterfeiters respect no international standards andare utterly indifferent to the usual standards of safety for thematerials and alloys they use.

Package carried from China to Switzerland by DHL
Alongside copies of brands or models we also find unlawful
technical indicators, first and foremost the “CHRONOMETER”
label and the Geneva hallmark, as well as false precious
metals hallmarks. In recent years, the “CHRONOMETER”
label, which nowadays enjoys high prestige, has proved attractive to the counterfeiters. In 2018, the FH recorded 80 casesof unlawful use of this label or its derivatives on watches andon the commercial documents accompanying the timepieces(97 in 2017).
After processing in the database, all the information gatheredin the course of the year enabled eight summary reports
to be drawn up (ten in 2017). These supplement individual
reports on origin. Based on a group of not less than fifteen
pieces, these documents provide a statistical panorama of
counterfeiting by brand and model, so offering further points
for consideration, that can be incorporated into the preventive
strategies developed by the companies concerned.
In parallel, eminently practical use was made of all these summary data in the preparation of a guide for the identification ofcounterfeit products for use by Mexican officers. This guide
was distributed on the occasion of the training session given
in Mexico in 2018 (see Highlights heading, page 11).

Origin of counterfeit products impounded at European
borders (source: Taxud 2018)

31

Fragmented distribution networks
In face of growing pressure from the rights holders and institutions, sellers of counterfeit products have shifted their distribution activities onto social media. As a result, transactions
now take place in a private discussion space beyond ourradar, so enabling relatively highly priced pieces to be put on
the market while minimising the risks of seizure and henceof financial loss. This changed modus operandi has allowed
the emergence of a new generation of counterfeit watches.
The quality improvements observed in 2018 relate to all the
product components: decoration and movement as well as
commercial documents and delivery methods. The counterfeiters’ professionalism and technical capacities therefore
progressed yet again in the year under review.

32Standardisation
With the help of its Standardisation Commitee (SC), the FH
coordinated and followed up several national (NIHS) and international (CEN and ISO) projects.
At the level of national standardisation, the main projects
involved the reorganisation of work by setting up a task force,the validation of two new standards (NIHS 06-10 and NIHS
06-11) for miniature threads (basic profile, tolerances and reference standard), the merger of ten standards into one single
text (NIHS 53-03) for watch industry screws and the merger
and transposition into an NIHS guide of the standards for watch
industry jewels and bushings. Work on the revision of standard
NIHS 91-30 - Definition of linear accelerations of wristwatches
when abrupt gesture and wear shocks continued in cooperation
with an HES student who chose this as the subject of her bachelor’s degree project. The new draft standard for quality controlof small diamonds also took on a new dimension, collaboratingon the ASSURE project of the Diamond Producers Association.
Eleven NIHS standards were examined by various watch industry experts in 2018. Four of them, concerning dials and hands,
were transposed into an NIHS guide, while two others werewithdrawn from the collected NIHS standards and the last fivewere still being assessed at the end of the year.
The NIHS service at the FH has been asked by the Swiss Association for Standardisation (SNV) to provide the secretariat for
the interdisciplinary committee INB/NK 164 - Jewellery, an
institution which mirrors the four corresponding committees at
European (CEN) and international (ISO) level. Working in cooperation with the appointed experts, it is therefore responsible
for acting on the votes initiated by these committees and thenforwarding a representative position statement for the whole of
the Swiss industry to the SNV. Some 30 votes were coordinatedin this way last year. Two INB/NK 164 plenary sessions were
held and the main subjects discussed were enamels incorporating lead, the new draft text concerning the clarity of watchglasses, nickel release, reactivation of the ISO/TC 174/WG 2
working group concerning diamonds and precious stones andthe colour of gold alloys.

Turning to international standardisation, the main event in 2018
was the organisation of two working days on 20 and 21 Marchat Freiburg im Breisgau. Steady progress is being made withISO draft texts, including publication of the revised standard
ISO 6425 – Divers’ watches and further work on draft standards
ISO 764 – Magnetic resistant watches, ISO 14368-4 – Mineraland sapphire watch-glasses - Part 4: Coating performance andISO 18684 – Timekeeping instruments – Watch external parts
made of hard materials – General requirements and test methods.
In parallel, a working group studied a potential improvement tostandard ISO 22810 – Water-resistant watches.
Finally, as part of the systematic examination process, standard ISO 3158 – Timekeeping instruments – Symbolization ofcontrol positions was confirmed for five years, while standard
ISO 4168 – Timekeeping instruments - Conditions for carrying out checks on radioluminescent deposits will certainly be
withdrawn and its relevant sections may be incorporated into
the revised version of standard ISO 17514 – Time-measuring
instruments – Photoluminescent deposits – Test methods andrequirements, on which work is due to begin in 2019.

