Rolex accused of getting many parts from china

https://robbreport.com/style/watch-collector/swiss-made-watch-1236164753/

I’ll start compiling articles outside of YouTube.

 

https://tagheuerforums.com/threads/the-swiss-scam-of-swiss-made.172638/

 

https://www.nytimes.com/2020/06/10/fashion/watches-supply-chain-coronavirus-China-Switzerland.html

 

https://www.rolexforums.com/showthread.php?t=972695

 

I just got my sea dweller 43 so I’m enjoying adding the watch. Just wish there was more transparency. The Swiss companies seem to be shooting themselves in the foot.

 

A Watch Is More Than Its Parts. But if You Can’t Get Them?
Swiss watch companies returning to production after coronavirus shutdowns are grappling with supply chain disruptions.

New York Times

By Nazanin Lankarani

June 10, 2020
A Swiss watch is much more than the sum of its parts, but when the supply chain for its hundreds and sometimes thousands of components is disrupted, each small piece can take on an outsize importance.

That was what happened during the coronavirus lockdowns, both in Switzerland and, halfway around the globe, in China. And now that manufacturing is resuming, Swiss watchmakers are struggling to get parts — even as they and their suppliers worry about slumping sales.

Many Swiss brands use only parts made in Switzerland, sometimes in the same village as the brand factory. But it is an open secret in the watch industry that others purchase bracelets, movements, cases, crowns or hands from suppliers, primarily in China.

“Since the 1970s, many in the Swiss watch industry have looked to Asia to avoid higher Swiss labor costs,” said Oliver Müller, founder and managing director of LuxeConsult based in Geneva. “Outsourcing to Asia has long helped brands to maintain their profit margins.”


In 2017, Switzerland revised a legal standard that, in the case of watch exports, allowed timepieces to carry the “Swiss-Made” label as long as at least 60 percent of their value came from Switzerland, their movements were made in the country and they were assembled there.

Watchmakers began having supply problems as the new coronavirus was recognized in China in January. Like other businesses, watch factories and parts makers shut down in Shenzhen, the watchmaking heart of China, a city of about 13 million in Guangdong Province, just north of Hong Kong.

“Factories in Shenzhen are typically small companies that tend to be run by private entrepreneurs,” said Thomas Gatley, a corporate analyst at the research firm Gavekal Dragonomics in Beijing.

“They closed right after the Chinese New Year holiday in late January, and some employees did not return to work after the normal holiday period,” he added. “Most factories reopened slowly after two to three weeks, sometime in March.”

Even as the Chinese factories were resuming work, production facilities in Switzerland were closing as the virus spread to Europe and retail outlets shut down around the world.


“Chinese factories took a big hit to cash flow after they reopened because customer orders had been delayed or canceled in the majority of Chinese export-related sectors,” Mr. Gatley said.

The Shenzhen companies “only have about two to three months of cash on hand to pay salaries and no access to banking channels,” he said. “After that, they will go under. The Chinese government has offered a ‘tax holiday’ and delayed payment of social security, fees and taxes to March 2021. It is a very helpful policy, but the question of how long the factories can hang on depends on how much cash they have on hand.”

Some are not operating at all. For example, a watch-case maker in Dongguan, another industrial city in Guangdong Province, closed in March for three months when Fossil Group, its largest client, canceled its order, according to a story in the Global Times, an English-language newspaper owned by the Chinese Communist Party.

The threat of factory closures — and the resulting decline in parts availability and lost expertise — could have ripple effects in Swiss watch manufacturing, particularly for watches priced at less than 1,000 Swiss francs ($1,040) because they so often use Chinese-made parts.


“China is the biggest source of horological imports into Switzerland,” said Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry. The organization, which monitors exports monthly to track industry growth, also tallies horological imports on a semiannual basis.


According to the 2019 federation figures, the most current statistics available, Switzerland watchmakers imported a total of 3.78 billion Swiss francs ($3.95 billion) worth of watches and components from sources worldwide. Of that amount, China and Hong Kong’s shares totaled 1.09 billion francs.


Based on information from the Swiss Federal Customs Administration, Mr. Müller said, those 2019 imports included 655 million francs worth of watch components (the rest were assembled watches).

But that was 2019.

The value of horological imports in the first quarter of 2020 dropped 35 percent, to 372 million francs from 572 million francs in the same period last year, Mr. Müller said, using data provided by the customs administration.

Suppliers and watchmakers alike hope things will improve in the second quarter: Switzerland began a phased reopening of businesses, including watch factories, in mid-May.

But companies like Code41, a watchmaker based in Lausanne, Switzerland, are continuing to experience delays in parts shipments.


“We now have a one-month delay in production of some models due to Chinese factory closures in January,” said Amir Sfez, the company’s chief operating officer.


Even brands that rely exclusively on Swiss parts are experiencing similar problems, but lack of demand — from wary shoppers to the collapse of global tourism and its related sales — may make the issue all but moot.

“When some of the big brands shut their production facilities, many of our Swiss suppliers were forced to close, too,” said Edouard Meylan, chief executive of H. Moser & Cie. “We have had to reduce our own capacity.”

“Initially, the view among brands was that we wouldn’t be able to produce because we couldn’t get parts,” he added. “Then we realized that even if we were able to produce, we couldn’t sell our watches.”


In April, the Swiss bank Vontobel estimated that the country’s watch exports would decline by 25 percent this year. That would be a larger fall than the 22 percent drop in the 2009 financial crisis or the 15 percent decline seen in the Quartz Crisis of 1975, when battery-powered watches threatened Swiss mechanical watchmaking.

“Swiss watchmaking will rebound again, but it will be slow,” Mr. Pasche said. “Its recovery will depend on consumers and whether they will want to buy watches again.”


So, could one result of Covid-19 be the emergence of a local, more efficient supply chain?

François-Henry Bennahmias, chief executive of Audemars Piguet, has long denounced the risks of outsourcing.


“Without its Swiss suppliers, Swiss watchmaking is nothing,” Mr. Bennahmias said. “I have pride in our know-how, and when I hear that some brands produce elsewhere to shave off a few francs on each piece, I want to scream.”

But brands in the low- to midrange price sector would find it difficult to maintain both volume and cost controls in Switzerland. “If a brand must pay a local supplier 400 francs for a part that costs 40 in China, that brand is dead in that price segment,” Mr. Müller said.

Still, to keep labor costs low, some production facilities are looking at increased robotization while some are moving from Switzerland to Eastern Europe, which has cheaper labor and a tradition of craftsmanship. “One part producer is already set up in Ukraine, but Poland, Slovenia or Romania are also viable options,” Mr. Müller said.