Working with Swiss and foreign watch components factories on a weekly basis, we have seen the loopholes in both the old and the new Swiss Made regulations.
Currently, 60% of the creation of added value has to happen in Switzerland, and that does not include the bracelet nor the strap.
Before January 1st, 2017, qualification for Swiss Made watches was looser than for Swiss Made movements. Until December 31st, 2016, you only needed the following to certify a watch as Swiss Made:
- A “Swiss Made” movement.
- Assembly on Swiss territory, but the factories are often located a stone’s throw from the border with France, Italy or Germany, so more than 30% of the workers are non-residents.
- Quality control in Switzerland, but it could be anything such as the above employee just taking a peek at boxes during his coffee break.
With that in mind, one could hire an overseas company to design and manufacture all external components, which would then be delivered for assembly in Switzerland.
Since January 1st, 2017, the qualification for watches has been aligned to that of movements. One need the following:
- Research and development carried out in Switzerland. You can still have the project run overseas and just hire a Swiss technician to print the drawings with their Swiss company logo and to invoice the development (=print) job from Switzerland. You can actually divide that cost by the amount of watches in your first batch, and replicate that cost on future batches.
- You now need to balance between the cost of components or the cost of operations to spend at least 60% of your production budget in Switzerland. Typically you source the expensive components from Swiss factories, who can themselves source blanks overseas and do some finishing inhouse to qualify with the 60% rule.
- As before, you still need assembly and quality control to be carried out in Switzerland.
Overall the major consequence of the new regulation is to raise the entry level, and to make it harder for overseas OEM to produce Swiss Made watches. It will potentially create new jobs for mechanical constructors, who are typically called upon to output production drawings, and create new jobs for component suppliers who are resourceful enough to mix 40% overseas and 60% local added value.
However, there are still loopholes as big as the ones in emmental cheese, so we personally don’t see this new regulation as an Earth-shaking improvement for the consumer.
There are initiatives such as theor the , that take it more seriously, and aim at guaranteeing a 100% production in Switzerland, but we are taking about watches that retail above USD 10,000.