33

Legal, economic and commercial
services
Several services are available on the FH Extranet site.
They are reserved for its members, giving them access toprivileged information and useful working tools. Topical news
items linked to the FH activities or matters of direct concern
to members are updated regularly

Legal services
The Swiss Made designation, hazardous substances, rulesof origin, competition law, legislation on money laundering in
Switzerland and data protection were just a few of the topics
examined by the FH legal service in 2018.
The FH continued to provide extensive information to its members on the Swiss Made designation (see Highlights section,
page 8).
2018 also saw wide-ranging action to monitor environmental
legislation. The FH responded to consultations organised byvarious authorities to defend the interests of the Swiss watch
industry on several occasions – for instance, in the case of theEuropean Union’s RoHS (Reduction of Hazardous Substances)legislation, which defines limit values for several chemical substances that are used in electrical and electronic equipment,
including quartz watches. This directive is likely to evolvein the near future, since a consortium was recently tasked
with a review of the substances concerned by the European
Commission. However, the FH takes the view that the firststep should be an examination of the process and criteria for
selection of the substances before moving on to the stage of
dealing directly with some of them.
Lead was another important matter on which the FH kept
a close watch. On 27 June 2018, the European Chemicals
Agency and the Member State Committee decided to add
the substance to the REACH candidate list, an index of substances that are classed as particularly hazardous. The addition of a substance, provided that it is present in a concentration of more than 0.1%, has immediate consequences forthe suppliers and importers of the articles concerned. The
information that must be supplied to the consignee of the particular article or to consumers (on request within a time limit of
45 days), must include at least the name of the substance inquestion and is intended to permit totally safe use of the article
concerned. Switzerland, which normally transposes REACH
provisions into its own domestic law, has already responded
and adapted the chemical products Ordinance accordingly.

The FH therefore contacted its members in September 2018
to inform them of the new situation and call their attention to
the legal requirements.
European data protection legislation (GDPR) was the subject chosen for the FH legal seminar (see Highlights section,
page 15).

Economic services
Members of the association have gained access to extensive statistical and economic information by visiting the FH
Extranet. They have been able to consult the full databaseof Swiss watch industry export statistics, quarterly analysesof the trend of the industry and the magazine Tendances(Trends) as well as information about exports by the othermain players at global level.

34

Relations with the authorities
and economic circles
Parliamentary group on the watchmaking
industry
At the instigation of Didier Berberat, Member of the NeuchâtelStates Council, a meeting with ten members of the Federal
Parliament was held in Bern on 25 September 2018. Following introductory statements by the FH delegation, discussions centred on the following subjects: implementation of
Swissness legislation in the watch industry and action to prevent misuse, the importance of free trade for the Swiss watch
industry and ongoing negotiations (in Indonesia, Mercosur andIndia), imports of counterfeit watch products into Switzerland
and the Bühler motion on international online commerce.

Watchmaking associations
For the 20th year in succession, watchmaking associations met
at Baselworld at the invitation of the FH to discuss topics ofinterest to the sector as a whole. The meeting was attended
by representatives of the following countries: Germany, China,
France, Hong Kong, Italy, Japan and Switzerland.
During the traditional review of economic trends affecting
the watch industry, most delegations announced rather contrasting results for 2017. While China, Japan and Hong Kong
reported falling watch industry exports, Switzerland welcomed
the upturn in business on the Hong Kong market after several
challenging years. The delegations remained fairly optimistic
for the 2018 financial year, which should produce encouraging results.
Turning to strengthening the Swiss Made label, the delegations
signified their interest in receiving the latest information on
the subject, especially the possible new calculation criteria.
Connected watches were also discussed and in particular,
how to tackle the question of their classification. Switzerland,
France and Japan argued for them to be classified in the same
category as traditional timepieces, either as a mark based on
the NICE International Classification of Good and Services
or according to the harmonised tariff of the World Customs
Organisation. These countries indicated their wish to makerepresentations to that effect to the different authorities. China
also reported a big increase in connected watches for children.
Finally, the participants voiced their concern over the technical legislation that is springing up almost everywhere. This
creates numerous difficulties for watch industry companies,

given the lack of any real harmonisation between the various
new laws. In particular, the new South Korean legislation onnickel release requires an extremely cumbersome certification process. The same applies to legislation in the United
Arab Emirates on electrical and electronic equipment. It wassuggested that the various industries concerned should act
directly with the authorities of the countries involved to seeka simplification of the regulations.

economiesuisse
As an active member of economiesuisse, the FH is represented on the following bodies: General Meeting (Jean-Daniel
Pasche, FH), Committee (Thierry Kenel, Swatch Group,
Me Theda Koenig Horowicz, Rolex, and Cédric Bossert,
Richemont), Executive Committee (Thierry Kenel, Swatch
Group), Board of Association Managers (Jean-Daniel Pasche,FH), Legal Commission, WTO Working Group, Working Groupon questions of origin and customs issues, Expert Group on
intellectual property, Working Group on short-term economic
issues, Working Group on relations with the European Union,
Competition Commission.

