National labels and the competitiveness of European industries: the example of the ‘Swiss Made’ law since 1950

ABSTRACT

This article discusses the impact of country-of-origin labels on the global competitiveness of European industries during the second half of the twentieth century. It considers ‘made-in’ labels as institutional innovations and demonstrates their role in maintaining manufacturing activities in high-wage economies. To facilitate a more detailed inquiry into the topic, the paper uses a case study of the Swiss watch industry. Swiss watch companies began facing growing competition from American and Japanese firms, which had implemented mass-production methods and started relocating low value-added activities to East Asia, in the 1950s. In Switzerland, the issue was to keep the reputation of Swiss watches intact, foregrounding the high precision of the devices, and cutting production costs at the same time. Consequently, in 1971 the federal government adopted an ordinance that allowed watch companies to use the ‘Swiss’ name on their products as long as they kept certain activities in Switzerland. Due to the advent of electronic watches, however, the new provision could not safeguard the Swiss watch industry from a severe crisis between 1975 and 1985. Policymakers updated the ‘Swiss Made’ law and it was renewed in the early 1990s within a shifting context, one in which the Swiss watch industry repositioned itself toward luxury. The law became a powerful tool for regulating the luxury-watch industry. Through the example of the Swiss watch industry, the article emphasizes that understanding the impact of country-of-origin labels requires an examination of the broader context of innovation in specific industries.

KEYWORDS:

• Country-of-origin labels
• nationality
• competitiveness
• innovation
• Swiss Made
• watch industry

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

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2. Head, “Advertising Slogans and the ‘Made-in’ Concept;” Higgins, “Forgotten Heroes and Forgotten Issues.”

3. Aaker, Managing Brand Equity; Yasin, Mohd, and Mohammed,“Does Image of Country-of-Origin Matter to Brand Equity?;” Baker and Ballington, “Country of Origin as a Source of Competitive Advantage;” Jaffe and Nebenzahl, National Image & Competitive Advantage.

4. Jones, Multinationals and Global Capitalism, 92–107.

5. Head, “Advertising Slogans and the ‘Made-in’ Concept;” Aichner, “Country-of-Origin Marketing;” Miranda, “The Country-of-Origin Effect and the International Expansion of Spanish Fashion Companies.”

6. Estevadeordal and Suominen, “Mapping and Measuring Rules of Origin around the World.”

7. Pouillard, “Managing Fashion Creativity;” Belfanti, “Renaissance and ‘Made in Italy’.”

8. Jones, Beauty Imagined.

9. Hansen, “Networks, Narratives, and New Markets.”

10. Fabre, Le sacre du Roquefort.

11. Diamantopoulos, Herz, and Koschate-Fischer, “The EU as Superordinate Brand Origin.”

12. Pasche, La protection des armoiries fédérales et de l’indication “suisse.”

13. Rafaelli and Glynn, “Institutional Innovation.”

14. Donzé, “Global Competition and Technological Innovation.”

15. Donzé, “Swiss Made but Global.”

16. Boillat, Les véritables maîtres du temps.

17. Estimations of the Federation of the Swiss Watch Industry, quoted by Landes, Revolution in Time, 423.

18. Ibid.

19. Tokei no honkon shijo chosa hokokusho (Tokyo: Nihon kikai yushutsu kumiai, 1980), 5 and Swiss foreign trade statistics.

20. Vontobel Luxury Goods Shop (Zurich: Vontobel Equity Research, 2013), 17.

21. Linder, Au coeur d’une vocation industrielle.

22. Pasquier, La “recherche et développement” en horlogerie; Perret, “Un institut de recherche communautaire entre industrie et Etat.”

23. Boillat and Garufo, “De la protection à la promotion.”

24. Donzé, “Des montres et des pétrodollars;” Glasmeier, Manufacturing Time.

25. Blanc, Suisse-Hong Kong; Donzé, “The Changing Comparative Advantages of the Hong Kong Watch Industry.”

26. Donzé, Industrial Development, Technology Transfer, and Global Competition.

27. Donzé, A Business History of the Swatch Group; Jeannerat and Crevoisier, “Non-Technological Innovation;” Kebir and Crevoisier, “Cultural Resources and Regional Development.”

28. See note 2.

29. L’Impartial, June 8, 1890 and May 15, 1891.

30. L’Impartial, June 24, 1892, November 18, 1892 and June 18, 1894.

31. Swiss official trade statistics published in the Journal suisse d’horlogerie, 1890–1894.

32. Donzé, History of the Swiss Watch Industry, 80–3.

33. See note 16.

34. Donzé, “The Transformation of Global Luxury Brands.”

35. Donzé, History of the Swiss Watch Industry, 57–9.

36. http://www.watch.swiss/eng/ (accessed October 10, 2017).

37. See note 15.

38. Journal de Genève, November 18, 1958; Martin-Achard, “La nationalité suisse de la montre.”

39. Rapport de la Commission pour l’étude des prix, Etude critique des conditions de concurrence dans l’industrie horlogère suisse, March 1959. I address my warmest thanks to Sabine Pitteloud for having given me this reference.

40. Between 1972 and 1979, only 0.3% of Swiss watches exported were controlled. Donzé, History of the Swiss Watch Industry, 122.

41. Archives of the Union suisse des fabricants de boîtes (USFB), Bienne, annual report, 1966.

42. Swiss foreign trade statistics.

43. Letter from the Swiss consulate in Hong Kong to the Division of trade of the Federal Department of Public Economy, November 17, 1967. Dodis 32554.

44. Archives of the Federation of the Swiss Watch Industry (FH), Bienne, letter from the Swiss Watch Federation to the Swiss Chamber of Horology, April 17, 1967.

45. FH, Minute of the working group “Swiss Made,” September 20, 1967.

46. Piguet, La drôle de montre de Monsieur Roskopf.

47. Ibid.

48. Pasche, La protection, 88–90.

49. Donzé, “Le district industriel horloger suisse de la cartellisation à la globalisation.”

50. Estimations based on foreign trade statistics.

51. Communicated by the Federation of the Swiss Watch Industry.

52. Baillod, “Une montre bio,” Watch Around 3 (2007): 35.

53. Ordinance of 1997.

54. See note 51.

55. Donzé, A Business History of the Swatch Group, 117–21.

56. http://www.fhs.swiss/fre/2011–07-05_868.html (accessed August 5, 2017).

57. Addor and Guyot, “La réglementation ‘Swissness’: objectifs et principes.”

58. Samiee, “Customer Evaluation of Products in a Global Market;” Aichner, “Country-of-Origin Marketing.”

Additional information

Notes on contributors

Pierre-Yves Donzé

Pierre-Yves Donzé is Professor of Business History at Osaka University (Japan) and Visiting Professor at the University of Fribourg (Switzerland). He is a member of the Councils of the European Business History Association (EBHA) and the Business History Society of Japan. His research focuses on global business history in various industries, such as watchmaking, luxury, fashion and medical technology. His recent publications include: A Business History of the Swatch Group: The Rebirth of Swiss Watchmaking and the Globalization of the Luxury Industry (Palgrave Macmillan, 2014); Global Luxury: Organizational Change and Emerging Markets since the 1970s (Palgrave Macmillan, 2018, co-edited with Rika Fujioka); and Industries and Global Competition: Business Beyond Borders (Routledge, 2018, co-edited with Bram Bowens and Takafumi Kurosawa).