www.fhs.ch

2013Annual Report

Ann

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The word of

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It gives me great pleasure to introduce our «new-look» Annual Report. After the Revue FH in the spring of 2013, it’s now the turn of this annual publication to receive a facelift designed to enhance our readers’ satisfaction. I hope you enjoy the new format and the information it contains.

In 2013, the Swiss watch industry made steady pro-gress in terms of export

growth, achieving record total export sales of 21.8 billion francs, an increase of 1.9% compared to 2012. While this upturn is below that of previous years, we are witnessing a return to more normal rates of growth and any increase is good news compared to existing levels, which are already very high. In vol-ume terms however, at 28.1 million units, the trend is negative, representing a decline of 3.6%, and this prompts us to remain cautious and attentive. While Asia, albeit in decline, constitutes the leading market for our branch, last year’s positive result is attributable mainly to Europe, thanks in particular to Germany, Italy and the United Kingdom.

The Swiss made project reached a decisive milestone with the adoption by Parliament of the Swissness bill. In formal terms, this entails a revision of the law on trademarks, which provides in substance that the origin of an industrial prod-uct must correspond to the place where at least 60% of its cost price is generated. The indication of origin must also correspond to the place where the activity which gives the product its essential characteristics was carried out. It is now a question of applying these principles to watchmaking products by revising the Swiss made ordinance.

China continued to occupy the centre stage with the signing of a «Switzerland-China» free trade agreement in July. The latter strengthens bilateral trade relations and provides a more precise legal framework. We expect from this a reduction in customs duties, effective rules of origin, and stronger protec-tion of intellectual property. The FH remains committed to the cause of free trade, particularly in the context of negotiations with India and Russia.

On the international stage, the FH successfully fulfilled its presidency and secretariat of the ISO/TC 114 Conference, which was held in Tokyo in May 2013. This institution is tasked with adopting or revising watchmaking standards in order to harmonise technical processes and regulations inter-nationally, thereby helping to reduce technical impediments to the trade.

In March 2013, the FH also organised the Swiss Anti-Coun-terfeiting Day, under the aegis of Stop Piracy. Extensive media coverage helped once again to raise awareness among all concerned of the serious difficulties posed by fake goods.

By way of conclusion, I offer my warm thanks to our mem-bers and partners for the trust they place in our association, as well as to our employees for their efforts and the quality of their work.

Jean-Daniel Pasche

the President

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Annual Report2013

ISSN 1421-7384

The annual report is also available in French and German, upon request.

© Fédération de l’industrie horlogère suisse FH, 2014

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The word of the President 1

Highlights of 2013 4

Swissness - Swiss made: Strengthening and decisive step in 2013 6

Free trade agreements: China, India and Russia 8

ISO/TC 114 - Horology: International Meeting in Tokyo 11

Swiss Anti-Counterferiting Day: Poster and film competition in support 13

Panorama of the 2013 activities 16

Improvement of framework conditions 18

Information and public relations 22

The fight against counterfeiting 25

Standardisation 30

Legal, economic and commercial services 31

Relations with the authorities and economic circles 32

FH Centres abroad 33

The Swiss watch industry in 2013 34

Watchmaking Statistics 36

Structure of the FH in 2013 40

Summary of 2013 42

The General Meeting 43

The Board 44

The Bureau and Commissions 45

Divisions and Departments 46

The network of partners 48

Table of contents

Highlights

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Among the year’s highlights for the FH in 2013, one in par-

ticular deserves special mention: adoption of the Swissness

bill at a rate of 60%. After a six-year struggle, the FH is proud

of this result, the more so since it was virtually a lone voice

in the industrial world calling for this percentage. The FH is

also proud of the new free trade agreements signed in 2013,

particularly with China, where measures to free up access

to the market have taken great strides. Another highlight of

2013 was the 21st ISO/TC 114 - Horology Conference, which

brought together six participating countries in Tokyo and

allowed progress to be made on many draft standards. In

the fight against counterfeiting, the FH also organised the

Swiss Anti-Counterfeiting Day 2013 in collaboration with

the Fondation de la Haute Horlogerie (FHH), this year with

creativity as its theme. With the help of various schools of

watchmaking, films and posters resulting from the initiative

helped raise awareness among the public.

of 2013

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By passing the Swissness bill on 21 June 2013, Switzerland’s Parliament brought to an end a procedure lasting six years and requiring a total of eleven votes, including those of committees. Discussions have focused above all on the required minimum rate of Swiss value, set at 60% in the Federal Council bill as opposed to a rate of 50% advocated by opponents. It will be remembered that the National Council adopted the Swissness project in the Federal Council version in March 2012, whereas the Council of States preferred the 50% version in December 2012. A new round of deliberations thus became necessary.

This was set in motion once again by the Legal Committee of the National Council (CAJ-CN). The latter, at its meeting of 10 January 2013, confirmed its previous year’s vote by adopting the 60% version and rejecting the 50% variant by 12 votes to 11. The full assembly of the National Council did likewise on 11 March 2013, by 127 votes to 67. The decision then rested with the Council of States. Its Legal Committee (CAJ-CE), ruling

for the third time on the subject, also confirmed its previous vote and approved the Federal Council bill by 11 votes to 1. Thereafter, the full assembly of the Council of States had the final say. Under pressure from all sides, the latter changed its position of December 2012 by siding with the National Council and approving the 60% version by 22 votes to 21, on 6 June 2013. At the same time, both Chambers ratified the Swissness project in its entirety with a comfortable majority: 137 votes to 47 and 10 abstentions in the National Council, and 26 votes to 13 with 6 abstentions in the Council of States.

In all modesty, we cannot emphasise enough what a success this represents for the FH and its members who backed the initiative, since our Federation was virtually a lone voice in the industry calling for the 60% rate, in opposition to other umbrella and sector-based associations. The issue also cre-ated a conflict with economiesuisse which was subsequently resolved.

Swissness - Swiss made Strengthening and decisive step in 2013

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For the FH, the adoption of Swissness was crucial since it was a decisive step on the long road to strengthening the Swiss made label which, as we have consistently pointed out, is in the interest of our branch. We all know that this label exerts a powerful attraction on consumers and is a forceful sales argu-ment. Serious studies have demonstrated that consumers are prepared to pay more for a Swiss made watch than for an identi-cal product which is not Swiss made. The same studies confirm that our customers expect a Swiss watch to incorporate a clear preponderance of Swiss value; otherwise, they feel let down. The FH receives complaints from such customers, who have realised that their Swiss made timepiece was manufactured for the most part abroad. This type of reaction will weaken the label, if not discredit it entirely. A response was needed, and hence our determination to succeed.

The Swissness project encompasses revisions of the law on trademarks and the law on public coats of arms. The latter regulates the use of national and cantonal coats of arms, and in particular use of the Swiss flag and the Swiss cross. This revision is not widely debated, since it is not contested. In fact, it expressly authorises use of the national flag on Swiss products. Hitherto such use was in principal prohibited, with only a few exceptions. In future, Swiss products displaying the Swiss cross will no longer be subject to controversy and that is as it should be.

For its part, revision of the law on trademarks supplements existing provisions governing indications of origin, particularly by the addition of an article 48c for industrial products which stipulates that the origin of industrial products must correspond to the place where at least 60% of their cost price is generated. Included in this calculation are manufacturing and assembly costs, research and development costs, and costs relating to quality control and certification, as prescribed by law or regu-lated uniformly at sector level.

Not included are the costs of natural products which cannot be cultivated in Switzerland due to natural conditions, the costs of raw materials which for objective reasons are not available in sufficient quantity in Switzerland, packaging costs, transport costs and marketing costs, for example promotional expenses and after-sales service costs. The indication of origin must in addition correspond to the place where the activity conferring the product’s essential characteristics was carried out.

These rules apply to all industrial products, including those in the field of horology (finished watches, movements, compo-nents, etc). Consequently, it is necessary to adapt the Fed-

eral Council ordinance regulating use of the name «Swiss» for watches, the «famous» Swiss made ordinance. This is a task for 2014.

It should also be noted that the Federal Council must revise or adopt other ordinances, particularly those stipulating the entry into force of both legislative revisions. The latter, as well as their implementing ordinances, are expected to enter into force at the end of 2015. Transition periods giving firms time to adapt are also likely to be announced. If 2013 marks a decisive stage in the strengthening of the Swiss made, a number of obstacles still need to be overcome before key objectives can be attained, not least revision of the Swiss made ordinance.

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The conclusion of free trade agreements with Switzerland’s main economic partners is a decisive step in helping to establish favourable framework conditions for the export industry, and therefore watchmaking.

In 2013, EFTA signed agreements with Bosnia-Herzegovina, Panama and Costa Rica, whilst at the same time continuing negotiations with Algeria, Guatemala, Honduras, the Russia- Belarus-Kazakhstan customs union, Thailand, India, Indonesia, Malaysia and Vietnam.

Bilateral agreement with China

The year was marked firstly by the signing of the bilateral agree-ment with the People’s Republic of China.

Following the example of other export industries, the FH stayed close to the heart of negotiations in order to assert the interests of the branch, essentially in three strategic areas.