Switzerland-China Watch Industry Working
Group
Established under the bilateral free trade agreement, the working group met for the fourth time at Shenzhen in December.
The Chinese delegation was led by Cao Xuejun, Deputy
Director-General at the Ministry of Industry and Information
Technologies, and Zhang Hongguang, President of the
China Horological Association. For its part, the Swiss delegation was led by Christine Büsser Mauron, Head of the
Bilateral Asia-Pacific Economic Relations Section” at theState Secretariat for Economic Affairs (SECO), and Jean-Daniel
Pasche, FH President.
The group began by examining Chinese regulatory provisions
on hazardous substances (RoHS 2 China), which enteredinto force in July 2016. Some details were given about its
implementation, with particular reference to the “ComplianceManagement Catalog” which took effect on 15 March 2019;consequently, work on the “Conformity Assessment System”
has continued.

35

Meeting of the Sino-Swiss watch industry working group at Shenzhen
Turning to customs duties and taxes, the Swiss delegationreferred to the impact of the charges imposed at present, including in particular the consumption tax, which is unlikely to bereviewed in the near future. SECO and the FH also reiterated
their wish for an early re-negotiation of customs duties adopted
under the free trade agreement, which has now been in force forfour years. On this occasion, the Chinese representatives statedthat the flat tax on individual imports (the “Parcel Tax” applied
to personal shipments and imports) had been cut on 1 November 2018 from 60% to 50% for watches with a value in excess
of 10,000 renminbi and from 30% to 25% for other watches.
The main topics on the working group’s agenda were once again
the prevention of counterfeiting and protection of intellectual
property, which took up most of the discussions. Subjects discussed included the persistence of highly visible and active
counterfeit product markets such as the Silk Market in Beijing
and the recent significant increase in lookalike copies, in otherwords counterfeit copies of iconic models often sold undercreatively invented brand names. Another issue raised was
the sale of counterfeit watch products on the internet, which,because of its scale, has become the number one problem. On
this latter subject, the Swiss delegation stressed, in particular,
the legal and administrative difficulties that persist during theintervention procedures seeking to deal with the host platforms.
Obviously, the fight to prevent unlawful use of indications oforigin is equally important. Unfortunately, unauthorised use of“Swiss Made” in the watch industry remains far too widespread.

Clearly, much work remains to be done on the protection of
intellectual property in China. Within its field of competence, theworking group has so far managed to achieve some advances
which have not yet achieved their full effect, such as the provision by the Hong Kong FH Center of a hotline to help withauthentication of marks/models and transmission by the FHof lists of Chinese brands that are active in counterfeiting or
make unlawful use of the Swiss Made designation. At this latest
meeting, the Chinese delegation tabled a proposal for cooperation on training in product authentication.
The second part of the meeting was dedicated to a visit to Fiyta
Holdings, during which the participants were able to familiarise
themselves with the firm’s various activities: manufacturing,assembly, distribution and so on.

Standing Committee of the European Watch
Industry
At the invitation of Assorologi, the German, French, Italianand Swiss delegations to the Standing Committee on European Watchmaking (CPHE) met in the Piedmont capital on 12
October for their annual gathering. Chaired by Mario Peserico,the meeting first provided an opportunity for an exchange ofviews on the economic situation of the watch industry and theoutlook in different parts of the world. The special situations
created by Brexit, by the restoration of US sanctions against
Iran and, more generally, by US trade policy, were the subject

36

of numerous exchanges. The implementation of the Swiss
Made label in the watch industry and the future developmentof trade shows were also discussed.
Among the technical subjects raised, the CPHE noted that, in
its ruling of 23 October 2017, the Luxembourg Court finallyrejected the complaint by the European Confederation of
Watchmakers-Repairers concerning the refusal of Swiss producers to supply spare parts to unapproved watchmakers-repairers. The Court accordingly confirmed the position adopted
by the European Commission. In August, the Swiss Competition
Commission (Comco) had, for its part, concluded the preliminary investigation of the non-delivery of spare parts to unapproved watchmakers on the Swiss market. By dispensing withthe opening of a formal investigation, Comco therefore closed
the matter, thus confirming the legality of selective distributionagreements.
The members of the CPHE also discussed the matter of theclassification of connected watches in the nomenclature of
the harmonised customs system. The divergent interests ofthe main countries concerned (United States, South Korea,
European Union, Japan and Switzerland, among others) were
fuelling the controversy over their classification as horological products (Chapter 91) or electronic products (Chapter 85).
As the FH had already done in its dealings with the Federal
Customs Administration, the CPHE agreed to submit its position

