For many, the first watch they wore as a child was likely a Swatch.
Indeed, the significance of the Swatch brand and Swatch Group is extraordinary for the entire Swiss watchmaking industry.
In November this year, Wang Qiong (Elisa), the Senior Vice President of Luxeplace.com, was specially invited by Swatch. As one of the first media representatives from China, and indeed globally, she visited Switzerland. She toured two ETA factories under the Swatch Group and visited the Swatch brand headquarters, engaging in a dialogue with a legend in the Swiss watchmaking world, Nick Hayek, the CEO of Swatch Group.
During an hour-long conversation, Nick Hayek Jr. often mentioned two phrases: Positive Provocation and Joy of Life. From his father, Nicolas G. Hayek’s connection with SMART cars, to his own insights as a film director, Mr. Hayek’s candid discussions cleared up many doubts, such as:
- How does the Swatch Group chief view the market for luxury watches with high price tags?
- What drives him to break the “class barriers” in the watch circle, allowing Swatch to collaborate with OMEGA and Blancpain?
The Swatch brand and Swatch Group,
What extraordinary significance do they hold for Swiss watchmaking?
This story begins with the “watch crisis” in Switzerland during the late 1970s.
With the progress and innovation of contemporary industry, quartz watches, with their entry-level positioning, successfully captured a larger global market share. This plunged the Swiss watch industry into an unprecedented crisis, leaving it at a crossroads:
Should Switzerland stick to its traditional manufacturing or switch to emerging industrial production?
Can they avoid this dilemma and embrace both?
As multiple Swiss watch brands and manufacturing companies faced layoffs and bankruptcy, Nicolas G. Hayek Sr. was called upon in an advisory role.
His consulting firm, Hayek Engineering, already had a significant reputation in the European industrial sector. He conducted a comprehensive assessment of the two Swiss watchmaking giants, ASUAG and SSIH, which employed about half of the Swiss watchmaking workforce at the time.
Hayek, Sr.’s conclusion was clear: Swiss core watchmaking technology and assets must not be sold overseas; there was still hope!
With a passion for 100% Swiss manufacturing, he personally invested and successfully integrated and restructured these companies, forming SMH Group, known today as the Swatch Group.
That same year also saw the birth of the Swatch brand.
At Swatch Group, Hayek Sr. not only retained several old Swiss watch brands but also integrated various companies and technologies within the Swiss watchmaking industry. Moreover, he faced the challenge of quartz watches head-on with the innovative, mass-market Swatch brand, bringing “Swiss Made” into the industrial watch sector, killing four birds with one stone.
This grand industrial restructuring and integration became a classic case in case studies at prestigious institutions like Harvard Business School.
It can be said that the emergence of the Swatch Group reflects Switzerland’s growing pains in the face of industrial watchmaking challenges and represents the resilience and innovative spirit of the Swiss watchmaking industry.
The success of the Swatch brand demonstrates its insight into the global watch market. Its entry-level positioning and differentiated brand innovation injected much-needed confidence into the Swiss watch industry at that time.
Since 2022, the collaboration between the Swatch brand and OMEGA, a high-end watch brand under the Swatch Group, sparked a buying frenzy at Swatch stores worldwide, making the Swatch brand once again one of the hottest topics in the global watchmaking industry.
Eighteen months later, the Blancpain X Swatch collaborative series with another luxury watch brand under the Swatch Group, Blancpain, was grandly launched. This was the main purpose of my trip to Switzerland:
To understand the two factories behind the Blancpain X Swatch collaborative watches and their core technologies:
SISTEM51 mechanical movement and BIOCERAMIC innovative plant-based ceramic.
The world’s first and only fully automated mechanical movement,
Our visit was to two factories of ETA, a watch and movement manufacturing enterprise under the Swatch Group, located in Boncourt and Grenchen, Switzerland. They are responsible for producing the “SISTEM51 mechanical movement” and the “BIOCERAMIC innovative plant-based and ceramic material.”