Firstly, the easing of restrictions on access to the market. By value, finished watches account for 98% of Swiss watch indus-try exports to China. Under the terms of the agreement, such exports will benefit either from complete abolition of customs duties within a five to six year timescale depending on the type of product, or from a staggered 60% reduction in duties over ten years, with an initial 18% reduction applicable from the entry into force of the agreement. More precisely, three types of watches (automatic watches of precious metals and common metals, and quartz watches with analogue displays), which alone account for 90% of exports in value terms, will benefit from this reduction. In concrete terms, customs duties

Free trade agreementsChina, India and Russia

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on these products will fall from current rates of between 11% and 12.5% to rates of between 4.4% and 5% by the end of the adjustment period. Other abolition or reduction measures will be applied to different clock and watchmaking products such as alarm clocks, movements, exterior components, supplies, etc. Only the bracelets of precious metal watches exported separately will see their rates of customs duty maintained when imported into China, however such products represent only a tiny fraction of Swiss exports.

Secondly, the definition of rules of origin. These preferential rules of origin determine, amongst other things, the criteria that confer origin on a product in the eyes of customs (tariff scale, sufficient operations, value). In the case in question, and following the example of other existing agreements, the FH argued for a minimum rate of originating value of 60% for watch industry products, which rate was able to be incorpo-rated in the agreement with China.

Thirdly, the protection of intellectual property rights. Even though this will not resolve overnight all the problems arising from counterfeiting, the agreement nonetheless provides an important additional institutional framework whilst ensuring improved legal safeguards. For the Swiss watch industry, this means above all better conditions for the protection of trade-marks and indications of origin (Swiss made).

The Swiss watch industry’s third largest customer, China thus becomes the fifth Asian country to have signed such an agree-ment with Switzerland or EFTA, after Singapore, South Korea, Japan and Hong Kong. Subject to ratification, this agreement should enter into force in the middle of 2014.

Formed as an adjunct to this agreement, the Sino-Swiss work-ing group on horology for its part held its first meeting in Bern in August, chaired jointly by Mr Gao and Mr Zhang on the Chi-nese side (Ministry of Industry and Information Technology and China Horology Association) and Mr Billeter and Mr Pasche for the Swiss (State Secretariat for Economic Affairs and FH). There are many topics on the working group’s agenda and this first meeting was devoted essentially to an examination of respective legislations concerning the protection of intel-lectual property rights and geographical indications (Swiss made, Made in China). Proposals were made by both sides to strengthen the protection for rights holders (registered trade-marks or models) and consumers.Johann N. Schneider-Ammann

Johann N. Schneider-Ammann and Gao Hucheng

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India : the negotiations are speeding up, but…

At the end of 2013, negotiations aiming at a free trade agree-ment between EFTA and India gathered pace, offering the hope of a possible conclusion in the early months of 2014. However some important differences remain, particularly as regards the application by India of the WTO agreement on TRIPS (Trade-Related Aspects of Intellectual Property Rights) notably in relation to patents, which nonetheless and to vary-ing extents concern all exporting sectors.

From the start of negotiations in 2008, the FH has pressed for important abolitions and reductions of import duties in India, as well as customs rules of origin identical to those prevailing in existing agreements (minimum 60% originating value), and minimum compliance with TRIPS regulations. For the FH, this last point is an unwavering principle, given its mission and its determination to enhance the value and protection of intellectual property rights (trademarks, models, indications of origin, pat-ents). Similarly, the FH naturally expects a substantial easing of restrictions on the Indian market where, as is widely known, a whole series of domestic taxes is added to import duties.

Russia : bilateral agreement on the recogni-tion of hallmarks enters into force

Signed in 2011, this agreement between Switzerland and Russia entered into force on 2 August 2013. It stipulates that articles of precious metals in the watch industry, officially inspected and hallmarked in the producing country and meet-ing the legal prescriptions of the country of destination, are no longer subject to inspection and hallmarking by the importing country. In addition, it is no longer necessary to register the maker’s mark in the country to which the goods are exported.

The agreement applies to wristwatches, pocket watches and other portable timepieces, including chronometers with cases of precious-metals (gold, silver, platinum, palladium) and their alloys. This definition includes, firstly, watches fitted with brace-lets manufactured entirely or partly from precious metals and their alloys, and secondly, watches without bracelets. It does not apply to other articles of precious metals (jewellery, writing instruments) or to multi-metallic articles.

It should be noted that the signing of this agreement was a prior condition stipulated by Switzerland to Russia’s membership of the WTO, effective since August 2012. It therefore constituted a long-term objective for the FH, in parallel with the granting of tariff concessions by Russia and the simplification of pro-cedures in the repair trade.

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The 21st ISO/TC 114 - Horology Meeting, held from 13 to 17 May 2013 in Tokyo, allowed experts from six delegations (Japan, China, France, Hong Kong, United Kingdom and Switzerland) to debate and move forward various projects in a convivial, collaborative and consensual atmosphere.

Revision of the standard ISO 1413 - Horology - Shock-resistant wrist watches was the main subject of work carried out during the week. Among the envisaged modifications, a third shock on the watch head is planned, more precisely on the crown, together with additional so-called «free fall» shocks for the com-plete timepiece including the bracelet. It is worth noting also that studies carried out on the sabot (the element that impacts the watch during tests) have allowed the development of a new composition of materials, thereby ensuring an excellent level of repeatability of shock intensity and duration.

On the subject of hard materials, a draft Technical Specification, produced by a working group composed of Swiss experts, was submitted to the delegations present. This draft gave rise to discussions which led to the finalisation of requirements, thanks in particular to comments received from Chinese experts. Work is therefore continuing at an international level and will be pub-

lished in the form of a Technical Specification, the interim stage prior to preparation of a standard devoted to the exteriors of watches manufactured from hard materials.

Batteries and cells, including those incorporated in watches, are the responsibility of a different technical committee (IEC/TC 35). A delegate expert was appointed, whose mission is to pass on watchmakers’ specific requirements concerning bat-teries intended for timepieces, for example when a standard is revised.

China, responsible for the technical subcommittee dealing with table clocks an wall clocks, presented a new draft standard concerning the accuracy of the latter. Accordingly, a working group was formed to pursue this matter.

A number of laboratories were pleased to learn that stand-ard ISO 3160-2:2003 Watch-cases and accessories - Gold alloy coverings - Part 2: Determination of fineness, thickness, corrosion resistance and adhesion, will be revised to include the SEM/EDS analysis method as an alternative to cupellation. This method has the advantage of bypassing the tedious task of dissolving the substrate.

ISO/TC 114 - HorologyInternational Meeting in Tokyo

Experts from the Swiss delegation in session: Patrick Lederrey, Stephan Pfrommer, Pierre-Alain Vuille (Chief of the Swiss delegation), François Aubert, Pascal Cartier and Denis Vincent

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Deviating from the strict framework of ISO/TC 114, the problem of the application of standard EN 1811 concerning the nickel release was discussed at a meeting tabled at the request of Japanese experts.

By the end of this Meeting around twelve resolutions were adopted, marking the progress of work carried out. It will be noted in addition that all decisions were taken unanimously, thereby avoiding the need for any subsequent discussions or negotiations.

It was therefore on this positive note that the delegations took leave of one another after agreeing to meet up again in the spring of 2015 for the next ISO/TC114 - Horology international meeting, which will take place in Switzerland.

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Each year, partners and members of the STOP PIRACY associ-ation, the Swiss body opposing counterfeiting and piracy, take turns in organising a national event to raise awareness of the damaging consequences of counterfeiting for the Swiss econ-omy and consumers. In 2013, responsibility for organising the event fell to the FH and its watch industry partner the Fondation de la Haute Horlogerie (FHH). Both wished to stage an action which was original and spectacular. To emphasise the importance of cooperation in the fight against counterfeiting, they played the card of collaboration from the outset by associating other partners in the venture, in this instance the pharmaceutical industry and the audiovisual sector, represented by Interpharma, Swissmedic and the Swiss Anti-Piracy Federation (SAFE). To give this initiative an interna-tional dimension the FH also invited foreign organisations to take part, namely the Union des Fabricants, a French association with an exemplary record in the fight against counterfeiting, and the French National Institute of Intellectual Property (INPI).

The 2013 edition of Swiss Anti-Counterfeiting Day had crea-tivity as its theme. The FH invited prestigious Swiss schools of art and design and the general public to take part in three competitions on the subject of counterfeiting. Students from Geneva University of Art and Design (HEAD) and Geneva Film School produced short films, while students at the University of Art and Design Lausanne (ECAL) created posters. A film competition was also launched on a specially dedicated web-site to encourage members of the public to join in. Entries were assessed by a jury of eminent personalities.

Finally, several hundred people and many representatives of the national and international press were invited to the University of Art and Design Lausanne on 22 March 2013. On this occa-sion, the winners of the various competitions were presented with magnificent Swiss watches. Guests listened to talks by Jean-Daniel Pasche, president of the FH and chair of the com-petition jury, Philippe Leuba, Councillor of State for the can-ton of Vaud, and Anastasia Li, president of the STOP PIRACY

Swiss Anti-Counterfeiting DayPoster and film competition in support

Speech from Jean-Daniel Pasche, President of the FH and chair of the competition jury

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association. All three personalities underlined the importance of the fight against an illegal activity which has acquired alarming proportions, and reminded those present of the important role of consumers in this struggle. Anastasia Li ended this part of the talks by thanking «all those who do not wear counterfeit articles and have no intention of buying any».