to the European customs authorities in favour of a classificationin Chapter 91, mainly on the grounds that connected watches,
which show the time in an autonomous manner and are similar in size and external appearance to a traditional wristwatch,
do indeed have all the characteristic features needed to beclassed in that chapter.
Turning to chemical substances, lead, which is habitually foundin the form of alloys in certain watch movement components,
is increasingly becoming the target of action by the European
Commission. While the use of lead is already regulated by
RoHS for electrical and electronic products, it was placed on
the REACH candidate list last June; in the long run, this may
result in the prohibition of its use on the EU market. Today, theREACH regulation already imposes restrictions on the use oflead in jewellery; by analogy, these restrictions likewise apply towatches. The watch industry, however, currently benefits froman exception (until 2021) to the extent that the lead in questionis incorporated into movement components and therefore does
not come into contact with the skin. A decision is awaited on
the renewal of this exception, which has been requested by
the FH and CPHE.
Finally, in accordance with the alternation arrangements stipulated in the articles of association, the Swiss delegation, i.e.
the FH, agreed to take over the chairmanship and provide
the general secretariat of the CPHE for the period 2019-2021.

37

FH centres abroad
FH Centre in Hong Kong
In 2018, the FH Centre in Hong Kong pursued a series of activities to benefit the sector and members of the Federation. First,
it assisted the many delegates from FH member companies
who were travelling to the region and their Asian representatives.
This regular assistance covers such varied domains as puttingcommercial or industrial partners in contact with each other inHong Kong, China or elsewhere in the region, identifying qualified personnel, helping with company formations and accompanying personnel on their visits to markets in South-East Asia.
At the same time, the FH Centre maintained regular contacts
with the media, local professional organisations, the authorities
and diplomatic representations throughout the region.
The Hong Kong Centre also responded to many requests madeby FH members, especially in the legal field and on preventing
counterfeiting throughout the zone. In particular, it provided
its support for many brands to facilitate their registration with
the Chinese and Korean customs authorities. Similarly, it conducted several dozen investigations of local companies and filed
a number of oppositions each month against the registrationof marks in Class 14 (watch industry), both in Hong Kong andelsewhere in the region.

FH Centre in Tokyo
On the Japanese market, the FH Centre in Tokyo provided
support to FH members and their local agents by supplying
commercial information, establishing business contacts andproviding linguistic assistance, among other things. It also
acted on requests from the media and maintained a close
relationship with local professional organisations and diplomatic representations, as well as responding to specificrequests received on a daily basis from Japanese consumers
or companies.
The FH Centre also assured regular follow-up in the area ofafter-sales service, now that some brands no longer provide
maintenance services for old models. This is one of the reasons why the FH Centre manages an after-sales service pool,to the benefit of a number of Swiss brands.

In the spring, the FH Centre in Tokyo published the 2018 edition of its fifth biennial survey of watch consumption on theJapanese market (Japan Watch Consumer Awareness Survey2018). Once again, the survey broadened its field of investigation to provide a more detailed analysis of some areas
suggested by local distributors of the brands. The results andanalyses are, of course, available on request.
Finally, at the end of the year it organised a seminar for local
distributors and agents. A presentation of the activities andservices provided for the benefit of the brands, changes in theJapanese market in recent years and a discussion on current
market trends were among the items on the programme forthe 40 or so participants.

The Swiss watch

39

industry in 2018
The statistics processed, distributed and analysed by the FH
are a key indicator for the sector. Prepared by the Federal
Customs Administration on the basis of declarations madeby firms, they constitute the main official, regular and reliable
source for monitoring the development of watch exports.
Through a wealth of detailed information concerning markets,
products and price segments, the FH can pinpoint recent or
historic trends in the Swiss watch industry.

40

Watch industry statistics
General situation
The Swiss watch industry reported good results overall in 2018.
However, this success was not shared by all the different segments, channels, markets or players. While export volumes
continued to lose ground, even falling below a historically low
threshold, the value curve proved more favourable. Nonetheless, it reached a turning point last summer and since then,
the trend has shown a gradual slowdown.
The short and medium-term outlook is fraught with many
uncertainties, while risks in the general context rose sharply
in the early part of the new year. The shutdown and politicalface off in the United States, the yellow vests movement inFrance, preparation for Brexit in the United Kingdom, thetrade war between China and the United States and the global
economic slowdown – especially in China – are all factors that
disrupt the progress of business and make the situation overthe coming months hard to predict.
The main players in the industry are well aware of this situationand have already placed their reservations on record. The
Crédit suisse analyses and those made by the EPFZ Shortterm Economic Study Centre have confirmed the need forcaution, as do the low average expectations of Swiss retailerson the one hand and watch industry companies on the other.

