Media headlines declare: ‘Coronavirus is throwing the watch industry into difficult times’. This is simultaneously both patently true and a subjective nonsense.
For more than 30 years the Swiss watch industry has had an uneasy history of creeping fragmentation and loss of strategic cohesion. This was first publicly manifested in 1991 when the Richemont Group split from Baselworld and formed the Salon International de la Haute Horlogerie (SIHH) in Geneva – recently renamed Watches & Wonders Geneva.
Since then, Richemont has separately exhibited its stable of fine luxury watch brands at its Geneva Salon, while the SIHH has sought to broaden its base by allowing unaffiliated brands to also exhibit at the show.
Following the split Baselworld’s problems became more deeply ingrained and recently came to a head when major exhibitors, led by Swatch Group, withdrew from the fair, creating a very large open space in the prestigious Hall 1.
It is rumoured that Swatch’s cost to exhibit at Baselworld was around €50 million ($AU90 million). The Swiss behemoth reportedly took the view that, without Baselworld, they could pocket some change while providing special personal attention to any and all agents and media who were closely associated with their promotional operations. For these selected groups and individuals, Swatch held private presentations of their new releases.
Whatever the cause, the number of exhibitors at the 2018 Baselworld was down by half, from 1,300 to about 650. Several years prior, more than 300 tools-sector exhibitors decamped to alternative, technically-focused trade events; they were completely absent from the 2018 fair.
However, the wider Swiss industry’s disarray was already well underway in the early ’90s. The defection of the Richemont group was the effect, not the cause; the problems were rooted in disaffection with the policies and ‘cash-cow’ preoccupation of the trade fair owner, MCH Group, as well as the hotels and service-providers of Basel itself.
The latter perfected the art of price gouging throughout the eight-day event.
An icon in decline
That this quasi-strategic failure of the industry continued for so long is a surprise. It is a further surprise that the MCH Baselworld management were not proactively addressing the problems, but instead took a monopolistic attitude to the growing discontent about exhibition costs and their contrived ways of gouging customers.
Of course, the public relations standing of the various international trade fairs does wax and wane depending on the organisers – and the willingness of the exhibitors to accept without question what is offered, including the not-inconsiderable costs imposed on them.
The history of the disintegration of Baselworld’s status is aired endlessly in the media because it was the pre-eminent Swiss watch industry fair and arguably the number-one jewellery industry trade event, attracting more than 100,000 visitors each year.
As many as 4,500 media representatives attended at one point, which demonstrated the importance of the show, and in some years, CNN set up a studio at Baselworld. It was the flagship of the Swiss industry specifically, though today it accepts any and all exhibitors from any country.
For the past 30 years, Baselworld and the SIHH have made up the two significant annual watch shows. Comparatively, SIHH is a small meeting, dubbed ‘Salon’, mostly showcasing Richemont’s luxury horology while Baselworld is about 15 times larger even in its currently reduced circumstances.
In 2018, after both fairs suffered prominent defections, SIHH reached an agreement with Baselworld to time their events back-to-back in late April 2020. This would have self-evident dangers, but it was a step in the right direction.
Many would say the two sides should have settled their differences and collaborated together years ago. In any case, the agreed April/May scheduling was slammed by both the large and small brands as being far too late for manufacturing schedules – which then precipitated further defections as more exhibitors quit Baselworld.
Breitling pulled out last year and then Seiko and Citizen – traditionally staunch supporters of Baselworld – withdrew too, as did Bulgari, which cited late scheduling as the reason.
And while the Swiss fairs have progressively unravelled, the Hong Kong Watch & Clock Fair, now by far the largest of the watch shows, has flourished. However, the reasons are not clear cut and we must resist lazy parallels of cause and effect.
Münich’s Inhorgenta, after being in the doldrums for 10 years, is now making a strong effort to re-establish its credentials. And Dubai and China are also establishing connections in the international community, so the exhibitors’ choices are now wider than ever.
The previously monopolistic practices of the Swiss now emerge as a serious bargaining issue.
It is a story for another day, but the wider Swiss issues have also decimated the value of the ‘Swiss Made’ epithet, which was patiently built over many decades on quality, trust and value.
Looking for the silver lining
Michel Loris-Melikoff, the new managing director of Baselworld, was appointed by MCH Group to navigate the shifting sands of evolution and rebuild the fair. He knew he would need to exercise supreme diplomacy in this accumulated wrangle of undiplomatic rhetoric from the high-end brands.
He would also need to hold the loyalty of the remaining major Hall 1.0 exhibitors, comprising of Rolex, Patek Philippe, Chopard and the LVMH group (TAG Heuer, Hublot, Bulgari and Zenith).
The combination of unresolved forces was surely formidable, even for such an experienced event organiser as Loris-Melikoff. Given the further problems Baselworld encountered after the disastrous 2019 year, the success of the 2020 fair was shaping up as do-or-die event; it could ill-afford more public relations disruption.
But wait! Out of nowhere came China to the rescue, unleashing coronavirus on the world. Suddenly, the PR and politicking problems in the international watch market became insignificant as the ‘real people’ of the world went out to their supermarkets to fight over rice, pasta, hand sanitiser and toilet paper.
The Swiss government reacted by banning gatherings of more than 1,000 people – which was, in fact, a timely and fortuitous circuit-breaker for this whole dreadful mess.
How amazing is that? What a lifesaver, for Baselworld and, perhaps, for Loris-Melikoff!
Upon hearing the news, I wonder if, privately, he took a sigh of relief and relaxed with the best bottle of red that he could find? Citing coronavirus concerns, both Baselworld and Watches & Wonders quickly cancelled their 2020 events.
Perhaps demonstrating that the Baselworld public relations staff have too much say, it was announced as a “postponement” – to the end of January 2021.
Of course, the fair had been cancelled, but the Swiss could not bring themselves to use that word – for the fair to be “postponed” it would have meant that they would hold two fairs in 2021.
So now it remains to be seen if Watches & Wonders will again agree to back-to-back dates with Baselworld – or better still, join them in Basel with concurrent dates.
It certainly should choose the latter option to avoid its own irrelevancy. Better still, the Swiss watch industry should use the international pandemic to review its own health and future prosperity. And if it does undertake a health-check, it might find the more sensible option is to put all the old problems behind it and present one fair, under one roof and under one ‘unity ticket’.
Baselworld has empty exhibition halls going begging with dedicated space available, if only the show formerly known as SIHH can grasp the enormous economic and political value of this opportunity. This is surely a unique moment to settle past differences and genuinely work towards bringing the Swiss industry back together in its time of need and for the greater good.
There has simply been too much damage for too long and it must stop.
And while you consider this mad history, think about this: who would have thought that a flu-like virus started by Chinese bats would offer the opportunity for the Swiss watch industry to rebuild?
More reading:
Baselworld 2020 cancelled
Watches & Wonders Geneva cancelled due to coronavirus
The luxury watch market can't support competing trade shows