The event was widely reported in the press, with the daily «Le Temps» in particular devoting a double page to the proceedings.

Moreover, thanks to superb collaboration with the audiovisual sector, the best films of the campaign were able to be shown in Swiss cinemas and on a number of private TV channels. The main aim, to raise awareness of the damage caused by counterfeiting among the Swiss population and young people in particular, was thus achieved.

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Panorama of the

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As the umbrella association of Switzerland’s third largest export

industry, the FH pursues multiple objectives: improvement of

framework conditions in Switzerland and the rest of the world,

measures to combat counterfeiting, support to its members

and information on their behalf, as well as to the media and

consumers. The pages that follow present a non-exhaustive

selection of the association’s activities in 2013.

2013 activities

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In 2013, in line with its objectives, the FH remained very active in defending the interests of the branch in its dealings with Swiss and foreign authorities. On this point, it paid particular attention to various ongoing negotiations preparing the ground for free trade agreements, either bilaterally or under the aegis of EFTA (see section in Highlights).

In parallel, the FH also played a part in dealings with around fifteen other countries, mainly - though not solely - on the occasion of official missions by Federal Councillors and bilat-eral joint committees, or during visits to Switzerland by foreign authorities. Conditions governing access to markets, the pro-tection of intellectual property and temporary imports were among the numerous subjects raised. The paragraphs below provide a round-up, necessarily non-exhaustive, of activities carried out to this end throughout the year.

Russia

The progress of negotiations between EFTA and the RuBeKa customs union (Russia, Belarus, Kazakhstan) was of course examined at the fifteenth meeting of the bilateral joint com-mittee. Specifically from the perspective of watchmaking, dis-cussions focused mainly on a number of decrees outlining consumer rights and ensuing warranty problems. According to the Russian legislation in force, watches at present are not included in the category of so-called «technically complex» products, which gives consumers extensive, if not dispropor-tionate rights, particularly with respect to refunds. In the light of international practice in this area, the FH emphasised the extent to which such provisions go too far and are potentially a source of major abuse. It therefore reiterated its request to the Russian delegation to include watches as quickly as possible in the list of «technically complex» products and allow them to benefit accordingly from warranty regulations prevailing at an international level.

Kazakhstan

In April, Federal Councillor Johann N.Schneider-Ammann made a trip to Azerbaijan and Kazakhstan. During his stopo-ver in Astana, he submitted an FH memorandum to the Prime Minister and to the Secretaries for Industry and the Economy and Trade, outlining instances in which watches of precious me- tals or precious stones had been blocked by customs. This intervention produced a very rapid effect and the goods were unblocked shortly afterwards. The FH also requested in this

memorandum that Kazakhstan should adhere to the Madrid Convention on precious metals or sign a bilateral agreement with Switzerland.

On the occasion of the eighth Switzerland-Kazakhstan joint com-mittee, the FH applauded the recent signature by Kazakhstan of the Istanbul Convention on temporary admissions. Subject to the ratification process, it is hoped that use of the ATA Carnet will enter into force on Kazakh territory next July. In addition, fol-lowing the example of the agreement with Russia which entered into force in 2013, Kazakhstan confirmed that it was ready and willing to conclude a bilateral agreement with Switzerland concerning the reciprocal recognition of hallmarks on articles of precious metals. A priori, both watches and jewellery are expected to be covered by this agreement. An initial meeting of experts took place on the eve of the joint committee, which included in particular a visit to the premises of the central assay office in Bern.

Myanmar and Thailand

From 18 to 23 November, an economic mission led by Sec-retary of State Marie-Gabrielle Ineichen-Fleisch travelled to Myanmar and Thailand. The FH was not present on this occasion but asked for two issues to be raised. Firstly, that Myanmar should ratify the Istanbul Convention on ATA Car-nets. Secondly, as regards Thailand, the FH referred to the ongoing negotiation of a Memorandum of Understanding on intellectual property between itself and the Department of Intellectual Property Thailand, with a view to improving pro-tection for trademarks and their international designs, sim-plifying the fight against counterfeiting in the watch industry, and strengthening collaboration with the Thai authorities. The importance of this agreement for Swiss brands was pointed out during the economic mission and a request was made for it to be signed within a reasonable timescale.

Serbia

The Switzerland-Serbia joint committee met on 14 May. This country has now officially submitted its candidacy to the Vienna Convention on precious metals. Problems linked to the non-recognition of CITES documents for watch straps manufactured from crocodile hide were again raised during this meeting, the Federal Veterinary Office being charged with resolving any concrete problems with the relevant Ser-bian authorities.

Improvement of framework conditions

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Vietnam

During the visit by Federal Councillor Johann N. Schneider- Ammann to Vietnam (24 to 26 October), the FH was consulted in the context of an economic mission. On this occasion, our association made clear its interest in the conclusion of a free trade agreement between EFTA and that country, a step which could lead to a significant reduction in customs duties for watch industry products, currently set at between 15 and 20%. The FH also asked for Vietnam to sign the Istanbul Convention on ATA Carnets.

Indonesia

From 26 to 28 October, the economic mission subsequently visited Indonesia. Referring to the conclusions of the third joint committee during which our Indonesian counterparts declared - further to the FH memorandum of December 2011 - that they were ready to examine the possibility of cutting the 40% luxury tax on precious metal watches, the FH asked

to be kept abreast of developments on this point. It also reiterated its request to Indonesia concerning ratification of the Istanbul Convention on ATA Carnets. Lastly, it asked the country’s authorities to ensure compliance with the law on geographical indications, which is still infringed by certain companies, and mentioned the very large number of coun-terfeit watches circulating in Bali. The FH sought the active participation of the Indonesian authorities in combating such sales, not only at the island’s airport but also in the streets and on beaches.

Brazil

The fifth Switzerland-Brazil joint committee met on 5 Decem-ber in Bern. The Brazilian delegation was led by ambassador Paulo Estivallet de Mesquita, head of the economic depart-ment of the Foreign Affairs Ministry. As well as difficulties concerning access to the market, the FH returned to the - overly - long timescale put in place for the implementation of ATA Carnets in that country. In fact, Brazil ratified the relevant

The Brazilian delegation at the Espace horloger, Vallée de Joux

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Convention as early as May 2011, but has not yet designated the indispensable national guarantor organisation. This step is awaited with impatience, if for no other reason than the approach of the planet-wide spectacle of the Football World Cup in 2014.

Earlier in the year, the FH had organised a watchmaking day on behalf of around twenty Brazilian parliamentarians visiting our country. On this occasion, the Joux Valley was accorded a place of honour, with tours of the Jaeger-LeCoultre manu-facture and Joux Valley Watch Museum.

Mission by the president to Mexico

From 13 to 17 February, the president of the FH took part in a mission by Federal Councillor Johann N. Schneider- Ammann to Mexico to discuss in particular the problem of counterfeiting.

Mexico has adopted an open-door policy since the middle of the 1980s, making it an export-oriented country. Of course, apart from oil (sixth largest producer in the world), its econ-omy is greatly dependent on the United States, which is the destination for 80% of its exports and the source of 50% of its imports. In addition, Mexicans living in the United States each year send more than 20 billion dollars to their native country.

GDP has increased by nearly 4% in recent years and infla-tion remains moderate (between 3% and 4%). The Mexican economy suffers however from a lack of competitiveness, particularly on account of state monopolies in the fields of energy (oil industry) and telecommunications. Fiscal reform would also be a step forward.

EFTA, including Switzerland, and Mexico signed a free trade agreement in 2000. Since then, trade between our two coun-tries has steadily increased. The Swiss watch industry bene- fits fully from this agreement: Mexico is the leading Latin American market for our branch, ahead of Panama and Brazil. The value of our exports to Mexico, nearly 209 million francs in 2013, is nearly four times greater than the corresponding figure for Brazil.

However, not all is rosy in Mexico. Armed robberies targeting retailers create insecurity on the market and risk impeding its growth. Some retailers have abandoned plans to expand or have reduced the degree of exposure of collections in shop windows. Counterfeiting is rife in big cities and remains a

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nagging problem. The FH organises training seminars for customs and seizures, resulting in the destruction of fake products. However, procedures remain time-consuming and complex.

These points were raised by the FH at a meeting with the Trade Committee of the Mexican Senate, chaired by senator Hector Larios Cordoba, and during meetings with the Secre-tary for the Economy, Ildefonso Guajardo. Our counterparts admit these problems. The fight against insecurity is one of the priorities of the new government, which has made clear its determination to enforce laws more strictly and coordinate more effectively operations between federal and local police in order to protect the population and allow commercial activ-ities to take their natural course.

With respect to the fight against counterfeiting, too, the determination exists to improve law enforcement. In addi-tion, the «Trans Pacific Partnership» agreement - a kind of future free trade agreement to be signed by countries on the North American continent, including the United States and Mexico - will impose stiffer obligations concerning the protection of intellectual property. The Mexican authorities see this as a mark of their efforts to ensure better protection on the continent.