Swiss watch exports (in billion francs)

At the same time, some brands also see attractive opportunities and are confident for 2019.
Despite all this, the luxury goods market as a whole is developing well and forecasts are now highly optimistic. This finding
is somewhat confusing, insofar as the Swiss watch industry
is not keeping pace with the momentum in the wider market.
It definitely appears to be exposed to keener competition in
all market segments. At the top of the range, personal luxury
goods in the jewellery, leatherwear or fashion segments are
the preferred purchases of wealthy customers, together witha new emphasis on experiences and services. In the entry
level range, fashion watches – non-Swiss made - and smartwatches are also exerting real pressure on Swiss products.
While the general environment is synonymous with challenges
to the Swiss watch industry, the sector is also having to take up
the gauntlet of adapting its own distribution system, which has
rapidly become a major factor in reaching out most effectively
to clients and satisfying their many different expectations. The
principal factors shaping distribution today are the integrationof digital channels and the increasingly pressing need to cover
every possible channel. In addition, consumers are showing aheightened awareness of sustainable development and callingfor greater transparency on the part of manufacturers.

41

Swiss exports of watches
Wristwatches accounted for 95% of total watch industry
exports, by value, reaching CHF 19.9 billion, an increase of
6.1%. Volumes failed to keep pace, with the sector recording
a decline of 2.3%, to 23.7 million items. This was 570,000
fewer timepieces than in 2017. The reduction in volume wasdue to quartz watches, with the number of items declining
by 5.0%, despite an increase in value (+4.2%). Mechanicaltimepieces, conversely, increased by both value (+6.6%) andvolume (+3.9%).

Exports of wristwatches (in billion francs)

Watches by price range

Among the most significant developments in the watch industry landscape, we also note the rapid growth and structuringof the pre-owned market. Today, major platforms are offeringcertified, guaranteed products that reassure consumers. Thisniche segment has real potential for the future.

Watches priced below CHF 500 (export price) fell back, particularly in the number of items exported (-5.0%). Above CHF
500, results were similar and very positive: +7.5% by value
and +8.1% by volume.

In a complex and uncertain environment, the Swiss watch
industry is having to contend with many challenges. While thelonger-term outlook remains positive, prudent optimism must
definitely be the order of the day for 2019. Combined with theeconomic slowdown and underperformance of the wholesale
sector, the very unfavourable base effect, especially in the firsthalf of the year, will have an adverse impact on export trends.

Trend of the different materials
The principal materials – precious metals, steel and bimetal – all
saw significant increases in value. Steel, used for over half of allwatches, also saw an increase in volume (+4.3%). Conversely,
the number of items in the Other materials category declined
by 15.2%, while the Other metals group fell by 12.7%.

Swiss watch exports
The outturn for watch industry exports in 2018 was in line with
forecasts. The steady pace of growth early in the year saw adecline from the summer onwards, due to a less favourable
base effect, but remained positive overall. Some signs of aslowdown in China, in particular, played a role in this trend
while, over the same period, the United States saw signifi cantly faster growth. Macroeconomic, commercial and political uncertainties influenced developments in the sector, which
also had to deal with competition from other luxury goods
and connected objects. 2018 was also marked by significant
changes in distribution. The value of Swiss watch exports overthe 12 months was CHF 21.2 billion, an increase of 6.3% over2017. Growth was particularly strong during the first half ofthe year (+10.6%), but slowed to +2.3% in the second half.

Exports by price segment (variation compared with 2017)

42

Europa6,556.7-2.9%

America
2,972.1+7.2%

Asia
11,201.1+12.2%

Africa185.7-5,8%

Oceania257.5+18.7%
World
21,173.2+6.3%

Total value of exports in 2018 (in million francs)

Main markets
growth (+11.7%), with a gradual slowdown from January
onwards. Japan (+9.1%) picked up signifi cantly, following
the reductions in recent years, and peaked in the summer.
Singapore (+0.7%) and Taiwan (+0.8%) were stable, while
South Korea (+25.7%) recovered strongly.

The growth in Swiss watch industry exports was led by the
Asian market, while the increase in America was offset by the
downturn observed in Europe. Asia represented 53% of thesector’s turnover and grew by 12.2%. America (+7.2%), led
by the United States, also contributed significantly to overall growth, accounting for 14% of exports of Swiss watches.
Europe (-2.9%) remained an important market, with a 31%
share, but its situation was less positive in 2018.

The United States (+8.2%) returned to growth after three years’
decline, with the pace of growth accelerating throughout 2018.

Most Asian markets grew, more or less strongly. Hong Kong(+19.1%) was a star performer, with very strong growththroughout the year. China ended the year on slightly lower

Last year’s declining markets were all in Europe. The downturn in the United Kingdom (-4.4%) has changed very little since the spring. The Southern European markets – Italy

43

Specifi cally, a sharp downturn (-14.3%) in export sales ofalarm and other clocks was reported for the third year in arow. Pocket watches (-22.4%) followed the same trend. At thesame time, the number of exported movements increased by
3.7%, to just under five million pieces.
Exports of watch cases and wristlets rose strongly, mainly asa result of processing traffic.

