Swatch Will Stop Providing Watch Movement To Competitors Such As LVMH And Richmont.

Nick Hayek, the president and chief executive of Swatch, a Swiss watch giant, recently announced that it will no longer supply its main competitors after the expiration of the existing contracts, including two luxury giants LVMH and Richemont.

Swatch group's core maker ETA is one of Switzerland's largest mobile suppliers.

Ten years ago, the Swatch group tried to restrict ETA's sales of the third party's movements, but the decision led to an investigation by the Swiss competition authority and a restriction on ETA, which required that it continue to supply the third party with the movement.

The order will expire this year.

Because of the large scale of ETA production and their lower core prices, many watch brands choose to purchase the core from ETA instead of building their own internal production lines.

Both the group and the LMVH group have begun to increase their investment in mobile devices in recent years, but their investment is mainly concentrated in the high-end series, and their more popular low-end watch movement still comes from ETA.

The Hayek family has been very unhappy with their competitors' strategy in the movement, claiming that they hardly invest in the production of the core. Instead, they invest their money in marketing and buy products directly from ETA to make watches.

"We sell 510 thousand movement to third parties every year, and we can completely use these products ourselves."

Hayek says.

He also mentioned that some small brands have renewed their supply contracts with ETA, and they will abide by these agreements, but have not renewed their contracts with LVMH group and Richemont group.

Hayek added: "I hope they can increase their investment, but this is their problem, not ours."

In February this year, Swatch group just announced its financial report in 2018, sales grew 5.7%, to 8 billion 480 million Swiss francs, operating profit increased to 1 billion 150 million Swiss francs, lower than analysts expected 1 billion 290 million Swiss francs.

Author: He Hongzhan