During this mission, on behalf of the watch industry, it was also noted that the ATA Carnet system does not function cor-rectly even though it has been officially adopted by Mexico. The dysfunction stems from failures on the part of the local partner who is supposed to guarantee the carnet system in the country. This point is being taken up with the help of the Swiss ambassador to Mexico, with a view to remedying the situation.

Mission by Federal Councillor Johann N. Schneider-Ammann to Mexico

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Relations with the media

The FH remains a popular port of call for the media, which seeks out its views on how the branch is performing or subjects relating to the watch industry. For its part, the FH regularly issues press releases.

Above and beyond regular contact with the specialist press and many invitations to speak at watch industry events, par-ticularly the SIHH in January and Baselworld in April, the president gave interviews to the following media organisations: ATS, Keystone-AWP, Revue Zurich Deluxe, 24 Heures, Tribune de Genève, L’Express/L’Impartial, Bieler Tagblatt, Journal du Jura, Le Temps, l’AGEFI, NZZ, Tages Anzeiger, Handelszei-tung, PME Magazine, Canal Alpha (Neuchâtel), Radio Cité (Geneva), Canal 3 (bilingual Bienne radio), RTS (French, Ger-man and Italian-speaking TV and radio), RJB (Berne Jura radio), Telebielingue (Bienne regional television), Echanges internationaux (France).

In addition, the president appeared and gave talks at various forums: AMS Agro-Marketing Suisse, Diplomatic Group for Economic and Commercial Affairs, OECD Group Switzerland, Lions Club Geneva, China Forum Basel, Gymnasiens Bienne, Swiss Chamber of Commerce in Milan, American Watch Asso-ciation in Washington.

General Meeting

The 2013 General Meeting, held in Biel on 27 June, was attended by FH delegates and members together with numerous guests.

The latter included Neuchâtel State Councillor Didier Berberat, leader of the watchmaking parliamentary group, ambassador Christian Etter, who is the Federal Council delegate for trade agreements with the State Secretariat for Economic Affairs, and Patrick Eperon, Secretary of the Employers’ Centre in Paudex, as guest speaker.

Berner Dictionary

The FH continued the work of updating the Illustrated Pro-fessional Dictionary of Horology, better known as the «Berner Dictionary». The project is led by the FH with the help of a group of experts whose members are as follows: Estelle Fallet, head curator of Geneva Museum of Art and History, Bernard and Marlyse Muller, designers and authors of books on watch-making, François Klopfenstein (ETA), Marco Richon, former curator of the Omega Museum, Antoine Simonin, former direc-tor of Wostep and publisher of books on watchmaking, and Jean-Pierre Golay (Franck Muller). The group is chaired by Jean-Daniel Pasche (FH).

Watch industry statistics

Watch industry statistics were widely distributed and consulted in 2013. Published every month, they were made available on a range of media. The Internet and Extranet sites of the FH, as well as its online statistics server, were the main distribution channels for FH members, journalists, students and finan-cial analysts in particular. The quarterly magazine Tendances and half-yearly press releases brought the analysis of sectoral trends to a wider audience. Watch industry statistics were also requested from many private sources, illustrating the major interest they generate.

Revue FH, Annual Report and website

2013 was a red letter year for the Revue FH, which received a comprehensive facelift. Its presentation was entirely rede-signed: it is now available in colour, is easier to read, and presents its subjects in a less cluttered format. Its editorial content has not changed and it still offers readers a broad overview of watch industry news both in Switzerland and inter-nationally (watch industry events, launch of new products) and practical information such as extracts from the Trade Register. It continues to be published at the rate of twenty editions annually.

Information and public relations

General Meeting 2013 in Biel

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Meanwhile 850 copies of the 2012 Annual Report were distrib-uted in a reversible French-German edition. Lastly, the website www.fhs.ch continued to provide detailed, wide-ranging infor-mation not only to Internet users, but also and above all to FH members through its Extranet.

Swiss Exhibitors’ Committee

As is the case every year, the Swiss Exhibitors’ Committee was present at Baselworld through its information stand, the Swiss Press Centre. In 2013, the event took on an entirely new config-uration, with the main hall having undergone a complete transfor-mation. Accordingly, the Swiss Press Centre was situated in Hall 5, alongside the Press Centre and information stands manned by foreign delegations (Germany, France, Japan). In addition to its usual promotional activities, carried out in collaboration with the PR agency Darwel, the Committee proposed a range of new pub-lic relations tools (application for smartphones, presence on social media), as well as the «Swiss Survival Kit», an implied reference to Swiss values, distributed to around 3,600 accredited journalists.

New presentation of the Revue FH

Information stand from the Swiss Exhibitors’ Committee at Baselworld

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Think Time Think Swiss Excellence

The FH travelling exhibition, Think Time Think Swiss Excel-lence, was made available to Le Locle School of Watchma- king from 21 October to 14 December 2013. During this two month period, the establishment welcomed young people in their final year of secondary school facing decisive choices for their future careers, who were able to visit the school and meet teaching staff. The presence of the exhibition, designed precisely to raise public awareness of the Swiss watch indus-try, was therefore a boon for the institution in terms of getting its message across. For the FH, it was a way of encouraging the learning of watchmaking skills and promoting the acti- vities of schools, not only with respect to students but also among the public generally. At the same time, a new «long duration» exhibition concept was inaugurated, an idea that had previously lain dormant.

Show and exhibition database

The show and exhibition database, accessible in full on the FH Extranet and in part on the website, was expanded and

revised to make it easier to consult. The aim of this database is to list events dedicated to watchmaking, jewellery and associated branches around the world.

Think Time Think Swiss Excellence at the School of Watchmaking in Le Locle

The show and exhibition database on the FH Extranet

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Scope of activities

Through its Legal and Anti-Counterfeiting departments, as well as its Internet Unit, the FH is closely involved in the fight against counterfeiting. Reserved to members of the Anti-Coun-terfeiting Group (GA) and the Internet Unit, these services include a number of activities: analysis of fake watches, protec-tion of Swiss geographical indications, investigations on mar-kets, defence of members’ intellectual property rights, aware-ness raising among authorities and the population, efforts to prevent the online sale of counterfeit watches.

Since the GA publishes a separate annual report, we shall only provide an overview of its activities here. However, anyone interested in receiving more detailed information may request a copy from the Legal Department.

Geographical indications

Synonyms of quality and corresponding to specific production criteria, the geographical indications «Swiss» and «Genève» are famous worldwide, particularly in a watchmaking context. Their

protection therefore accounted for a significant part of the work and concerns of the FH during the year 2013. Through its surveillance and its pro-active approach, the FH achieved several notable successes. One criminal charge, filed against a company in breach of the Ordinance regulating the use of the name Swiss for watches, led for example to an agree-ment being struck, whereby the company in question was required to modify all nonconforming parts and discontinue the misleading use of the term «Swiss Parts» on timepieces in all future production. Applications to register trademarks in class 14 (watchmaking products) were also closely monitored. Whenever the risk of misuse of Swiss names was suspected, the FH was able to make a successful intervention. In more than 87% of cases, either the registration application was abandoned, withdrawn or refused, or the applicant signed an agreement with the FH undertaking to restrict the use of the trademarks concerned to products of Swiss origin in accord-ance with applicable Swiss law.

Brazil

In Brazil, various interventions made by postal offices led to the seizure of more than 10,500 watches and components. To prevent the release of these items, a complaint was filed on behalf of around ten member brands of the GA. The FH will be paying close attention to how this procedure unfolds in 2014.

Dubai

Because of its administrative laxity, Dubai remains one of the preferred transit destinations for counterfeiters. In 2013, the FH therefore continued its efforts to combat counterfeit-ing. Investigations carried out in this city made it possible to locate clandestine premises used as storage warehouses and sales offices. A number of raids carried out by the FH in collaboration with its agent and the local authorities led to the seizure of more than 90,000 counterfeit watches.

Spain

The aim of the programme of actions in Spain was to reduce the visibility of counterfeit articles on tourist markets. In total, 31 notifications were made to the FH, taking to 929 the number of seized counterfeit watches. While it is true that in terms of quantity, this number does not reflect the size of the counterfeiting problem in Spain, the programme’s objec-

The fight against counterfeiting

5’000 false clocks seized in Zürich

26

tive was nevertheless attained. Indeed, with the arrest of 25 people, operations showed counterfeiters that the fight is continuing and that they run the risk of arrest and sanctions as a result of their illegal activity.

Bulgaria

The countries of Eastern Europe are also among the most important targets in the fight against counterfeiting led by the FH. In 2013, a record seizure took place in Bulgaria. Indeed the customs authorities in Blagoevgrad took possession of a truck en route from Greece containing more than 12,700 counterfeit articles intended for the European market. The FH was responsible for informing brands and for administrative management of the seizure.

Switzerland

In Switzerland, as part of its request for intervention, the FH collaborated closely with customs. Between August and Sep-tember nearly 9,000 counterfeit products, including 5,000 watches, were seized by customs at Zürich airport. Also from Greece, these products were transiting through Switzerland on their way to Spain and Portugal.