Watch industry imports
Swiss watch industry imports rose steeply in 2018. Their total
value passed the CHF 4 billion mark, 13% higher than in 2017.
Half of this growth was generated by wristwatches (+11.5%),
although their volumes fell (-3.3%). Wristlet imports also contributed to the overall rise, largely because of processing trafficand components.

Main export markets in 2018(-14.3%) and Spain (-11.4%) – were particularly badly affected.
By contrast, Germany (+4.3%) experienced steady growth.
France (+9.1%) benefited from a strong first six months, clearlybuoyed by a significant increase in re-exports, while the second six months were practically flat.

Other exported products
Although wristwatches accounted for just under 95% of thevalue of watch industry exports overall, other products werealso shipped abroad in 2018. These included both finishedarticles – such as clocks, alarm clocks and pocket watches –and spare parts. The total value of these items was CHF 1.2
billion, up 8.9% on 2017.

Swiss watch imports (in billion francs)

Structure of

45

the FH in 2018
An organisation representative of the Swiss watch industry as
a whole, the FH has the following main tasks and objectives:
helping to defend and develop the sector, establishing a permanent link between its members in order to promote theirshared interests, representing the Swiss watch industry in its
dealings with Swiss and international economic authorities andorganisations, asserting the interests of its members duringconsultation procedures preparing the ground for nationaland foreign legislations, defending its members’ interests inthe legal arena, and fighting actively against infringements
of intellectual property rights and acts of unfair competition.

46

The FH in 2018
On 31st December 2018, the FH included 428 companies,
associations and institutions (approximately 90% of the Swiss
watch industry manufacturers), including 167 firms in the finished products sector. In terms of products, markets and busi-

ness size, the Swiss watch industry is characterised by its very
great diversity. The FH is therefore structured with a view toharmonising the different interests of its members through thebalanced composition of its statutory organs.

General Meeting
60 delegatesCouncil20 delegates

Bureau5 members

Presidency

Commissions

47

The General Meeting
Governing body of the association, the FH General Meeting
comprises a maximum of 60 delegates totalling 60 votes. Lasting three years, terms of office are renewable.

bers to the Board, as well as the president of the association,
and appoints the auditor; it discusses and approves the annual
report and the accounts, as well as the scale of subscriptions.

The General Meeting takes decisions on issues submitted to
it by the Board concerning the interests of the Swiss watch
industry and the association’s general policy; it elects mem-On 31st December 2018, the FH General Meeting was composed of the following delegates (some with more than onevote):

Grégory Affolter
Pignons Affolter SA
Karlheinz Baumann
Richemont International SA
Denis Bolzli
Aéro Watch SA
Cédric Bossert
Richemont International SA
Patrick Brandelet
Joray & Wyss SA
Pascal Bratschi
Manufacture des Montres Rolex SA

Thierry Kenel
The Swatch Group SA(FH Vice President)
Chrisitan Klever
Breitling SA
Aurélien Le Bigot
Zenith, Branch of
LVMH Swiss Manufacture SA
Giuseppe Maesano
Universo SA
Alain Marietta
Métalem SA

Sébastien Roche
TAG Heuer, Branch of
LVMH Swiss Manufactures SA
Alain Sierro
Fraporlux SA
Manuela Surdez
Goldec SA
Alberto Tellan
Manufacture des Montres Rolex SA
François Thiébaud

Pierre-André Meylan
Piguet Frères SA

Tissot SA

Dino D’Aprile
Rubbattel & Weyermann SA

Olivier Montavon
Simon et Membrez SA

La Montre Hermès SA

Pascal Dubois
Dubois Dépraz SA

Corine Neuenschwander
Neuenschwander SA

Joris EngischJean Singer & Cie SA

Marianne Pandiscia
Multitime Quartz SA

Christian Feuvrier
Nivarox-FAR SA

Jean-Daniel Pasche
FH President

David Guenin
Gimmel Rouages SA

Flavio Pellegrini
MGI Luxury Group SA

Jean L. Guillod
Guillod-Günther SA

Adrianna Pozza
Victorinox Swiss Army SA

Philippe Gurtler
Rolex SA

Daniel Rochat
Patek Philippe SA Genève

Pierre-André BühlerETA SA Manufacture horlogère suisse

Pierre Verdière

Andreas Voll
IWC Schaffhausen,
Branch of Richemont International SA
Claude Vuillemez
Richemont International SA
Roger Wermeille
Le Castel Pendulerie Neuchâteloise
Eric Yersin
Raymond Weil SA
Vladimiro Zennaro
Bergeon SA

48

The Board
Comprising twenty members elected for three years by theGeneral Meeting, the FH Board, which meets four times a year,
has the following main attributions: it defines the association’s
policy and monitors its application; it rules on the admission ofmembers; it gives its opinion on issues to be submitted to theGeneral Meeting and executes the latter’s decisions; it elects the
Bureau and appoints the vice-president(s); it appoints headsof division and commission members; generally it assuresa permanent link between members of the association, theauthorities and third parties; it approves agreements concluded
between the association and its members or third parties; etc.

