His comments are the latest in a long-running dispute between the world’s largest watchmaker and rival Swiss companies who complain that Swatch Group’s announced plan to reduce watch movement deliveries from next year constitutes an abuse of its near monopoly control of the market.
“The Swiss watch industry has no shortage of mechanical movements if you stop selling them to people who will put them in fakes or unheard-of Hong Kong brands that will sell them as ‘Swiss made’ without respecting our standards,” Hayek said.
He quoted figures that he said were proving competitors, and in particular movement assembler Sellita, sell the movements they receive from Swatch Group’s ETA unit to customers in Asia.
According to statistics compiled by the Swiss Watch Federation, hundreds of thousands of mechanical watch movements are exported from Switzerland to China and Hong Kong each year.
Hayek said only a small fraction of these were exported by Swatch Group’s brands for customer service.
“Most of them are ETA movements that we have to deliver to customers such as Sellita who then sell them as a commodity in Asia.”
Sellita, which started developing its own movements a few years ago but still buys about half of its movements from Swatch Group, declined to say how many units it delivered to Asian customers each year.
“I have given all the information to the federal administrative court and to the competition authorities who will decide whether we are allowed to work with customers abroad,” said Miguel Garcia, owner of Sellita.
“In 2011, we had enough movements for everybody, even though we sold some abroad, but next year we will not have enough. There is a discrimination against customers abroad and a Swiss protectionism that is not good,” he said.
Swatch Group’s monopoly position means it has to supply components to the whole industry at relatively low prices.
To end this situation, it turned to Swiss competition authorities who opened an investigation and drew up provisional measures allowing Swatch Group to reduce deliveries from 2012.
The announcement sent shockwaves through the industry and some of Swatch Group’s customers, including Sellita, have taken legal action, saying the measures were jeopardizing their growth and threatening jobs.
Hayek said the steps the company had taken would on the contrary lead to more competition and secure the industry’s future in the long run.
“We need innovation. Our industry will die if there is no more innovation and everybody uses the same movement and then only decorates it,” he said, adding Swatch Group had been encouraging rivals like Richemont and LVMH for years to deepen their own watchmaking know-how.
“This is all about money,” Hayek said.
“Our competitors sell their watches for 15,000 or 20,000 francs but complain if the movement costs 200 francs instead of 100 francs. They say that is a problem but it is not. The margins are big enough.”