Hong Kong Watch & Clock Fair

Active for a number of years in a surveillance role at watch exhibitions, the FH carried out more of this work in 2013. Any infringement of an intellectual property right, trademark or design belonging to a GA member was carefully listed at the Hong Kong Watch & Clock Fair. In the final analysis, of the 44 infringements identified by FH teams, 34 complaints were upheld. It should be noted that the work initiated five years ago is beginning to bear fruit and that, while the number of imitations is still too high, slavish copies are now almost non-existent.

Baselworld

At Baselworld, various actions were taken by the FH. Sur-veillance at Zürich and Basel airports led in particular to the discovery of a consignment of 700 timepieces addressed to a Basel hotel. Of this total, more than 320 watches were seized for unlawfully displaying indications such as «Geneva»

«Swiss EB» and «Swiss made». The surveillance of exhibited brands also revealed that around fifteen were in breach of the rules. Thanks to this constant vigilance, the FH was able to have the litigious pieces withdrawn from display cabinets.

Awareness raising and training of authorities

Finally, the FH worked closely with authorities to raise aware-ness and train staff. It is a fact that counterfeiting is adapting to the rapidly changing world in which we live. This reality calls for knowledge to be constantly updated. Since on-the-job training is clearly desirable, the FH took part in a training workshop for Belgian customs and police officers in Brussels, a training session at Paris-Roissy airport for customs officers working in the freight area, and a workshop for specialist government officers in Dubai. These exchanges were very productive and allowed participants to familiarise themselves in a hands-on way with the most recent counterfeit watches.

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Internet Unit

In the fight against counterfeiting on the Internet, the FH adopts a global approach: it is necessary to attack the evil by its roots.

Thus in 2013, thanks to a new initiative deployed in the United States, the number of domain names seized by the Internet Unit doubled compared to 2012. The operation was followed by the freezing and confiscation of liquid assets on Paypal accounts linked to the activities of the sites in question. The costs of this action were therefore able to be reduced drasti-cally through the award of more than 40,000 dollars. In addi-tion, the Internet Unit now participates in ex officio seizures of domain names carried out by Europol, in collaboration with the American authorities.

The surveillance of websites dedicated to the sale of counter-feit products is making steady progress thanks to the WebIn-telligence system, which on a weekly basis monitors a growing number of such sites (approximately 6,000 websites at the end of December 2013). Over the year as a whole more than 160,000 emails were sent by this system, resulting in the closure of around one in every two sites, thereby increasing the ratio while at the same time allowing constant monitor-ing to be maintained. In addition, analysis of data recovered during such interventions made it possible to identify the main hosts relied upon by counterfeiters and, as a result, to initiate specific actions against the most recalcitrant of their number.

With time, the systematic surveillance of small ads platforms is beginning to bear fruit. Improvements have been noted on some of the more problematic among them, such as the Chinese site Paipai.com. This sends a clear signal which encourages us to believe that counterfeiters will eventually be banished once and for all, as their offers become less and less visible, limited to fringe platforms on which buyers will lack the confidence to make a purchase.

The Internet Unit also persevered in its fight on social networks, particularly on the video sharing platform YouTube, insofar as this is an important promotional tool for websites dedicated to the sale of counterfeit products. Other media, in particular Facebook and Pinterest, are used more for direct sales and do not necessarily promote a particular website. However, in general, collaboration with the legal departments of social net-works is improving and notification procedures are becoming faster all the time.

The principle issue of 2013 concerned new extensions (new gTLD) of domain names, wherein the main problem for brands is to find an optimal protection strategy at a reasonable cost. The Internet Unit therefore kept its members regularly informed of how the project was progressing and held sev-eral meetings specifically on this subject. The first extensions were up and running at the end of 2013, with the remainder scheduled for distribution in 2014 and 2015.

Collaboration of the FH with Europol

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Technical analysis

In 2013, watchmakers in the Anti-Counterfeiting Depart- ment carried out technical analyses of 635 samples, i.e. 141 fewer timepieces than in 2012 (-18%). The results of these analyses were recorded in 456 reports of origin, i.e. 77 fewer than one year previously. The timepieces recorded infringed the rights of 59 different brands (49 in 2012). The samples examined in 2013 were seized or acquired in 15 countries (23 in 2012). Watches and reports were forwarded to rights holders, as well as to the organisations responsible for their seizure.

The number of consignments is hard to pin down. Samples are a direct result of seizures, which yield variable results from one year to another. It would therefore be erroneous to conclude, from the cases in question, that counterfeiting is on the decline. On the contrary, the variation in the number of brands affected is cause for concern. During the year under review the increase was 20%, which gives a good idea of how the work of prevention is broadening its scope.

As usual, the great majority of samples (83%) constituted counterfeit versions of brands and/or models. The remain-der comprised unlawful indications of origin, i.e. timepieces displaying a false indication of Swiss origin («Swiss made», «Made in Switzerland», or a derivative such as «Geneva»). For the latter, the Anti-Counterfeiting Department prepared 56 reports in the year under review (63 in 2012), examining 109 samples (91 in 2012).

Added to copies of brands or models are false technical indica-tions, mainly the label «Chronometer» or the Geneva Hallmark, as well as false precious metal hallmarks. In recent years the label «Chronometer», enjoying a renown which is now well estab-lished, has become highly coveted. In 2013, the FH recorded 109 cases of misuse, as well as derivatives of the term both on watches and commercial documents accompanying the timepiece (138 in 2012).

In addition, as well as reports of origin, the Anti-Counterfeiting Department issued 12 summary reports (15 in 2012). Based on a body of at least 15 timepieces, these provide a statistical over-view of counterfeiting by brand and by model, thereby providing more food for thought as to how the prevention strategy pursued by affected companies can be improved. In parallel, they also allow risk analysis forms used by Swiss and foreign customs authorities to be updated, as well as requests for intervention. These forms illustrate, for each brand, models considered to be at risk (statistically the most frequently counterfeited) and their origin, with a view to helping customs put in place better targeted, and therefore more efficient controls.

Samples analysed by the Anti-Counterfeiting Department

Example of unlawful indication of origin

Misleading technical indication

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Technical analyses: monthly distribution in 2013

Fake watches: country of origin (source: Taxud / FH)

As well as its «routine» analysis activity, the Anti-Counter-feiting Department continued its «fundamental» research in collaboration with students at the School of Criminal Jus-tice of the University of Lausanne. In the year under review, the group focused on the chemical analysis of counterfeit watches. In other words, is it possible to unearth clues about the structure of counterfeiting networks by examining the vola- tile constituents of counterfeit bracelets? With this investiga-tion now over, it appears that the basic hypothesis holds true: the chemical profile extracted from volatile constituents can be used to establish links between different watches, thereby providing additional information about the structure of net-works involved in the production of fake watches. This work opens new avenues of investigation which will be explored further in 2014. In terms of logistics, the Anti-Counterfeiting Department took advantage of the summer period to modernise its workshop, replace its measuring tools and update its image capturing software. Operational for the past fifteen years and used intensively, the existing systems were suffering from natural wear and tear and as a result losing their accuracy and relia- bility. Replacement of the old equipment with a latest-gene- ration system was long overdue. In parallel, a new database was put into service by the IT Department.

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The Standardisation Committee (CN), responsible for national standards (NIHS), met four times in 2013 to monitor and steer a number of projects. Among the latter, several achieved notable progress. The standard NIHS 07-02 - Technical draw-ing was finalised. The draft standard NIHS 61-30 – Sapphire watch glasses - anti-reflective coatings is in its final phase. The standard NIHS 96-50 - Process to estimate the resistance to chemical and climatic agents of an horological external part was translated into English, thereby allowing it to be referenced internationally (ISO). Work on the new collection «Extracts from Standards used by the Swiss Watch Industry» continued. The principle new feature is to have two sepa-rate books, one oriented mainly towards watch construction, the other more focused on notions of quality and reliability. Boxes of colour samples of gold were a great success again this year, with all available stocks exhausted. In addition, a working group was formed to examine new concepts for these samples, in parallel with revision of the standard ISO 8654 - Colours of gold alloys - Definition, range of colours and designation.

In 2013, seventeen standards were examined by different watch industry experts. Fourteen were confirmed for ten years. The standard NIHS 91-30 - Definition of linear acce- lerations encountered by a watch bracelet during sudden gestures and shocks when being worn will be revised, while the standards NIHS 04-05 - Determination of tolerances and NIHS 98-10 - Test and measuring methods intended for quartz at 32 kHz for wristwatches and normal values were removed from the NIHS collection.

The Standardisation Committee also took note of the resi- gnation of Yves Corthésy, replaced by Luca Verardo, of TAG Heuer.

2013 provided a new opportunity for the Swiss watch industry in the realm of European standardisation. Indeed at the start of the year, the members of CEN/TC 347 - Methods for ana- lysis of allergens learned of the resignation of the president and secretary. A proposal was quickly made for the work of this committee to be resumed under Swiss leadership (via SNV), with the support of the FH. After the FH Board gave its approval, approaches made resulted in the secretariat being assigned to SNV, and a few weeks later the election by mem-bers of CEN/TC 347 of Patrick Lötscher, head of the NIHS Department, as president. For information, this committee is responsible for preparing standards concerning methods for the analysis of allergens, in particular the standard EN 1811 concerning the nickel release.

