Swiss watch exports to China: Duty-free deal explained

What happened Switzerland and China finished negotiating an upgrade to their 2014 free trade agreement on August 20, after five rounds of talks that began in September 2024. Once it takes full effect, 99.8% of Swiss goods exports to China will enter duty-free, against roughly half today. Both sides aim to sign the text before year-end, but the last tariff lines fall as much as 10 years after entry into force. Watchmakers have more to gain than any other Swiss industry, and they will eventually get to decide what to do with it: cut Chinese prices, or keep the savings as margin. One percent of watch exports currently enter China duty-free, the smallest share of any major category, and the upgraded agreement lifts that to 100%. Swiss watch exports to China fell 18.5% in July from a year earlier, while shipments to the US rose 26.5%, according to the Federation of the Swiss Watch Industry. Watches with export prices above 3,000 Swiss francs ($3,700) rose 12% worldwide that month, while the 500-to-3,000-franc ($600 to $3,700) band fell 3.9%, the only segment to decline. Those shipments track what retailers expect to sell rather than what shoppers buy, and expectations in China have been low for two years. A weak economy and younger shoppers focusing on price and resale value have kept them there. Beijing added further pressure in late July, when new rules imposed a 20% tax on offshore trust income and brought overseas insurance returns into scope, with unpaid amounts on assets moved into trusts since January 2023 due within 90 days. The households affected are the ones who buy the watches at the top of the range. The Jing Take Duty relief is worth less than the 99.8% figure suggests, because import duty is the smallest of the three levies on a Swiss watch sold in China. Alongside it sits 13% VAT and a 20% consumption tax on watches above 10,000 RMB ($XXX), and the agreement touches neither. Take the duty away, and a watch bought in Shanghai closes some of the gap to the same watch in Hong Kong or Tokyo. it does not close it. Because duty is charged on declared import value, the biggest cash savings land on the most expensive watches. That is the segment already growing 12% worldwide, and the one where price matters least. A few percentage points do change a purchase further down, in the 500-to-3,000-franc tier ($620 to $3,730), where Tissot, Longines and Tudor compete against domestic brands, Japanese imports and smartwatches, and where a retailer;s decision to stock one over another turns on margin. Swatch Group has the deepest exposure there, and the most to gain. For brands with waiting lists, the cut is pure margin. For everyone else it is a decision: pass it to the shopper, or fund a boutique network built for a market that has shrunk. Either way, it is a one-time reset of the cost base, not a source of growth. Demand still has to come from somewhere else. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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Swiss watches win a China tariff cut, not a comeback

How Bottega Veneta weaved China’s forever it bag