Backed up by traditional image and quality, watches are the most popular souvenirs in Switzerland, followed by chocolates and knives. The main market is not the home market, however, but the rest of the world, which buys over 95 per cent of the watches made every year by over 600 Swiss companies.

"We rely on the worldwide market, and it's thus very important to see what's happening. It's easier to access the world market with world-defined strategies, and we have a wide range of products, brands and strategies. We have a wide spectrum of products to keep the No 1 position," said Maurice Altermatt, head of the economic division of the Federation of the Swiss Watch Industry.

The industry's strategy is borne out by export figures. In March of this year 1.8 million units were exported, an increase of 230,000, or 14.2 per cent, from the same month a year earlier. By value, the export market grew 22 per cent to 936.1 million Swiss francs (Bt29.4 billion).

Notably, the ex-factory price is used to calculate value, while the retail price could be three to four times higher. The growth in value was attributable to timepieces worth 3,000 francs and over while the rise in volume was attributable mainly to the 200-franc-and-under category, which increased by 180,000 pieces.

The United States is the biggest market for Swiss watches. In March alone, exports to the US reached 174.8 million francs, compared to 134.1 million francs in the same month last year. In the same month, Thailand's imports reached 18.5 million francs, up from 13.4 million francs in the previous year. Thailand is ranked as the 13th largest market for Swiss watches, trailing the US, Hong Kong, Japan, Italy, Germany, France, China, the UK, Singapore, Spain, the UAE and Taiwan.

While high- and low-priced items witnessed stronger demand, the result was negative for the 200-500-franc segment. Controlling this segment are Japanese watchmakers, who entice customers with advanced technology and novel features.

"People will buy the most expensive items or the lowest priced items," said Christine Scheufele, a member of the family that owns luxury watchmaker and jeweller Chopard. "That's why everybody is now going more for luxury."

According to Philippe Pegoraro, the Swiss watch federation's economist, throughout the past 10 years export volume has been declining while value has been rising, showing that Swiss watchmakers are moving higher in the upscale market.

A history spanning more than 100 years ensures Swiss watchmakers know best how to combine knowledge with new luxury designs and precision technology, but despite the uniqueness of its timepieces, the Swiss industry has suffered from counterfeits.

In 2005, about 50,000 fake timepieces, which cost from about US$2 (Bt76) up to $10 to produce, were seized in Thailand, mostly in Bangkok, Phuket and Pattaya. Over 90 per cent of them were made in China and assembled elsewhere, including in Thailand. Even the Swiss admit that the quality of counterfeits these days has improved, and sellers ask for a price close to that of the authentic piece, which makes it hard for consumers to know which is real and which is pirated.

"What we can do right now is give customers information, some tips to consider before buying watches. There should also be a political will to cooperate," Altermatt said.

Watch companies are more active in warning buyers of potential counterfeits from unauthorised shops. No matter how much they pay for the fake items, the manufacturers will not accept responsibility for a malfunction. The companies are also reaching out to buyers worldwide.

Swiss watchmakers are pumping money into research and development to maintain their competitive edge. Twenty years ago designs were completed to match the preferences of individual countries, but now with globalisation, buyers everywhere, including in new markets like India and China, demand the same products that are sold in Paris.

Altermatt said there was still room to grow in the mechanical segment following concerns about the impacts on the environment of nickel and mercury, used in making cheap watches.

"We have to find new things. Thus R&D is very important," he said, adding that spending on research and development required only a few percentage points of total sales.

And the ultimate way out would be to move towards upmarket products, to further raise the average price of Swiss watches and to meet market demand. Quoting high prices gives an advantage to international brands, as they can use every means - ambassadors and sponsorships - to promote their brands, and advertising and marketing budgets can go as high as 20 per cent of total sales.

But even Altermatt admits that Swiss watchmakers' rivals are no longer watch-manufacturers elsewhere but heavy products like home theatres that are drawing money from target customers.

Achara Deboonme,

Thanong Khanthong

The Nation

Bienne, Switzerland