Despite positive market development in mainland China, fewer Chinese tourists now shop in Hong Kong and other places abroad as mainland China has increased its vigilance on watch imports, leading its elite consumers to buy more items domestically.
Globally, people have become more hesitant to travel to European territories like France, mainly because of fear based from recent terrorist attacks, which translates into less retail foot traffic and spending.
These factors have affected the Swiss watchmaking industry.
For example, recent industry data stated that Swatch’s stock fell as much as 14%, with analysts expecting a 22% net income drop—though Swatch still remains optimistic in its business.
Swatch CEO Nick Hayek said that the company doesn’t have plans to cut down on employees in spite of “important cancellations of orders from third parties.” Hayek wants to avoid labor reduction because he believes that he’ll need all of his employees when the market improves someday.
Swatch currently has more than 36, 000 employees in over 50 countries.
In an interview with Reuters, Hayek said that profit, even if reduced, is still profit nonetheless.
“The first half [of the year] is not so bad under the circumstances. Our profit about halved, but it’s still a profit,” said Hayek, adding that he’s confident that the second half of 2016 will yield business growth.
Swatch reported its full first-half earnings on July 21, 2016.
—Eugene Y. Santos