Silke Koltrowitz

GENEVA, (Reuters) – Swiss watchmakers will gather in Geneva this week to tackle the negative impact of sanctions on the rich Russians resulting in the war in Ukraine.

Russia was only the 17th largest market for Swiss watch exports last year, but how to manage business and client relations during such a sensitive time was high on the priority list, Reuters’ conversations with executives at Watches & Wonders showed.

Brands can’t ship luxury products to Russia because of sanctions against Russia. All the major labels that have shut down directly-operated stores are also prohibited from shipping timepieces there.

Ulysse Nardin was not sold recently to Richemont. Kering (PA:), a Russian company that is well-respected and has a long history of being a strong presence in Russia, was able to comment on the reports by Russian authorities of an alleged seizure of millions of dollars of watches belonging to sworn rival Audemars Piguet’s Russian affiliate. They also wanted to know what this could mean for their business. Audemars Piguet declined to comment.

Patrick Pruniaux, Ulysse Nardin’s spokesperson, said that the brand had around 20 outlets and was still dependent on Russia.

According to Claudia D’Arpizio (senior partner, head fashion and luxury, consultancy Bain), Russians make up around 2 to 3 percent of the global luxury spend, which amounts to around 7 billion euros (7.75 billion).

“These are loyal customers that buy every year and that I think have strong relationships with some of these brands on a personal level,” she noted.

According to Thierry Stern (head of independent Patek Philippe), which collaborates with the big Russian luxury retailer Mercury Group, Russian retailers couldn’t attend the trade fair.

DIAMONDS AND DUBAI

Stern indicated that the brand was not likely to be affected by the sanctions because the stock had been in place for at least a full year, and the supply from other sources. Stern said, “If this continues for a long time, maybe prices will go up a little.”

Richemont indicated that although it stopped buying Russian diamonds it was certain it could find them somewhere else.

Oris is another independent brand that said plans to grow in Russia with a new partner retail company were put on hold. Rolf Studer (CEO) told Reuters Thursday that many brands were in long-lasting relationships with Russian partners.

Independent H.Moser’s Edouard Meylan claimed that his brand was subject to demands by Russians – right before the sanctions were implemented – and they wanted to spend money quickly on watches, before their money got seized in Switzerland. He stated, “We declined, of course.”

Studer, Oris’s chief financial officer, confirmed that this is not unusual. He also recalled similar requests from Germans a few years back before Swiss banking secrecy was abolished. Burkhart Grund, Richemont’s finance chief, told Reuters that the company is very careful about making sure its products are not used to launder money or circumvent sanctions.

Many executives stated that they saw a boom in Dubai’s demand as both Turkey and the United Arab Emirates see more money coming in from Russians looking for financial security.

($1 = 0.9279 Swiss francs)

($1 = 0.9028 euros)