Swatch launches payment watches in China

Swatch Group AG, the world's largest watchmaker by revenue, is going head-to-head with Apple Inc. to develop the next generation of watches in China.

According to Marketwatch.com, the Swiss watchmaker launched its answer to the smartwatch in China on Wednesday, with a 580 yuan (US$91) analog timepiece called the Swatch Bellamy, which will start selling in January next year. While the new watch doesn't connect to the Internet, it includes a built-in chip that allows consumers to pay for purchases while shopping, Swatch Chief Executive Nick Hayek said in a news briefing.

Swatch said it has struck deals with state-run China UnionPay Co., which holds a virtual monopoly on bank-card payment processing in China, and state-controlled lender Bank of Communications Co.

China is one of the world's largest watch markets by sales. Chinese consumers, at home and abroad, typically buy more than 50% of the world's watches by value, according to Luca Solca, head of luxury goods at investment firm Exane BNP Paribas.

While many people around the world use their phones to keep track of time, Chinese consumers still buy traditional watches. "Watches are still absolutely a status symbol in China," said Ben Cavender, a senior analyst at Shanghai-based consultancy China Market Research Group.

Consumers in the country are also quick to adapt to new technology, said Mr Hayek, explaining why the company opted to launch in China ahead of other countries. "People here are open and they change their habits," he said.

As a result, China is critical turf for Swatch. Greater China, which includes Hong Kong, is the company's biggest market, generating nearly 40% of its 9.22 billion Swiss franc (US$9.63 billion) sales in 2014. In China alone, the company gets about 20% of its sales, according to analysts.