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WEF slams ‘misuse’ of Swiss resort name for conference

The World Economic Forum, host of an annual gathering of political and business elites at Davos, has slammed the "misuse" of the Swiss ski resort's name in reports on an investment conference in Riyadh.

Published: 15 October 2018 15:40 CEST

WEF slams 'misuse' of Swiss resort name for conference

Nicholas Kamm / AFP

“The Saudi Public Investment Fund's meeting in Riyadh, which has been dubbed as 'Davos in the Desert', has generated a great deal of misunderstandings,” the World Economic Forum said in a statement amid the Saudi event being hit by a string of prominent cancellations as part of an international outcry over the disappearance of Saudi journalist Jamal Khashoggi.

“While we understand that 'Davos' can be a synonym for summits, the misuse of the 'Davos' name is a great concern as it generates confusion around our mission and our work,” it said.

READ MORE: Swiss call for clarity on Saudi journalist disappearance

“The Riyadh event is not connected, linked or in any way associated with the World Economic Forum,” said WEF, which hosts its plush gathering of the world's rich, famous and influential at the luxury Swiss ski resort each January.

Khashoggi, a Saudi national and US resident who became increasingly critical of powerful Crown Prince Mohammed bin Salman, has not been seen since he walked into the Saudi consulate in Istanbul to sort out marriage paperwork on October 2.

Since his disappearance, a number of business barons, including British billionaire Richard Branson and Uber CEO Dara Khosrowhahi, and media power houses like Bloomberg and CNN, have said they no longer intend to participate.

Geneva watch show opens in throes of Swiss banking turmoil

Industry professionals were upbeat on the first day of the Watches and Wonders annual fair, where 48 prestigious brands including Rolex, Patek Philippe and Cartier were showing off their new creations.

The fair, which runs until Sunday with the weekend open to the public, kicked off after two years of record gains for Swiss watchmakers.

Exports soared by 31.2 percent in 2021, after a strong rebound in sales in the United States and the Middle East.

And the return of luxury tourism to Europe in 2022 after two years of Covid disruptions pushed exports up a further 11.4 percent to 24.8 billion Swiss francs ($27.1 billion).

The growth has also continued so far this year, with exports up by another 10.6 percent during the first two months of 2023, according to statistics from the Federation of the Swiss Watch Industry.

But optimism at the Geneva fair was somewhat dampened by the angst surrounding the turbulence currently lashing the banking sector.

Switzerland – whose vibrant banking scene is a key part of the country’s economy and culture – has been rocked to the core after the government strong-armed the nation’s biggest bank UBS into swallowing up its troubled competitor Credit Suisse, in a bid to ward off a larger global banking crisis.

READ ALSO: ‘A dark day’: How Switzerland reacted to shock UBS buyout of Credit Suisse

‘Global repercussions’

The upheaval has brought back difficult memories for Swiss watchmakers.

After the 2008 round of bank failures sparked a global financial crisis, Swiss watch exports plunged 22.3 percent in 2009 – more even than during Covid-dominated 2020.

“I am unable to say what the global repercussions will be,” Thierry Stern, the boss of Patek Philippe, told AFP.

“But I still think it should be easier than in 2008-2009.”

Participants are seen next to a giant watch by German manufacturer of luxury and prestige watches at the luxury watch fair in Geneva’, on March 27, 2023 in Geneva. (Photo by Fabrice COFFRINI / AFP)

For the moment the difficulties remain “very localised” as Patek Philippe “sells all over the world”, said Stern, who is counting in particular on Asia to ensure growth in 2023.

Jerome Lambert, managing director of the luxury giant Richemont – owner of the Cartier, Piaget and IWC brands – acknowledged that the turnaround in
demand in 2009 had been “very rapid” and very “severe”.

“But it was a big lesson for us,” he said, explaining that the group had since taken distribution in hand.

Edouard Meylan, owner of the Hautlence brand, nevertheless believes that “lights are turning red”.

“If there is a financial crisis, it will have a very big impact on our sector,” he told AFP, especially since with supply difficulties some watchmakers have gone from “very large orders from their suppliers” and risk finding themselves with large stocks if the market turns.

Other analysts believe there is little reason to panic just yet.

“For now, I would expect the impact to be muted,” Jon Cox, an industry analyst with the Kepler Cheuvreux financial services company, told AFP, adding that he is still expecting to see growth this year of around 10 percent in exports.

READ ALSO: Swiss sweat over size of new superbank

Full steam ahead for China?

However, the Credit Suisse debacle, which threatens tens of thousands of jobs in the financial sector, could take its toll.

“The financial community is an important part of the buying public for the watch industry and there could be impact in local markets, such as Switzerland, on domestic business,” Cox warned, adding though that “this is likely to be offset by tourism”.

For now, Swiss watchmakers are looking to the Chinese market to pick up pace and ensure their 2023 export growth.

When demand was exploding in other markets as they rolled back pandemic protection measures, the watch market in China remained subdued as the country ploughed on with its zero-Covid rules, and then saw infection numbers explode when it abruptly ended that policy late last year.

But watchmakers and experts are expecting that to change with the reopening of the Chinese economy.

Jean-Philippe Bertschy, an analyst with Swiss investment managers Vontobel, warned however that “a return to normalcy” for Chinese watch sales – traditionally Swiss watchmakers’ largest market – will take time.

On the positive side, he told AFP he was confident, given “the level of savings the Chinese had set aside during the health restrictions”.

As for tourism, he cautioned that while Chinese travellers may quickly flock to Asian destinations, “it will take more time before they return to Europe,” due to the continued limited air transport capacity and visa backlogs.

By Nathalie OLOF-ORS

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