A view of a Swatch store in New York

PARIS — Swiss watch exports inched up 2.4 percent in 2019, lifted by demand for high-end pieces and despite a steep drop in business in Hong Kong, the industry’s most important market, the Federation of the Swiss Watch Industry said on Tuesday.

“The general situation will remain complex and require watch brands to adapt accordingly,” cautioned the federation, noting a challenging environment for the sector due to geopolitical uncertainty, increased competition, a sharp rise in the pre-owned market and fast-changing consumption habits, among other reasons. The increasing popularity of connected watches — the Apple Watch in particular — has posed a challenge to traditional watchmakers.

Exports totaled 21.7 billion Swiss francs, or $22.4 billion, fueled by growth in Asia, excluding Hong Kong, where exports fell 11.4 percent due to protests. The region accounted for more than half of export turnover.

In terms of volumes, Switzerland shipped 20.6 million watches, 3.1 million fewer than the previous year, and falling below the level seen in the crisis year of 2009, when the financial crisis spooked watch consumers. The federation compared the decline to the dip seen in the early Eighties.

A bellwether of the luxury industry, Swiss watch exports are eyed by investors looking for clues about the health of the luxury goods industry overall.

Mechanical, precious metal and bi-metal watches with an export price tag of more than 3,000 Swiss francs led growth, while lower-priced quartz and steel watches declined.

“This is a weaker growth than in the past three years,” said Luca Solca, analyst with Bernstein. Solca attributed the decline in volumes to the industry limiting production as it shifts focus to the higher-end models that are driving growth, away from lower-end pieces that are coming up against competition from smartwatches.

In terms of regions, the U.S. was the industry’s second largest market after Hong Kong in terms of value, growing 8.6 percent to 2.41 billion Swiss francs. Exports to Europe increased 1 percent, spurred by brisk growth in the U.K.

The coming year will likely be marked by “high-level consolidation,” noted the federation, citing a list of geopolitical and consumption challenges facing the industry, including the strength of the Swiss franc, ongoing unrest in Hong Kong, the U.S. presidential election, restrictive regulations — in Russia and Turkey in particular — and the coronavirus epidemic in China.

In December, exports grew 5.8 percent to 1.7 billion Swiss francs, lifted by purchases in China ahead of the early Chinese New Year and an extra working day.

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