From the outside, these factories look no different from others. Due to the secrecy of the technology involved, photography was strictly prohibited throughout the tour.
ETA, as the world’s leading and most historic watch and movement manufacturers, not only serves the Swatch Group but also supplies some historical external partners.
Nick Hayek (hereinafter referred to as Nick), the CEO of the group, stated, “Switzerland must persist in retaining its industry. Innovation must occur in manufacturing, as innovation and manufacturing are mutually beneficial in both directions.“
He spoke about his pursuit of innovation and manufacturing, particularly the core logic of industrial watchmaking, all of which originated from his father, Nicolas G. Hayek:
“I believe that, whether it’s designing the two-seater microcar SMART or creating the Swatch watch movement with fewer parts, this all reflects my father’s wisdom in Swiss manufacturing and industrial innovation. He constantly pondered how to create globally competitive industries in a high-cost country like Switzerland and how to leverage modern industry to produce more cost-effective products. ‘Simplification‘ was his core logic.”
In traditional complex mechanical watches, the movement generally requires over 200 parts and more labor hours from craftsmen.
Today, on the Blancpain X Swatch Fifty Fathoms collaborative watch, its movement uses only 51 parts — the SISTEM51 mechanical movement.
[on left image: a mechanical movement. right: SISTEM51]
Such extreme “simplification” represents another groundbreaking achievement in contemporary Swiss watchmaking: precise construction, efficient automated production, reduced manual labor, and fewer parts.
51 — is also a significant number for the Swatch brand. The quartz watch launched by Swatch in 1983 had a movement comprising only 51 parts.
The SISTEM51 mechanical movement thus became the world’s first and only mechanical movement produced entirely automatically with just 51 parts.
On-site, the head of the ETA factory told us that in just three short years, engineers, architects, movement specialists, and watch design experts developed ten years ago automated production line and completed this year the design of the Blancpain X Swatch collaborative watches from scratch.
Inside the factory, it was clear that such a level of industrial watchmaking innovation could perhaps only be efficiently achieved by a vertically integrated watchmaking giant like the Swatch Group.
“Having a prototype and an idea is one thing, but actual industrial production, using countless parts, complex processes, and automated machines to achieve 100% mass production, is another,” Nick said. “After we have an idea in the office, we need to step into the factory, ask interdisciplinary questions, and see if it’s feasible. This is where you take a significant step, the beginning of real innovation.”
On one hand, this stems from the Swatch Group’s deep industrial chain foundation in the Swiss watchmaking industry. Currently, the Swatch Group owns over 100 factories in Switzerland, including leading companies like ETA and Nivarox, which supply movements and hairsprings to the watchmaking industry.
On the other hand, such industrial manufacturing innovation also relies on expertise and talent accumulated in interdisciplinary fields beyond watchmaking. Apart from watchmaking, the Swatch Group also has a presence in batteries, chips, and other fields.
Why do people need an affordable watch?
For many, their first watch is likely a Swatch simply because it’s affordable, fashionable, and attractive.
Swatch has always pursued breakthrough innovations in modern watchmaking, from ultra-thin quartz movements to the mass production of mechanical movements with just 51 parts. This has undoubtedly excited industry insiders, but for ordinary consumers, how can such innovations ripple through their everyday life, bringing about the Positive Provocation and Joy of Life that Nick mentions?
The “meaning” of the Brand becomes highlighted at this moment;
When Swatch collaborates with luxury watch brands, this meaning is endowed with a kind of “magic.”
In 2022, when watch enthusiasts first learned of the collaboration between OMEGA and Swatch, most found it incredible, even skeptical. But as the collaboration’s popularity fermented, why did more and more consumers “couldn’t resist” wanting to buy one?
Perhaps, this is what Nick referred to in the interview — Positive Provocation.