Raynald Aeschlimann
Omega SA

Olivier Montavon

Denis Bolzli
Aéro Watch SA

Arianna Pozza

Cédric Bossert
Richemont International SA

Daniel Rochat

Pierre-André BühlerETA SA Manufacture horlogère suisse

Sébastien Roche

Christian Feuvrier
Nivarox-FAR SA

On 31st December 2018 the Board was composed of the following members:

Simon et Membrez SA

Victorinox Swiss Army SA

Patek Philippe SA Genève

TAG Heuer, Branch of LVMH Swiss Manufactures SA
Alain Sierro

Philippe Gurtler
Rolex SA

Fraporlux Swiss SA

Thierry Kenel
The Swatch Group SA

The Swatch Group SA

Christian Klever
Breitling SA
Massimo LongoRoventa-Henex SA
Alain Marietta
Métalem SA

Peter Steiger

Alberto Tellan
Manufacture des montres Rolex SA
Andreas Voll
IWC Schaffhausen, Branch of Richemont International SA
Claude Vuillemez
Richemont International SA

49

The Bureau and the Commissions
Comprising the president, the two vice-presidents and two
members, the Bureau examines issues delegated to it by the
Board and, exceptionally, questions of an urgent nature.

The FH also has six permanent Commissions responsible
for examining issues of general interest dealt with by the
association.

At the end of 2018, its composition was as follows:

The Commissions and their presidents:

Jean-Daniel Pasche
FH

Economic Commission
Thierry Kenel

Carole Décosterd
Rolex SA

Financial Commission
Pascal Bratschi

Thierry Kenel
The Swatch Group SA

Legislative monitoring Commission
Olivier Blanc

Alain Marietta
Métalem SA

Legal Affairs Commission
Jean-Daniel Pasche

Daniel Rochat
Patek Philippe SA Genève

Standardisation Committee
Silvano Freti

The president of the Financial Commission is regularly invited
to attend the Bureau’s meetings.

Anticounterfeiting Group
Jean-Daniel Pasche

50

The Divisions and theDepartments
On 31st December 2018 the FH employed 31 people full-timein Bienne (31 in 2017). Its organisation chart is as follows:

Presidency
Jean-Daniel Pasche

Communication
Philippe Pegoraro

Information Department
Janine Vuilleumier

Economic Division
Maurice Altermatt

Legal Division
Yves Bugmann

Adminstrative Division
David Marchand

External Affairs
Department
Maurice Altermatt

Legal Department
Yves Bugmann

Administration
Department
David Marchand

Economic and Statistical
Department
Philippe Pegoraro

Anticounterfeiting
Department
Michel Arnoux

Information Technology
Department
Fabrice Erard

Promotional Affairs
Department
Hélène Fima

NIHS Department
Patrick Lötscher

FH Hong Kong Centre
Thierry Dubois

Internet Unit
Yves Brouze

FH Japan Centre
Ayako Nakano

FH Latin America
Delegate
Philippe Widmer

51

The network of partners
The FH would be nothing in the globalised world without asolid network of partners, which can be found both within andoutside the sector on all five continents. Non-exhaustive, thelist below provides a summary of this network.

Watchmaking Partners◆◆

All India Federation of Horological Industries◆◆

Groupement des fabricants d’aiguilles de montres◆◆

American Watch Association (AWA)◆◆Hong Kong Watch Manufacturers Association

Association des fabricants de décolletages et detaillages (AFDT)◆◆

Infosuisse Information horlogère et industrielle◆◆

Japan Clock and Watch Association◆◆

Japan Watch Importers’ Association

◆◆

◆◆

◆◆

◆◆

Association des fabricants suisses d’aiguilles demontres
Association patronale de l’horlogerie et de la
microtechnique (APHM)
Association patronale des industries de l’Arc-horloger
apiah

◆◆

◆◆

Korea Watch and Clock Industry Cooperative◆◆

Société suisse de chronométrie (SSC)

Association pour l’assurance qualité des fabricants debracelets cuir (AQC)◆◆◆◆

Association suisse pour la recherche horlogère (ASRH)◆◆◆◆

Associazione Ticinese Industria Orologiera-ATIO◆◆

Assorologi (Italy)◆◆

BV Schmuck + Uhren (Germany)

