First the facts, as described by international organisations like the WTO: Hong Kong is a special administrative region (SAR) of China and is thus granted a high degree of autonomy, as stipulated by Article 2 of the Hong Kong Basic Law ratified under the Sino-British Joint Declaration of 1997.
More recently, it has been described as one country with two systems.
According to my sister, who has lived in Hong Kong since before 1997, not much has changed for the average citizen over that time; if anything it became materially better, mostly because of the increasingly capitalist and globalist instincts of Beijing.
That globalization came to a juddering halt in 2000 when the pandemic all-but froze international trade.
Swiss watch exports to Hong Kong dropped from CHF 2.7 billion in 2019 to CHF 1.7 billion in 2020; a drop of 37%, compared to America’s dip of 18%. Exports to China, remarkably, grew in the first year of the pandemic.
China’s rigid enforcement of lock downs and travel restrictions continued until the end of 2022, by which time Swiss exports to Hong Kong had dropped to CHF 1.9 billion, 29% below 2019. Exports to the United States by that year were CHF 3.9 billion, up 61% over 2019.
China was up 29% over the same four year period to CHF 2.6 billion.
Without going into the politics of China’s control over Hong Kong, it is clear the special administrative region has endured a catastrophic collapse as the once largest market in the world for Swiss watches while its overlord is doing comparatively OK, and the pesky democracy of the United States of America has boomed.
It has now become an anachronism to treat China and Hong Kong as different markets. Both are staggeringly successful, highly modern economies, but the advantage Hong Kong held over China has disappeared.
They are one country, and should be treated as such, at least by the bean counters in of the Federation of the Swiss Watch Industry (FHH).
So, what would the history of exports to the top three markets in the world look like if Hong Kong and China were combined?
Mainland China barely existed as a market before hitting CHF 1 billion in Swiss exports in 2010, a year in which Hong Kong was more than three-times its size at CHF 3.2 billion.
Over the next decade, barring a blip in 2015 when Chinese authorities cracked down on expensive trinkets like watches being used to grease the palms of officials, the mainland and Hong Kong trounced the United States, which was going sideways until 2020, when post lock-down demand exploded.
To get a reasonable view of how Swiss watch demand is moving around the world, it no longer makes sense to count China and Hong Kong separately (and I will not be doing so moving forwards).
So, for the very first time, we can declare the United States the biggest market in the world for Swiss watches, irrespective of whether it is competing with China and Hong Kong separately, or together.
In fact, that milestone was reached last year and, if the first four months of 2025 are a guide to the rest of the year (they very well may not, given the current chaos in global trading rules) the USA will trounce the combined Chinese performance.
For the first four months of 2025, exports to the United States rose by 42%, compared to the same period last year.
For China (including Hong Kong), exports have dropped by 20%.
If that continues, which I very much doubt in the case of USA, the two markets will finish this year with exports worth CHF 3.2 billion to China and CHF 6.2 billion to America.
Could America really be double the size of China for Swiss exporters this year? Only time will tell.