“The Swiss Watch Industry Does Not Exist” Argues a New Book that Examines the Rise of Watchmaking Multinationals

A former history winner of the Prix Gaïa – the Nobel Prize of watchmaking – and occasional Watchonista contributor, Donzé argues that until the middle of the twentieth century, countries’ watch industries were invariably organized and competed on a national scale.
 

The Swiss watch industry, for example, consisted of companies headquartered in Switzerland, controlled by Swiss capital, and which produced their components in Switzerland. Germany, France, Japan, the USSR and, to some degree, the US operated similarly.

But from the mid-twentieth century onwards, a fundamental paradigm shift occurred: Namely, that large, multinational companies with fewer territorial ties went on to dominate the industry.
 

“Watchmaking is now a globally organized industry, although some activities are concentrated in particular territories, such as Switzerland for luxury watches or China for other watches,” says Donzé.

As a result, Donzé believes that the term “the Swiss watch industry” is a bit of a misnomer: “The Swiss watch industry does not exist – or, put more precisely, it no longer exists,” he says.

In his book, Donzé points out there are three kinds of organizations that control the Swiss watch industry. First, there are the companies headquartered in Switzerland, controlled by Swiss capital (like Swatch Group). Then, there are the companies with foreign capital that control Swiss watch manufacturers but based in foreign headquarters (like LVMH and CITIZEN Group). Finally, there are the Swiss-based companies that are controled by foreign capital (like Richemont).
 

All these companies, he says, are integrated into production systems organized on a global level. Some have subsidiaries in Europe and Asia, while others rely on subcontracted suppliers, often located in China and Thailand.

“Under these conditions, it is difficult to define exactly the nature of the Swiss character of the watch industry present in Switzerland,” says the Kyoto-based academic. However Switzerland isn’t alone; he believes the same can also be said for the modern-day watch industries of other countries, especially Japan, Germany, and China.
 

Donzé paints a picture of how we arrived at today’s state of play by marrying statistical analysis with snapshots of the watchmaking industry in each country throughout the decades.