Even in the fashion circle, the “matching doors” of the collaborating parties is seen as a key prerequisite, let alone in the traditionally conservative watch circle. Higher prices and more luxurious positioning seem to be considered the ultimate goal of a watch brand’s success.
So, why did Swatch dare to collaborate with OMEGA and Blancpain, brands of different positioning?
Of course, we can’t ignore that these three brands all belong to the Swatch Group.
Currently, the Swatch Group, besides Swatch, owns several well-known high-end watch brands, including OMEGA, Longines, Tissot, Breguet, Blancpain, Glashutte Original/Union, and more.
As the head of the Swatch Group, which owns multiple watch brands, Nick openly talked about the pricing in the watch market, especially his views on the pursuit of watch luxury:
“For example, in the luxury goods industry, it’s not hard to find that many luxury brands offer entry-level products like perfumes. These products aren’t that expensive, allowing more people to approach the brand without feeling left out. This is a question worth considering for the watch market.”
Nick said, “If the price of watches keeps increasing, catering only to elite customers, what about the young people? Watches that cost 7,000 or 10,000 Swiss Francs are indeed very expensive, and they can’t afford them. If they can’t even buy an entry-level watch, how will they ever think about buying an expensive watch in the future?“
Nick recalled that the collaboration between Swatch and OMEGA was once the group’s top-secret project. When he first showed the watch model to the group’s executives and brand managers, he was excited. In fact, many people’s first reaction, especially those within the industry, was: “What?!”
In 2022, when the OMEGA X Swatch collaboration was released before the Watches and Wonders show of Geneva, it not only caused a global buying frenzy but also became a hot topic among industry insiders.
The collaboration not only boosted Swatch’s sales but also made more people pay attention to OMEGA.
“I dare say that 80% of the world doesn’t know that OMEGA’s Speedmaster was the first watch to go to the moon with humans. Once we collaborated with Swatch, we had the opportunity to tell OMEGA’s story to the world, opening up a new market, creating a desire for OMEGA!” he recalled, “Once, while shopping in a supermarket, a girl saw the MoonSwatch on my wrist and immediately exclaimed, oh that’s the OMEGA MoonSwatch collaboration!”
After the release of the collaboration, data showed a 50% increase in sales of the original OMEGA Speedmaster MoonSwatch compared to the previous year.
eBay’s luxury division general manager Tirath Kamdar said: “Searches for the OMEGA Speedmaster watch increased by nearly 100%, and sales increased by 150% in the week following the MoonSwatch release.”
Nick said with a smile, “Although people’s first reaction to this collaboration was ‘what!?’, you see, our brand and our products ultimately bring Positive Provocation and more joy of life.”
In past interviews, Nick often mentioned the joy of life. So, I seized the opportunity to ask him directly:
“What is the source of joy in your life?”
Why did Nick Hayek and Swatch dare to break the “class barriers” of watches?
“I think happiness is sharing your emotions with as many people as possible. I used to work in the movie industry, so this is incredibly important to me.”
“I am a movie buff. At one time my ambition was to become a movie director, and I did end up doing that. Before you make a movie, you first have to think about the story, and then think about how can you make the story interesting so that people want to share the story you want to tell? The best way to share it is to bring people into the movie theater and make them experience the same thing. When you’re watching a movie in a room of 600 people, everyone smiles at the same moment in the movie or feels sad at the end of the screening. It’s just a great feeling!”
Nick touched the watch on his wrist, a Swatch X Blancpain Fifty Fathoms collaboration piece themed on Antarctic.
“If you can make 90% of people have the same emotion, it will bring you a lot of joy, not only for yourself but also for them. It’s the same for Swatch co-creating and co-branding with OMEGA and with Blancpain,” Nick said, looking into my eyes, “For me, this is the ‘joy of life.'”
Due to Swatch’s entry-level positioning and continuous quality advancement, more people around the world can pay attention to, purchase, and enjoy the happiness brought by Swatch watches.
