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Watch Brands Fear Coronavirus Will Slash Top-Market Sales

One analyst’s report: “Our understanding is that luxury consumption in China has ground to a sudden stop.”

Swiss watch brands worry about the spread of the coronavirus in Hong Kong. Residents are avoiding crowds and wearing face masks, like this employee outside a watch shop at a local shopping mall.Credit...Vincent Yu/Associated Press

After a record-breaking 2019, in which exports rose 2.4 percent to reach $22.2 billion, the Swiss watch industry is now facing fears that the spread of the new coronavirus will eliminate growth in 2020.

Watchmakers are extremely dependent on Chinese consumer demand — “to the tune of close to 50 percent of their revenues,” Luca Solca, an analyst with Bernstein, said in an email. “A continuing spread of the novel coronavirus epidemic would hit them particularly hard.”

That is especially true in Hong Kong, Switzerland’s No. 1 destination for watch exports, which is trying to contain any spread of the virus while still suffering the effects of antigovernment demonstrations that began in June. The semiautonomous city, a special administrative region of China, confirmed in mid-November that it had entered its first recession since 2009.

Watch exports to the city fell by 11.4 percent in 2019 compared with the previous year, and the downward trend shows no signs of improving, said Thierry Huron, founder of The Mercury Project, a Swiss watch and jewelry consultancy.

Exports to mainland China, however, jumped by 49 percent in December over the previous year’s December total, in anticipation of the Lunar New Year that began Jan. 25, traditionally a popular time for shopping and gift giving.

But anecdotal reports suggest that sales in January were broadly affected by the viral outbreak in the central Chinese city of Wuhan and the subsequent travel restrictions imposed on tens of millions of people in the region to contain the disease.

As of Feb. 13, at least 1,491 people were reported to have died, all but three in mainland China. The toll has surpassed that of the SARS epidemic of 2002-3.

“Our understanding is that luxury consumption in China has ground to a sudden stop,” Mr. Solca wrote in a report to investors dated Feb. 5.

Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, said in an email that the effect of the epidemic “will depend on the length and the extent.”

The Swatch Group is not taking any chances. On Feb. 3, the company — which owns seven prestige watchmakers, including Blancpain, Breguet and Omega — announced that it had canceled a global press event scheduled March 4 to 6 in Zurich because of “the uncertainty related to the 2019-nCoV Coronavirus outbreak.”

If the virus is not contained by the end of March, said Alexander Linz, a watch journalist for WatchAdvisor.com based in Vienna, “things might change dramatically.”

He was referring to the Swiss watch industry’s two most important annual events, Watches & Wonders, a luxury watch fair slated for April 25 to 29 in Geneva, and the Baselworld trade show, scheduled for April 30 to May 5 in Basel, Switzerland.

Representatives of both fairs said that, as of now, their shows would go on, though they were monitoring the public health situation closely. So are some participants. On Feb. 11, Bulgari, the Roman jewelry house owned by LVMH Moët Hennessy Louis Vuitton, announced it was withdrawing from the Baselworld fair. Jean-Christophe Babin, its chief executive, said in a statement that the decision had been made “having in mind the SARS impact on the watch fairs years ago as well as acknowledging that the pandemic is still expanding.”

Watchmakers are left to draw imperfect comparisons to the SARS epidemic, when the start of the Iraq War and a sharp appreciation of the euro against the dollar contributed to a 4.4 percent drop in exports.

“If the media craze surrounding coronavirus does not abide quickly, it may very well cause much more economic damage than 17 years ago,” Maximilian Büsser, founder and creative director of the Geneva-based brand MB&F, said in an email. “Probably the only winners will be e-commerce platforms — as consumers in some parts of the world dare not to venture out of their homes.”

A version of this article appears in print on  , Section S, Page 4 in The New York Times International Edition. Order Reprints | Today’s Paper | Subscribe

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