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00:00:00
>>
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00:00:01
A Swiss watch, a thing of family heirlooms and a point of pride for the country. But the reality is that the Swiss made label hasn't meant 100% Switzerland for a long time. Under old regulations, over half a time piece's parts could come from China and still carry it.
00:00:21
But as Reuters Zika Alterwitz in Zurich explains new regulations returning some purity to the industry has a number of clock makers ticked off.>> Strike the rules for the Swiss made label came into force at the beginning of the year. And for watches the key requirement is that 60% of the value of the watch needs to be generated in Switzerland.
00:00:41
That is up from 50% previously which only applied to the watch movement. That is the mechanism inside the watch that makes it tick. So for the cheaper watches, the situation is particularly difficult because there's a lot of competition in that price segment from foreign brands, also from smartwatches.
00:00:59
The margins are lower. So these brands, thus, for example, Victorinox, they are under a lot of price pressure and they can't raise their prices very easily.>> This all means that some brands may need to lower their quality to keep the label or go for cheaper Asian parts to change the percentage of value.
00:01:18
For higher end companies like Rolex and Brightling, it's not as big a problem because they already have large profit margins. But the industry is in a downturn. Switzerland exported 10% fewer watches last year. So they're still concerned.>> Suppliers have told me that they have customers coming to them saying, can't you make more in China, then and that way it could be cheaper and we would really like that.
00:01:43
And then some suppliers go along with that, some others maybe refuse cuz they're concerned about their reputation.>> One parts maker Metalon told us that losing that pedigree would mean a slow death for the Swiss tradition.