The Watch Industry Lacks Transparency. That Is Changing.

The Swiss have long had a reputation for being discreet in business life. (Think banks). And their watch industry is no different.

However, growing pressure from activists, investors and consumers on environmental and ethical accountability has convinced some brands that the time has come to reveal where they source some of their raw materials.

They are fighting the deeply ingrained tradition of discretion in the industry, a practice born out of watchmakers’ fear that identifying suppliers will reveal details of their expertise and give competitors an edge.

However, many are kept secret for a completely different reason: They are reluctant to admit that their “Swiss Made” watches contain numerous components made in China. These are not legal concerns: According to Swiss law, at least 60 percent of the manufacturing costs of a product must be incurred in the country in order for it to qualify for the label.

Rather, it is at least partly a branding issue: “Swiss Made” has long been associated with quality, precision and value and is an essential part of the marketing strategies of most Swiss watchmakers. Will that be undermined if the products are not exclusively of Swiss origin?

“The real transparency challenge facing the watch industry goes beyond these important issues, supply chain ethics – it’s the integrity of Swiss Made,” said Jean-Christophe Babin, Bulgari General Manager, in a video call earlier this month. “When you find watches for 500 Swiss francs [$530] If you claim to be Swiss with mechanical movements, you can assume that there is a miracle behind it. Because I’ve never done it before and have been in the Swiss watch industry for 20 years. “

Brands at the prestigious end of the watchmaking spectrum, for whom the Swiss Made edition is less of a problem because they make their own parts or buy them from Swiss suppliers, face a different challenge: the need to demonstrate their commitment to sustainability and ethical sourcing.

They are also being driven by a number of other factors – industry changes caused by the pandemic and digital growth, a new generation of executives, public pressure – to displace long-standing ideas about the way they do business. including the value of, reconsidering working with fellow watchmakers.

For consumers, the emerging spirit of openness in the industry means unreachable information such as: B. Where brands get their gold from and how they make their timepieces more available. Some watchmakers even go out of their way to share this.

For example, during the virtual watch fair in Geneva, which began on April 7, Panerai unveiled the Submersible eLAB-ID, a 44-millimeter wristwatch made almost entirely from recycled raw materials, including recycled Super-LumiNova on the hands and recycled Silicon is its movement inhibitor and a recycled titanium alloy known as EcoTitanium is on its case, sandwich dial and bridges.

In a press release, the brand named the nine companies that worked on the watch, which will remain a unique concept watch until 2022, when Panerai plans to release a limited edition of 30 pieces, each priced at around 30 pieces tentatively are 60,000 euros. “We’d like to be copied and improved,” said Jean-Marc Pontroué, Panerai’s managing director, during a video interview last month.

Mr Pontroué said the value of making a recycled watch is in the ability to “make noise” in order to put the collective effort into making it.

“The watch will be limited to 30 pieces. It won’t change the life of Panerai or the watch industry, ”he said. “But the idea is to create a new business that makes these companies stand out and can be approached by any of our competitors.”

Similarly, in November, Ulysse Nardin unveiled an upcycled concept watch called Diver Net, which features a case and bezel made from recycled fishing nets and a bracelet made from recycled plastic taken from the ocean. The company announced the names of its suppliers in press materials.

“We didn’t try to pretend we could do it ourselves,” said Patrick Pruniaux, Ulysse Nardin General Manager. “You have to do things that inspire others.”

This philosophy is also represented by parent company Kering, the Paris-based luxury group that also includes Gucci, Boucheron and ten other companies High-profile brands – this has made a name for itself for transparency and activism in a sector that is not known for either quality.

Kering has taken this route, at least in part, because it keeps an eye on what its buyers – and potential future buyers – want.

“All over the world,” said Marie-Claire Daveu, Kering’s chief sustainability officer, on a video call last month, “they have millennials and Gen Z.” [customers] ask more questions and want more answers in more detail. “

Claudio D’Amore, a Lausanne-based watch designer, is one of the few Swiss watch managers to welcome such a test. In 2016, he founded a crowdfunding brand called Goldgena Project, later renamed Code41, whose radical approach to transparency was a response to the long simmering debate in the industry about the Swiss Made label.

Mr. D’Amore created his own label called TTO for Total Transparency on Origin. And Code41 is just as transparent about another sensitive issue: pricing.

On their website, the brand included a table listing all of the components and processes of their latest crowdfunded watch, the NB24 Chronograph, as well as their prices and origins. For example, the watch’s Swiss movement cost the company $ 1,056 (including tax), while the Chinese-made titanium case, dial, and packaging were $ 167, $ 56, and $ 22, respectively. The total cost of the watch to manufacture was $ 1,474.

Below the table, the brand stated that it had hit a retail price of $ 3,500 by adding something called a “minimal markup” for profitability.

“At first some people didn’t like us explaining everything,” D’Amore said on a video call last month. “But we also got a lot of positive comments from people who encouraged us, ‘It’s time someone told us how it works.'”

Even the most established brands in the Swiss watch trade understand this message.

According to IWC Schaffhausen, visitors to the website will be able to click an icon or logo on any product page through July for information on the steps that are being taken to ensure that the materials have been responsibly sourced.

The information is part of the latest sustainability report from IWC. What is new is how easy online access will be, said a spokeswoman.

Chopard is another well-known watchmaker who is making an effort to make its business more transparent. In late February, the Geneva-based brand updated its website with more information on its commodities, including gold from the Barequeros, a community of artisanal miners in the Chocó region on Colombia’s Pacific coast. For the first time, the Code of Conduct for Partners was also published.

However, Juliane Kippenberg, a Berlin-based mineral supply chain expert at Human Rights Watch, says these measures are still not meeting the needs of other sectors such as the apparel industry to create transparency, particularly on the complex issue of gold sourcing.

“Big companies like Adidas and H&M publish Excel spreadsheets listing the names of the clothing factories that make their products,” said Kippenberg. “But there is far more reluctance to do this in this sector.” (Of course, these companies aren’t immune to controversy either; H&M, for example, is embroiled in one over its cotton sourcing.)

This hesitation may be because many watchmakers still fear the threatening effects of transparency on their intellectual property.

“Part of our know-how is the know-how and the how – why should you share it?” said Wilhelm Schmid, managing director of A. Lange & Söhne, a renowned watchmaker from the German city of Glashütte.

From Ms. Kippenberg’s point of view, however, the information she wants to see has nothing to do with the characteristic technical or artistic details of a watch. “It’s about the conditions under which the material is mined and processed and the actors in the supply chain,” she said. “There is also a broader question of accountability. Transparency is the only way to ensure that human rights violations can be prevented or addressed. “

Like it or not, the greatest watchmakers in Switzerland may soon no longer have a choice.

In November, Swiss voters rejected the Responsible Business Initiative, a proposal by a civil society coalition that would require Swiss companies to carefully review their human rights and environmental risks in their supply chains and publish their reports. A counter-proposal by the Swiss parliament, according to which companies must ensure the traceability of their supply chains and make their reports publicly available for 10 years, is expected to come into force in 2022.

That means even the notoriously narrow Rolex, the world’s top-selling brand – a Morgan Stanley report on Swiss watches published last month found the company now has an estimated 26.8 percent market share – needs to be more transparent about its business.

“You can’t claim to be a private company because nobody asks your trade secrets,” said Milton Pedraza, executive director of the New York City-based Luxury Institute. “You will have to answer. There is no place to hide. “

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