An initial meeting of the restricted committee, held on 11 November in Winterthur, brought to light various letters requesting a revision of the aforementioned standard. At the suggestion of the president, a vote to this end was ini- tiated at the end of November. If approved by the members of CEN/TC 347, work to revise the standard could begin in the near future. In anticipation of this decision, a working group including several Swiss experts was set up to prepare necessary arguments supporting the interests of the Swiss watch industry during working sessions.

The NIHS Department is entrusted by SNV with the secre-tariat of the interdisciplinary committee INB/NK 164, which is in fact the mirror committee of European or international committees (CEN and ISO respectively). On that account it is responsible, in collaboration with the experts concerned, for coordinating votes initiated by these committees and for-warding to SNV a position which is representative of Swiss industry as a whole. During the year, more than fifteen votes were coordinated in this way.

In terms of international standardisation, the year 2013 was notable mainly for the ISO/TC 114 – Horology conference, which took place in May in Tokyo (see under Highlights).

On a final note, the ISO/TC 114 family welcomed two new members, Armenia (participant) and Austria (observer). In addition, Switzerland was designated as organiser of the of the next International Meeting which will be held in 2015.

Standardisation

New NIHS logo

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Legal, economic and commercial services

New NIHS logo

Legal services

As usual, the year 2013 was very eventful for the FH Legal Department. Three examples among others bear this out.

On the subject of dangerous substances, the FH strengthened its surveillance activities under the REACH regulations. The latter already limit the use of lead and cadmium specifically for watchmaking products. At present the community legislator is supplementing this regulation, in particular with regard to watch bracelets, by introducing an additional restriction con-cerning eight polyclinic aromatic hydrocarbons (PAH). These are generated during the incomplete combustion of organic matter and are found in oil derivatives such as plastics. Since this regulation impacts on the Swiss watch industry, the FH intervened within the framework of the consultation proce-dure. Other planned restrictions and authorisations, particu-larly regarding the restriction of chromium VI in leather articles in contact with human skin and hexavalent chromium salts, are being monitored very closely by the FH and its Legislative Watch Commission. In 2013, the problem of how watches worn (but not owned) by employees is dealt with by customs was also at the heart of discussions between the FH and the Federal Customs Admin-istration. Such watches are articles made available by a watch-making company to its employees for purposes of testing or commercial representation. In Switzerland, they are not con-sidered to be personal effects but are nonetheless subject to the system of temporary exports and imports. As such, they must be notified by means of a customs declaration of tem-porary admission or an ATA carnet. This procedure must be followed whenever a person passes through customs. Where applicable, the fine for employees in breach of the regulations can be as much as five times the VAT amount, combined with a possible entry on their criminal record. To find a more flexible system, the FH approached the Federal Customs Administra-tion and an agreement covering the issue was prepared. FH members can avail themselves of the latter, which now permits watches worn but not owned by employees to be considered as personal effects. This eliminates the need for a customs declaration; the employees concerned can now walk through the «green channel» at airports.

Finally, the FH also examined the revision of the Swiss law on cartels. The Council of States took important decisions on this subject in March 2013. Firstly, it rejected the idea of creating a Federal Competition Court, and secondly it approved the pro-fessionalization of COMCO. It also maintained the principle of

prohibiting certain types of agreement (horizontal agreements on prices, quantities and geographical distribution, vertical agreements on prices and territorial divisions) and introduced, somewhat unexpectedly, a new article 7a intended to com-bat unlawful obstacles to purchases made abroad. Recently however, the Economic Commission of the National Council decided to recommend that no action should be taken regard-ing the draft revision. The latter, initiated precipitously and under the effect of pressure induced by the strong Swiss franc during the economic crisis, is therefore increasingly contested and highly disputed by different groups.

As part of its activity in 2013, it should also be noted that the FH Legal Department travelled to Brussels to defend the interests of the branch among departments of the European Commission, in the context of the European directive on waste electrical and electronic equipment and the new directive on batteries. It also visited Paris in order to discuss with French customs the hallmarking of precious metal watches, with a view to helping FH members to export this type of timepiece to France. In addition to these trips, the Legal Department took part in numerous national and international consultation procedures, particularly in the framework of the new Swiss law on money laundering, the agreement on mutual administrative assistance between Switzerland and the United States, and a Switzerland - European Union agreement on REACH.

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Watchmaking associations

In keeping with a tradition which now dates back fifteen years, the FH invites watchmaking associations from watch produc-ing countries to a meeting at Baselworld. While this courtesy gives different associations the chance to meet one another, it also provides an opportunity for discussions to take place on economic developments and issues affecting the watch indus-try worldwide. This year, the meeting brought together dele-gates from the following countries: Germany, China, France, Hong Kong, Italy and Japan. Delegations from the United States and Spain sent their apologies.

As well as developments on the business front, participants also examined the Swissness project, as well as the revised standard EN1811 on reference test methods concerning the release of nickel.

economiesuisse

After resigning from economiesuisse in February due to pro-found differences concerning the Swissness project, the FH went back on its decision in November and decided to remain a member. For the one part, the Swissness bill was passed. Secondly, the FH Board recognised efforts made by the econ-omy’s umbrella association, which took account of criticisms levelled against it and corrected mistakes that had been made.

The FH is represented on the following bodies: general meeting, executive committee, steering committee, coun-cil of directors of associations, WTO working group, working group on customs and origin related issues, expert group on intellectual property, working group on economic questions, expert group on relations with the European Union, compe-tition commission.

Watchmaking parliamentary group

The watchmaking parliamentary group met twice, on 5 March in Bern and on 30 April in conjunction with Baselworld. These meetings allowed representatives of the Swiss watch industry to take stock of developments in the sector and examine the problem of strengthening the Swiss made label in the context of the Swissness project.

Standing Committee on European Watchmaking

Since 1st January 2013, in keeping with the articles of associa-tion, the FH has taken over for three years the presidency and general secretariat of the Standing Committee on European Watchmaking (CPHE). Chaired by Jean-Daniel Pasche, the Committee met on two occasions during the year, in Basel at the time of Baselworld, and in Besançon on the occasion of the International Chronometry Contest awards ceremony.

The work of the CPHE was of course marked by the adoption in June of the Swissness bill, the latter being decisive for revision of the Swiss made ordinance for watches. In concrete terms, the CPHE discussed in detail the genesis of Swissness, i.e. more than six years of work all told, to ensure that this bill, for the one part, and the forthcoming revision of the Swiss made ordinance for the other part, take into account the interests of European watchmaking in the context of free trade agreements signed between Switzerland and the European Union. In Besançon, the European delegation finally confirmed its readiness not to oppose revision of the ordinance and in particular the minimum rate of Swiss value of 60%.

During the year, the CPHE also discussed many European and Swiss regulatory subjects. The main items included the revision of the European standard EN1811 concerning the release of nickel, the revision of the European directive on batteries, the marking of precious metal watches in France, and the application of the directive on waste electrical and electronic equipment.

Relations with the authorities and economic circles

Standing Committee on European Watchmaking in Besançon

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FH Centre in Hong Kong

As usual, the FH Centre in Hong Kong worked extensively on behalf of the branch and members of the association. It gave concrete support to more than 50 delegates of FH members travelling in the region, as well as to their Asian representatives. This regular assistance covers areas as varied as facilitating contact between commercial or industrial partners in Hong Kong, China and elsewhere in the region, the search for quali-fied personnel, help with establishing companies, and personal accompaniment during visits to markets in South East Asia. Around fifteen trips were organised along these lines during the year under review (China, Vietnam and South Korea amongst others). Promotional events organised in this part of the world were also closely monitored.

In parallel, the FH Centre increased its contacts with the media, local professional organisations, and diplomatic authorities and representations in the region as a whole, particularly in Hong Kong, Beijing, Guangzhou and Bangkok.

Lastly, throughout the region, the Hong Kong Centre followed up many requests from FH members concerning legal mat-ters and measures to combat counterfeiting. In particular, it offered its support and expertise to numerous brands applying for registration with Chinese and Korean customs. Similarly, it conducted several tens of investigations into local companies and each month filed one or more objections to trademark applications in class 14 (watchmaking), both in Hong and else-where in the region.

FH Centre in Tokyo

In addition to its usual activities supporting FH members and maintaining relations with the media, local professional organ-isations and diplomatic representations, and various requests from Japanese individuals or firms, the FH Centre in Tokyo worked very hard in 2013 to raise the profile of the Swiss watch industry among Japanese consumers. In particular it organised a seminar on the maintenance of watches which provided prac-tical advice about the daily use of watchmaking products and the need for them to be serviced regularly. It also supported and took part in the Watch Festival Tokei Festa, the first edition of which was held in 2012. This provided an opportunity to present the activities of the FH and more particularly the Tokyo Centre, as well as the Swiss watch industry in general. As part of this festival a number of events were staged for the benefit of consumers, to which retailers and watch repairers were invited.

