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Watch over the label

"Swiss made," the geographic indication synonymous with precision manufacturing, premium quality and luxury watches, is in the spotlight as Swissness is fast turning into a marketing vehicle, with increasing sensitivity to consumer expectations. Manufacturers have overwhelmingly endorsed the Federation of the Swiss Watch Industry's proposals for tougher eligibility criteria for firms to retain the coveted label. The development addresses the difficulty experienced globally in distinguishing premium watch brands from lesser versions made largely outside. The federation's move also coincides with the government's plans to amend the law on the protection of trademarks and indications of geographic source. Rules based on a 1971 ordinance require that 50 per cent of the value of the movement mechanism of a watch — its motor — is generated in Switzerland. But the regulation as a whole has triggered a controversy among manufacturers. To begin with, it allowed Swiss producers of low-priced items to compete with lesser brands by sourcing components of the watch — dial, hands, and case — from Asia. A 1992 amendment stipulated that the casing of watches and final clearance should be completed in Switzerland. Top-end producers have held that the current definition of “Swiss made” is too lax, increasing the risk of counterfeiting. In its place, the federation wants at least 80 per cent of the cost of production of a mechanical watch and mechanical movement to be incurred in Switzerland. While earnings from watch exports have more than tripled in the past two decades, employment in the industry has shrunk to a third of its strength in the 1970s. In this scenario, the implications of the federation's proposals would have to be weighed carefully. The compulsions to protect the “Swiss made” label would have to be balanced against the imperative of outsourcing components to low-cost producers for the enterprises to remain competitive. The Swiss government has struck a note of realism by tempering the objective of ensuring proper labelling of the place of origin with the practical demands of the market place.

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