China-Switzerland Agreement: The Benefits for the Swiss Watch Industry
By Eva Morletto24 août 2026
Switzerland and China have just taken a decisive step toward modernizing their free trade agreement, which has been in effect since 2014. After five rounds of negotiations, Bern and Beijing announced that they had concluded their discussions.
The text still needs to be finalized and signed by the end of the year, but its significance is already considerable: Ultimately, 99.8% of Swiss exports covered by the agreement will be able to enter the Chinese market duty-free, compared to about half today. Access to the Chinese market will thus be less costly and easier overall.
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A Major Boost for Swiss Watchmakers
For Swiss watchmakers, the benefits are very tangible. If tariffs are reduced, the cost of importing watches into China will decrease. Brands will then be able to either lower their prices in the Chinese market, retain this advantage to improve their profit margins, or reinvest these savings in their boutiques, marketing, and relationships with local customers. The exact impact, however, remains to be seen, as the details of the tariff reductions and their timeline have not been disclosed.
This performance contrasts with the persistent slowdown in the Chinese market, which is no longer the main driver of the Swiss watch industry. In July, exports to China fell by 18.5% year-over-year, while exports to the United States surged by 26.5%, according to the Federation of the Swiss Watch Industry (FH). The high-end segment, however, continued to hold up: watches with an export price exceeding 3,000 Swiss francs rose by 12% in July 2026 on the global market.
Lower Tariffs, but Demand Remains Fragile
In China, luxury consumption continues to be held back by the economic slowdown and changing consumer behavior, particularly among younger consumers. Recently, stricter tax measures—directly affecting the “offshore” assets of the country’s wealthiest individuals—have compounded this trend. Authorities have, in fact, increased taxation on income derived from structures and investments held abroad. The new agreement alone will therefore not be enough to significantly boost Chinese demand. It will, however, give Swiss luxury brands a lever they had lost: the ability to balance prices, margins, and investments more freely.
China remains Switzerland’s third-largest trading partner today, after the European Union and the United States.
Key Points:
- Switzerland and China have concluded negotiations to modernize their free trade agreement: eventually, 99.8% of Swiss exports covered by the agreement could enter China duty-free.
- The Swiss watch industry could benefit from greater flexibility in the Chinese market, with the ability to pass on customs savings to prices, margins, or local investments.
- The agreement comes at a time when Chinese demand remains fragile: Swiss watch exports to China fell by 18.5% in July, compared with a 26.5% increase to the United States.
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