The Centre had to deal with an increasing number of problems relating to repair work, with certain brands no longer assuring the maintenance of old models. For this reason it continues to manage the Taga Watch Center after-sales service pool. A website in Japanese dedicated to after-sales service was also created.

The Centre began the work of updating the brochure in Japa-nese presenting the Swiss watch industry, the first version of which dates from 2005. This is intended for consumers and sales staff. In addition, it helped to prepare the 2014 Consumer Survey, the results of which will be published to coincide with Baselworld.

In view of the commemoration in 2014 of the 150th anniversary of diplomatic relations between Switzerland and Japan, the Centre approached the chain of Tobu department stores with a view to staging the Think Time Think Swiss Excellence exhi-bition as part of the 2014 World Watch Fair in August.

Following the decision by the director of the FH Centre in Tokyo, Maki Onjo, to live with her family outside Japan, the FH invited Ayako Nakano to take over the reins from 1st January 2014. The FH would like to thank Maki Onjo warmly for her dedication and commitment on behalf of the Swiss watch industry over the past five years and wish her the very best for the future.

FH Centres abroad

Ayako Nakano, director of the FH Centre in Tokyo from 2014

The Swiss watch

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industry in 2013

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General situation

Over the year 2013 as a whole, growth slowed distinctly com-pared to previous years but did not disappear. On the contrary, it allowed the branch to consolidate its recent results at a high level.

Growth was penalised by only three markets, however the weight of these was considerable. One such was China, which recorded not just a decline, but probably a turning point in its evolution, an observation that required the FH to make an exceptional adjustment to its forecasting model. The very high rates of growth of the past decade now seem less achievable. It should be noted however that this applies only to Switzerland’s direct exports to China, and that an increasing number of Chi-nese customers are purchasing their watches abroad. There can be no doubt therefore that this group of buyers will continue to be highly placed in the portfolio of the Swiss watch industry.

Swiss watch exports

Growth slowed quickly in the first half-year, which recorded a variation of +0.7% compared to January-June 2012. Exports showed an improvement in the second half of the year, with an upturn of 3.0%. Over twelve months, the value of exports stood at 21,8 billion francs. This figure exceeds the perfor-mance achieved in 2012 by more than 400 million francs and corresponds to an increase of 1.9%.

Exports of wristwatches

Watches accounted for nearly 95% of the total value of exports in 2013, recording growth of 2.0% to 20,6 billion francs. In volume terms, Switzerland exported 28,1 million timepieces. This represents a downturn of just over one million units (-3.6%) compared to 2012. Despite the second consecutive annual decline, the level remains well above the average for the past ten years.

As in 2012, mechanical watches showed a positive trend, while quartz products lost ground. The former not only recorded an increase in value terms (+4.5%), but also by volume, to a quite marked extent (+8.2%). At the end of 2013, the total amounted to 560,000 more units than in 2012. Electronic watches accounted for less than a quarter of export sales, but nearly three-quarters by volume. Their value fell by 5.8% and the number of units by 7.3%.

As a consequence of these variations, the average price of exported watches continued to rise. In 2013, it stood at 733 francs, i.e. an increase of 5.9% compared to 2012. It has doubled in the space of 12 years.

Exports by materials

For the year as a whole, steel watches (+4.9%) were the main source of growth in value terms. Platinum timepieces (+20.5%) also strongly supported this trend. By contrast, gold and bimetallic watches (-1.6% and -3.3% respectively) reg-istered downturns. Half of materials registered declines in volume terms. Among the main underperformers, the category

Watchmaking Statistics

Swiss watch exports (in billion francs)

Exports of wristwatches (in billion francs)

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of other metals (-28.0%) weighed heavily in the balance, like-wise the category of other materials (-8.4%). The magnitude of their decline was such that the rise in steel watches (+1.0%) was unable to play a significant role.

Exports by price segment

The year 2013 brought about no great surprises in trends shown by the main price ranges. The 200 to 500 francs cat-egory remained buoyant, with strong increases (+14.2% by volume and +12.7% by value). Variations, whether positive or negative, were generally more measured in other segments. Below 200 francs, volumes were down considerably however (-8.5%). Above 500 francs there was little change (+0.5%). Trends by value differed according to price categories. Watches costing more than 3,000 francs (+2.8%) were responsible for a large part of the general increase. Below 200 francs and between 500 and 3,000 francs, value fell by several points, but with a limited impact on the overall result.

Export markets

In 2013, Europe exerted a positive effect on results with an upturn of 5.7%. The continent absorbed 31.4% of Swiss watch exports by value, before seeing a large part of these products cross its borders in the form of tourist purchases or re- exports. Asia accounted for more than half of watch in- dustry sales (52.7%) despite a very slight downturn (-0.9%).The American continent registered a moderate and steady slowdown, before stabilising close to its final result (+2.4%).

Only a few markets recorded negative results in 2013, however they had a significant effect on the overall result on account of their size. The leading market for direct exports, Hong Kong, was one of these. Its level reached a low point in the summer, eventually recording a decline of 5.6% compared to 2012. Watches costing more than 3,000 francs in particular had a negative effect on sales.

China, the second-largest Asian market and third largest on a global scale, recorded one of the steepest declines, with -12.5%. The 3,000 francs and over segment was particularly hard hit (-40.4%), albeit representing a smaller share than on other markets. By contrast, watches costing less than 500 francs registered an increase of around 20%, both in value and volume terms.

The last significant negative influence was that of France, which occupied sixth place worldwide. Its annual value fell by 9.6%, driven by most price segments. Watches costing less than 200 francs plummeted in volume terms by 30.6%, which represents half the global downturn. France has apparently suffered from a decline in purchases by tourists, particularly from China.

Among the many positive variations, the United States (+2.4%) remained close to the world average. After a slow-down during the first half-year, growth remained stable in the second part of the year, buoyed by watches between 200 and 3,000 francs, with other segments showing little change compared to 2012.

Except for France, European markets gave a boost to the Swiss watch industry. Germany recorded an upturn of 9.0%, Italy 4.6% and the United Kingdom 18.2%, thanks mainly

Exports by price segment (variation compared with 2012)

Main export markets in 2013

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to watches costing more than 3,000 francs. Other, smaller markets also registered upturns, some of which were quite considerable.

In Asia, Japan (+5.7%), Singapore (+1.0%) and South Korea (+11.4%) also surpassed their 2012 levels. The Middle East followed the same trend, with positive results recorded by the United Arab Emirates (+9.2%) and Saudi Arabia (+6.6%).

Other exported products

Other clock and watch products exported by Switzerland in 2013 accounted for approximately 5% of the total value, made up in part by the trade in repairs. For the remainder, exports of movements lost ground slightly at 6,4 million units (-1.3%), however in value terms the total of 236,5 million francs rep-resented an increase (+5.9%). Alarm clocks and other clocks remained stable in volume terms, while registering a steep 51.3% increase by value to 73,7 million francs.

Watch industry imports

Switzerland’s imports of watch industry products followed the trend of exports. The total value of imports was 3,4 billion francs in 2013, an increase of 2.1% compared to 2012. This upturn was due to wristwatches, the value of which rose by 16.9%. Supplies of foreign components fell for most items: bracelets (-3.0%), cases (-7.7%) and dials (-9.9%), in particular.

Swiss watch exports by region (in billion francs)

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Structure of

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An organisation representative of the Swiss watch industry as

a whole, the FH has the following main tasks and objectives:

helping to defend and develop the sector, establishing a per-

manent link between its members in order to promote their

shared interests, representing the Swiss watch industry in its

dealings with Swiss and international economic authorities and

organisations, asserting the interests of its members during

consultation procedures preparing the ground for national

and foreign legislations, defending its members’ interests in

the legal arena, and fighting actively against infringements

of intellectual property rights and acts of unfair competition.

the FH in 2013

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On 31st December 2013, the FH included 489 companies, associations and institutions (approximately 90% of the Swiss watch industry manufacturers), including 241 firms in the fin-ished products sector.

In terms of products, markets and business size, the Swiss watch industry is characterised by its very great diversity. The FH is therefore structured with a view to harmonising the differ-ent interests of its members through the balanced composition of its statutory organs.

Summary of 2013

Bureau5 members

Presidency Commissions

General Meeting60 delegates

Council20 delegates

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Governing body of the association, the FH General Meeting comprises a maximum of 60 delegates totalling 60 votes. Last-ing three years, terms of office are renewable.

The General Meeting takes decisions on issues submitted to it by the Board concerning the interests of the Swiss watch industry and the association’s general policy; it elects mem-

bers to the Board, as well as the president of the association, and appoints the auditor; it discusses and approves the annual report and the accounts, as well as the scale of subscriptions.

