Book Review: When corporatism leads to Corporate governance failure – The case of the Swiss watch industry by Isabelle Schluep Campo & Philipp Aerni

An interesting read for all who follow the Swatch Group’s undertakings, especially in the light of the spare parts situation

Schluep Campo and Aerni start their book with the merger of the Swiss ASUAG (Allgemeine Schweizerische Uhrenindustrie Aktiengesellschaft / General Swiss Watch Corporation) and the SSIH (Société suisse pour l’industrie horlogère / Swiss Watch Industry Corporation) in 1983. I always assumed that Nicolas Hayek was the “saviour” of the Swiss Watch Industry, developing the Swatch, and saving the industry from certain death single-handedly.

This book paints a very different picture. As often, the merger of the failing SSIH with the healthy ASUAG was brought on by a bank, UBS. This often happens, as banks want to protect their involvement in a failing business by forcing a debtor to take on the business, or to withdraw the credit line. This was also the fate of the PUW (Pforzheimer Uhrenrohwerke). Forced by their bank to take on Rowi, the company was finally bought by SMH (now the Swatch Group). That alone is not a new insight, and no surprise.

The second myth the book clears up is that the Japanese brought on the Swiss Watch Crisis of the early 80s.

The ASUAG had already developed the Swatch before Nicolas Hayek joined, and had its own quartz movements. So the ASUAG would have nicely survived on its own, would UBS have let SSIH go into receivership, and no Swiss Watch Crisis of the 1980s would have taken place.

Also, Hayek was not directly involved in turning Tissot and Omega around, but this was done by Ernst Thomke. So instead of being a visionary leader, Hayek appears to have been somebody who was more concerned about his personal wealth than the Swiss watch industry. His son Nick Hayek is further widening the influence of the Hayek family on the company, and the introduction of the new 60% Swissness rule (60% of the manufacturing cost for a watch has to be incurred in Switzerland for a watch to be called “Swiss Made”) through the Swiss FH (Fédération de l’industrie horlogère suisse / Federation of the Swiss Watch Industry) is a further step to create a monopoly.

Fortunately, history tells us that these attempts always fail in the long term. Even though the Swatch Group has an almost 100% market share when it comes to the production of hairsprings (Nivarox), and it uses this market dominance to squeeze other manufacturers out of the sector, these things always backfire. Get some popcorn, and sit back whilst others will take the market share of the Swatch Group.

Already, the Swatch Group is sitting on 6.15 billion CHF of unsold stock, representing 46.4% of the company’s total assets.

At the end of the book, a good comparison is made between Volkswagen and the Swatch Group. In both cases, corporate governance has failed, and the moral fibre of a company has been destroyed. Others will pick up the pieces.

You can download a free PDF copy of the book or order a printed copy at

5 thoughts on “Book Review: When corporatism leads to Corporate governance failure – The case of the Swiss watch industry by Isabelle Schluep Campo & Philipp Aerni

  1. Fantastic, informative and a quick read. Thanks for sharing, Christian! Makes me want to start looking at its financials in detail to short the stock, but still think the Swiss corporatism is strong and institutions will not let this ship sink… As you mentioned, next couple of years should be interesting.

  2. I was aware of this situation, which prompted me to have my Omega serviced before only knock off parts were available. I won’t be making any purchases from makers who don’t support independents.
    My Speedmaster is running great by the way! thanks!

  3. I always thought, Nicolas Hayek was the savior of the swiss watch industrie.
    This book tells a new story.

    Figure 7 (P112) looks, as if inventury was never been written off. Someone must have financed this. Swatch by losing it’s profits, banks giving huge credits or both.

    Who owns swatch group?

  4. I was naively unaware of these issues when I bought two Omega watches. My choice was based on a more romantic history of the Seamaster Planet Ocean and Speedmaster moon watch. While corporate shenanigans are nothing new, as your reference to Volkswagen illustrate, I can’t help feeling that this dims the lustre of a great watch history, more than a little.

    Where do their monopolistic aspirations leave independent practitioners such as yourself?

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