Market Pressured: Firms Aim to Boost Smart Wearables

The watch industry, a sector often associated with luxury and precision, has been experiencing a downturn in 2023, influenced by a range of macroeconomic factorsAmid these challenges, companies like Feiyada and Sipuni are strategizing to pivot towards smart wearables to stay relevant and profitable, highlighting a potential shift in the market's landscape.

Feiyada, the only publicly traded watch company in China whose primary business focuses on watch manufacturing and sales, recently informed its investors that consumer sentiment remains low, impacting the overall watch marketThe company disclosed that both its luxury watch segment and proprietary brand lines have felt the pinch, with a more pronounced effect on the luxury watch businessAmidst this context, Feiyada’s financial reports tell a stark story – for the first three quarters of the year, it reported revenues of 3.04 billion yuan, marking a 13.82% decrease, and a net profit dip of 25.58%, coming in at approximately 198 million yuan.

Feiyada is a key player under the Aviation Industry Corporation of China and possesses several self-owned brands, including “Feiyada” and “EMILE CHOURIET,” covering a spectrum from mid-range to high-end

The core brand, Feiyada, is characterized as a high-quality Chinese watch brand with aerospace featuresHowever, the struggles faced by Feiyada paint just a part of the broader industry picture.

Another prominent player, Shenzhen Sipuni Precision Technology Co., reported similar challengesAs a leading manufacturer of precious metal watches in China, Sipuni’s financial trajectory has shown a decline as wellA recently submitted prospectus to the Hong Kong Stock Exchange outlined their earnings, showing fluctuations from 450 million yuan in the 2021 fiscal year to 324 million yuan in 2022, then back up slightly to 445 million yuan in 2023. Their net profits followed a similar pattern, decreasing significantly before showing a minor reboundNotably, the first half of 2024 still hints at modest growth of 2.6% in revenue, while profit dipped slightly by 2.22%.

Adding to these woes, major brands under the Richemont Group, known for labels such as Cartier and Van Cleef & Arpels, reported through their financial department a decline in sales

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Swiss watchmakers, particularly those under the Swatch Group umbrella like Omega and Breguet, acknowledged that a slowdown in luxury spending has been impacting them the most, with expectations that these trends will continue into 2024.

According to the Swiss Watch Industry Federation, the statistics reveal a concerning narrativeFrom January to May 2024, there was a reported 2.5% decrease in total Swiss watch exports compared to the previous yearExploring these figures further, mainland China and Hong Kong saw reductions of 18.2% and 19.2%, respectively, suggesting a cooling demand in two critical markets for luxury watches.

In response to this challenging landscape, companies are not just standing byThey are actively exploring transformational pathsFeiyada, for instance, has indicated that while the fluctuations in macroeconomic conditions are undeniably affecting their operations, the company is committed to improving its existing portfolios while adopting new strategic planning aimed at industry transformation

They are especially keen on cultivating emerging industries related to precision technology and smart wearables, where they believe growth opportunities lie.

Sipuni, too, is moving forward with transformation effortsRecently, they introduced a groundbreaking line of smart gold watches that incorporate advanced intelligent mechanisms from well-established technology firmsAccording to data from ZhiShi Consulting, they currently hold a dominant position in China as the largest gold watch and gold jewelry brand, with significant market shares of 8.97% and 35.83% respectively.

The global smart watch market, meanwhile, continues to expandResearch firm Canalys predicts that in 2024, the market is expected to grow, with a projected 17% increase in the fully-fledged smart watch segment and a 10% rise in lighter smart watch modelsThis hints at a shifting consumer preference towards functionality and tech integration.

Highlighted within this growing space are technology giants like Huawei, Apple, Samsung, and OPPO, all of whom are making significant strides in developing health-centric smart watches

The increasing societal focus on health awareness has spurred consumers' higher demands for health monitoring capabilities in wearables.

OPPO’s representatives recently stated that recognizing the shift in consumer health consciousness, they are focusing heavily on advancements in the sports and health monitoring domainTheir endeavors include launching self-developed algorithms for heart rate adjustments and assessing the risks associated with sleep apnea, in collaboration with reputed institutions, showcasing their commitment to exploring new possibilities in fitness tracking.

As the watch industry navigates through these turbulent waters, the topics of resilience and adaptation are becoming increasingly prominentCompanies that successfully incorporate technology into their products and pivot towards catering to consumer demand for multi-functional devices stand a better chance of thriving in this evolving landscape