On 31st December 2013, the FH General Meeting was com-posed of the following delegates (some with more than one vote):

The General Meeting

Jean-Claude AffolterPignons Affolter SA

Marco AvenatiManufacture des Montres Rolex SA

Jean-Christophe BabinTAG Heuer SA

Olivier BernheimRaymond Weil SA

Denis BolzliAéro Watch SA

Cédric BossertRichemont International SA

Pascal BratschiManufacture des Montres Rolex SA Bienne

Pierre-André BühlerETA SA Manufacture horlogère suisse

Emile CharrottonSAH

Pascal DuboisDubois Dépraz SA

Jacques G. DuchêneRolex SA

Jean-Frédéric DufourZenith International SA

François DurafourgPierhor SA

Christian FeuvrierNivarox-FAR SA

Jean-Paul GirardinBreitling Montres SA

David GueninGimmel Rouages SA

Jean L. GuillodGuillod-Gunther SA

Jean HirtEstoppey-Addor SA

Philippe HubbardArteCad SA

Peter HugWenger SA

Albert KaufmannRichemont International SA

Marc KüfferRoventa-Hennex SA

Alain MariettaMetalem SA

Jacques MataLuxury Timepieces International SA

Pierre-André MeylanPiguet Frères & Cie SA

Pierre-Jean MeyratRubattel & Weyermann SA

Jean-Jacques NémitzUniverso SA

Corine NeuenschwanderNeuenschwander SA

Marianne PandisciaMultitime Quartz SA

Hannes PantliIWC Schaffhausen Branch of Richemont International SA

Jean-Daniel PascheFH

Flavio PellegriniMGI Luxury Group SA

Jean-Claude ProbstBulgari Horlogerie SA

Hanspeter RentschThe Swatch Group SA

Daniel RochatPatek Philippe SA

Philippe RossierSimon & Membrez SA, Habillage Horlo-ger Haut-de-Gamme

Manuela SurdezGoldec SA

François ThiébaudTissot SA

Claude VuillemezRichemont International

Roger WermeilleLe Castel Pendulerie Neuchâteloise

Vladimiro ZennaroBergeon & Cie SA

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Comprising twenty members elected for three years by the General Meeting, the FH Board, which meets four times a year, has the following main attributions: it defines the association’s policy and monitors its application; it rules on the admission of members; it gives its opinion on issues to be submitted to the General Meeting and executes the latter’s decisions; it elects the Bureau and appoints the vice-president(s); it appoints heads

of division and commission members; generally it assures a permanent link between members of the association, the authorities and third parties; it approves agreements concluded between the association and its members or third parties; etc.

On 31st December 2013, le Board was composed of the fol-lowing members:

The Board

Raynald AeschlimannOmega SA

Marco AvenatiManufacture des Montres Rolex SA

Jean-Christophe BabinTAG Heuer SA

Denis BolzliAéro Watch SA

Pierre-André BühlerETA SA Manufacture horlogère suisse

Jacques G. DuchêneRolex SA

Christian FeuvrierNivarox-FAR SA

Jean-Paul GirardinBreitling Montres SA

Jean HirtEstoppey-Addor SA

Peter HugWenger SA

Albert KaufmannRichemont International SA

Marc KüfferRoventa-Henex SA

Alain MariettaMetalem SA

Hannes PantliIWC Schaffhausen Branch of Richemont International SA

Pascal QuelozOréade SA Manufacture de boîtes

Hanspeter RentschThe Swatch Group SA

Daniel RochatPatek Philippe SA

Philippe RossierSimon & Membrez SA, Habillage Horloger Haut-de-Gamme

Peter SteigerThe Swatch Group SA

Claude VuillemezRichemont International SA

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Comprising the president, the two vice-presidents and two members, the Bureau examines issues delegated to it by the Board and, exceptionally, questions of an urgent nature.

At the end of 2013, its composition was as follows:

Jean-Daniel PascheFH

Hanspeter RentschThe Swatch Group SA

Alain MariettaMetalem SA

Jacques G. DuchêneRolex SA

Jean-Paul GirardinBreitling Montres SA

The president of the Financial Commission, Pierre Huguenin, is regularly invited to attend the Bureau’s meetings.

The FH also has six permanent Commissions responsible for examining issues of general interest dealt with by the association.

At the end of 2013, its composition was as follows:

Thierry KenelEconomic Commission

Pierre HugueninFinancial Commission

Olivier BlancLegislative monitoring Commission

Jean-Daniel PascheLegal Affairs Commission

Jean-Pierre CurchodNIHS Committee

Jean-Daniel Pasche Anticounterfeiting Group

The Bureau and Commissions

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On 31st December 2013, the FH employed 31 people full-time in Bienne, as in 2012. Its organisation chart is as follows:

Divisions and Departments

CommunicationPhilippe Pegoraro

FH Japan CentreMaki Onjo

FH Hong Kong CentreThierry Dubois

Promotional Affairs DepartmentHélène Fima

Economic and Statistics DepartmentPhilippe Pegoraro

External Affairs DepartmentMaurice Altermatt

Economic DivisionMaurice Altermatt

FH Latin America DelegateFrançois Pillonel

Internet UnitCarole Aubert

NIHS DepartmentPatrick Lötscher

Anticounterfeiting DepartmentMichel Arnoux

Legal DepartmentYves Bugmann

Legal DivisionYves Bugmann

PresidencyJean-Daniel Pasche

Information Technology DepartmentSébastien Veillard

Internal DepartmentCorinne Palladino

Administration DepartmentDavid Marchand

Adminstrative DivisionDavid Marchand

Information DepartmentJanine Vuilleumier

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Efficient though its staff may be, the FH would be nothing in the globalised world in which we live without a solid network of partners, which can be found both within and outside the sector on all five continents. Non-exhaustive, the list below provides a summary of this network.

Federal Administration

◆ Bureau fédéral de contrôle des ouvrages en métaux précieux

◆ Commission des experts douaniers

◆ Direction générale des douanes (DGD)

◆ Office fédéral de la santé publique (OFSP)

◆ Office vétérinaire fédéral (OVF)

◆ Secrétariat d’Etat à l’économie (seco)

Watchmaking Associations

◆ All India Federation of Horological Industries

◆ American Watch Association

◆ Assorologi (Italy)

◆ British Horological Federation

◆ BV Schmuck + Uhren (Germany)

◆ Chambre française de l’horlogerie et des microtechniques (CFHM)

◆ China Horologe Association

◆ Comité permanent de l’horlogerie européenne (CPHE)

◆ Fédération française de l’horlogerie (FH)

◆ Hong Kong Watch Manufacturers Association

◆ Japan Clock and Watch Association

◆ Japan Watch Importers Association

◆ Joyex - Asociación Espagñola de Fabricantes y/o Exportadores de Joyería, Platería y Relojería

◆ Korea Watch and Clock Industry Cooperative

◆ The Federation of Hong Kong Watch Trades & Industries Ltd

Chambers of commerce

◆ Alliance des chambres de commerce suisses

◆ Chambre arabo-suisse du commerce et de l’industrie (CASCI)

◆ Chambre de commerce international (CCI)

◆ Chambre de commerce Suisse-Chine

◆ Chambre de commerce Suisse-Inde

◆ Joint Chambers of Commerce (Russia, Ukraine, Kazakhstan, Belarus, Kyrgystan, Moldova)

◆ Swiss Chamber of Commerce in Japan

Customs and police organisations

◆ Agenzia delle Dogane, Roma

◆ Commandement général de la Guardia Civil (Spain)

◆ Commandement général de la Guardia di Finanza (Italy)

◆ Organisation mondiale des douanes

◆ Police cantonale de Neuchâtel

◆ Police cantonale du Jura

Economic organisations

◆ BUSINESSEUROPE

◆ economiesuisse

The network of partners

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Legal organisations

◆ Association internationale pour la protection de la propriété intellectuelle (AIPPI)

◆ Institut fédéral de la propriété intellectuelle

◆ Association suisse du droit de la concurrence

◆ Association suisse du droit européen

◆ Ligue internationale du droit de la concurrence

◆ Organisation for an International Geographical Indications Network (Origin)

Anticounterfeiting organisations

◆ Institut de police scientifique, Lausanne

◆ Anti-Counterfeiting Group (ACG)

◆ Istituto di Centromarca per la lotta alla contraffazione (Indicam)

◆ Union des fabricants

◆ Stichting Namaakbestrijding SNB, Amsterdam

Organisations involved in standardisation

◆ Association française de normalisation (AFNOR)

◆ Association suisse de normalisation (SNV)

◆ British Standards Institution (BSI)

◆ Bureau of Indian Standards (BIS)

◆ Comité européen de normalisation (CEN)

◆ International Standardisation Organisation (ISO)

◆ Japanese Industrial Standards Committee (JISC)

◆ Korean Agency for Technology and Standards (KATS)

◆ Standardization Administration of China (SAC)

Technical organisations

◆ Centre technique de l’industrie horlogère française (CETEHOR)

◆ International Electrical Committee (IEC)

◆ Tokyo Watch Technicum, Japon

Others

◆ Fédération romande des consommateurs (FRC)

◆ Swiss Business Council Dubai

◆ Ecole d’ingénieurs ARC

◆ Comité des exposants suisses à Baselworld

◆ Osec Business Network Switzerland

◆ Présence suisse

◆ Société suisse de chronométrie (SSC)

Tél. +41 (0)32 328 08 28Fax +41 (0)32 328 08 80info@fhs.ch / www.fhs.ch

Rue d’Argent 62502 Biel-BienneSwitzerland