But when I asked if he ever worried that the collaboration between Swatch and luxury watch brands might be questioned, Nick said, “You get a gut feeling.”
He tapped his head and said, “How you think is certainly important, but it only determines 30% of the event, especially in business,” pointing to his chest, “It’s going to be 70% here, and at the time my heart told me it was right and we did it. But I could never imagine that it would be such a huge success and get so much fanatical love from so many people.”
As the group’s head, why did Nick dare to trust his intuition and courage? He shared a childhood experience:
Once, he accompanied his father, Nicolas G. Hayek, to a board meeting of a well-known car company. When faced with a technical question he didn’t understand, his father directly asked everyone.
“At the time, the executives heard it and reacted as if to say: oh my God, how could he ask such a silly question?” Nick recalled, “Sitting in the corner of the conference room, I thought to myself, if it were me, I’d be too embarrassed to ask such a question in the face of all these professionals… but you know what, not only did my father ask, he kept asking, and in the end, none of the executives on the floor could even answer his question.”
Nick emphasized, “One of the most important things my father taught me is that you always have to be as imaginative as a seven-year-old child, daring to do anything, not afraid of anything. You don’t have to play anyone’s role. You are exactly who you are, and that’s the best way to keep yourself at your best.”
With intuition and courage, Nick boldly completed the OMEGA X Swatch collaboration, and the “Positive Provocation” effect Nick spoke of is still fermenting in the new Blancpain X Swatch collaboration.
This collaborative watch series has five different styles, themed on the five oceans, with dial layouts and other details consistent with the original Blancpain designs, achieving high fidelity.
To echo Blancpain’s philosophy of “only making mechanical watches,” Swatch genuinely mass-produced and used the mechanical movement SISTEM51. Notably, like the original Blancpain Fifty Fathoms, this collaborative watch can withstand a water depth of 91 meters.
In the watch production, Swatch used the group’s innovatively developed BIOCERAMIC plant-based ceramic material, and for the watch colors, they drew inspiration from five species of nudibranchs living in the five oceans. Additionally, the watch is paired with an environmentally friendly recycled fishing net NATO strap.
On the road, a Swatch brand marketing colleague told us a story:
On the day of the Blancpain X Swatch collaboration release, she was responsible for maintaining the site and monitoring at the store in Bern, the capital of Switzerland. To her surprise, in this long queue, the first person was not a young person but an old grandfather with white hair sitting in a wheelchair.
After communicating, she found out that he came to line up because the first watch he bought in his life and his subsequent collection were all Blancpain brands, so this time, he hoped to also buy this Swatch collaboration watch.
Written at the end of the trip to Switzerland
When I finished this journey and went through customs at Zurich Airport, the customs officer glanced at the invitation from the Swatch Group, immediately lifted his wrist, and proudly showed me his Swatch watch.
In fact, during this trip to Switzerland, whether at Zurich Airport or in high-end department stores in the city, if you pay special attention, the Swatch brand stores are always bustling with customers.
Blackstone founder Stephen Schwarzman, Bank of England Governor Mark Carney, “007” Daniel Craig, former Goldman Sachs CEO Lloyd Blankfein usually wear Swatch watches, and Pope Francis even successfully auctioned his Swatch Once Again for charity.
For these wealthy celebrities, the price of the watch itself is no longer that important; the meaning and story carried by the watch are more moving. As the Swatch Group’s official website accurately describes the Swatch brand: low cost, high tech, artistic, emotional and Swiss made.
One could say that Swatch is not just a watch brand; it has become a super IP well-known to global consumers.
At the end of the interview, Nick revealed, “We have a series of projects on our agenda that we want to complete, and the story of Swiss watchmaking and its achievements over the last fifty years can be recognized and resonated with a wider audience through Swatch watches and Swatch co-branding.“
｜Image Credit: Onsite photography by Luxeplace.com, provided by the Swatch Group