◆◆

◆◆

◆◆

◆◆

Centre suisse d’électronique et de microtechnique(CSEM)
Centredoc Centre suisse de recherche, d’analyse et desynthèse d’information
China Horologe Association

Joyex - Asociación Espagñola de Fabricantes y/oExportadores de Joyería, Platería y Relojería◆◆

The Federation of Hong Kong Watch Trades &Industries Ltd
Union des Fabricants d’Horlogerie de Genève, Vaud etValais (UFGVV)
Verband deutschschweizerischer Uhrenfabrikanten(VdU)

Federal Administration◆◆

Bureau central du contrôle des métaux précieux◆◆

Commission des experts douaniers◆◆

Direction générale des douanes (DGD)◆◆

Swiss Federal Institute of Intellectual Property (IPI)◆◆

Office fédéral de la santé publique (OFSP)◆◆

Comité des exposants suisses à Baselworld◆◆

Comité permanent de l’horlogerie européenne (CPHE)◆◆

		Contrôle officiel suisse des chronomètres (COSC)◆◆

Fédération de l’horlogerie (France)◆◆

Fédération romande des consommateurs (FRC)◆◆

Présence suisse◆◆

Fondation de la Haute Horlogerie◆◆

State Secretariat for Economic Affairs SECO◆◆

Fondation Qualité Fleurier◆◆

Fondation WOSTEP◆◆France Horlogerie Industries du Temps et desmicrotechniques◆◆

Office fédéral de la sécurité alimentaire et des affaires
vétérinaires (OSAV)

52

Chambers of commerce◆◆◆◆

Alliance des chambres de commerce suisses
Arab-Swiss Chamber of Commerce and Industry(CASCI)◆◆

International Chamber of Commerce international (ICC)◆◆

Swiss-Chinese Chamber of Commerce◆◆

Swiss-Indian Chamber of Commerce◆◆

Joint Chambers of Commerce (Russia, Ukraine,
Kazakhstan, Belarus, Kyrgystan, Moldova)

Customs and police organisations◆◆

Agenzia delle Dogane, Roma◆◆Commandement général de la Guardia Civil (Espagne)◆◆◆◆

Commandement général de la Guardia di Finanza(Italie)
Direction générale des douanes et Droits indirects dela République française

◆◆Ecole des Sciences Criminelles, UNIL◆◆

Europol
Federal Bureau of Investigation (FBI)◆◆Swiss-Asian Chamber of Commerce◆◆◆◆

Swiss Business Council Abu Dhabi◆◆

Interpol◆◆Swiss Business Council Dubai◆◆

Organisation mondiale des douanes◆◆

Swiss Chamber of Commerce in Japan◆◆

Police cantonale de Neuchâtel◆◆

Police cantonale du Jura◆◆

U.S. Customs and Border Protection

Economic organisations◆◆

BUSINESSEUROPE◆◆

economiesuisse◆◆

Switzerland Global Enterprise

Organisations involved in standardisation◆◆

Association française de normalisation (AFNOR)◆◆

Association suisse de normalisation (SNV)◆◆

British Standards Institution (BSI)◆◆

Bureau of Indian Standards (BIS)◆◆

Comité européen de normalisation (CEN)

Ecole d’ingénieurs ARC◆◆

Deutsches Institut für Normung (DIN)◆◆

International Electrical Committee (IEC)◆◆◆◆Tokyo Watch Technicum

Technical organisations◆◆◆◆

Centre technique de l’industrie horlogère française
(CETEHOR)

Federal Agency on Technical Regulating and Metrology(GOST R)◆◆International Organization for Standardization (ISO)◆◆Japanese Industrial Standards Committee (JISC)◆◆

Korean Agency for Technology and Standards (KATS)◆◆

Standardization Administration of China (SAC)53

Anticounterfeiting organisations
◆◆
◆◆

◆◆

◆◆
◆◆

Anti-Counterfeiting Group (ACG)
Brandowners Protection Group (Gulf Cooperation
Council)
INDICAM - Associazione italiana per la Lotta alla
Contraffazione
Institut de police scientifique, Lausanne
STOP PIRACY – Plate-forme suisse de lutte contre lacontrefaçon et la piraterie◆◆

The Anti-Counterfeiting Network (REACT)◆◆

Union des fabricants

Legal organisations◆◆

Association internationale pour la protection de la
propriété intellectuelle (AIPPI)◆◆Association suisse du droit de la concurrence◆◆

Association suisse du droit européen◆◆

Commission européenne, DG Environnement◆◆

International Trademark Association (INTA)◆◆

Ligue internationale du droit de la concurrence◆◆

Organisation for an International Geographical
Indications Network (Origin)

Rue d’Argent 62502 Biel/Bienne
Switzerland

info@fhs.swiss
www.fhs.swiss
Tél. +41 32 328 08 28