To compete with Apple, the Swiss watch industry will have to swallow some of its pride

Apple will have to watch out for competition from Switzerland.
Apple will have to watch out for competition from Switzerland.
Image: Keystone/Georgios Kefalas
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Tag Heuer admits it doesn’t have the tech know-how to create a smartwatch of its own. What it does have—aside from expertise in crafting quartz and mechanical timepieces—are partners to produce the hardware and applications. But tapping them may compromise the watchmaker’s “Swiss Made” label.

“We can’t produce the engine, the chips, the applications, the hardware—nobody can produce it in Switzerland,” Jean-Claude Biver, head of luxury conglomerate LVMH’s watch division, which includes Tag Heuer, said in an interview with Bloomberg.

Swiss watch makers traditionally have operated as vertically integrated businesses, buying up suppliers and controlling the distribution of their products. Tag Heuer is an example of how seriously the Swiss Made stamp is taken by the local industry; it describes the label as “a state of mind” in its marketing copy.

To be considered Swiss Made, at least half of the watch’s movement, which includes assembly and inspection, must be produced in the country, and at least 50% of the components must be Swiss. More restrictive conditions adopted by the industry in 2013 dictate that at least 60% of the manufacturing costs must be generated in the country to be considered from Switzerland. Though specifics of Tag Heuer’s upcoming smartwatch have yet to be released, it’s likely the brand will sacrifice the label so it isn’t left in the dust of the pending smartwatch revolution.

In fact, Biver—who was quick to judge the Apple Watch, saying it looked like it “was designed by a student in their first trimester”—is warming up to the device. He told Bloomberg he’ll be sporting one of his own when it’s released: “I’m not just living in the tradition and culture and the past, I also want to be connected to the future. The Apple Watch connects me to the future.”