From R. B. Selwyn.
Sir, I note that, on the very day you report that the Swiss authorities are investigating the watchmaking industry for possible price-fixing agreements in their home market (August 25), you also report that the price of gold has reached a near 20-year low.
This prompts me to ask if one of your readers in the Swiss watch industry can provide me tiffany jewellery with an answer to the following riddle.
If Ipurchase a quality Swiss watch in a stainless steel case and bracelet, I might pay, say, £2,000 ($3,200). If I buy the very same movement with an 18ct gold case and bracelet, I can pay as much as £10,000. Yet both watches contain precisely the same movement. Surely the value of the watch rests in the movement and the craftsmanship applied to its manufacture? The case and bracelet require the same number of machining operations whether they be in stainless steel or gold. The difference in value between the stainless steel and gold case/ bracelet in terms of the cost of the metals cannot possibly account for the factor of five in the price differential of the finished product.
Is this not an example of another Swiss watch manufacturers’ price-fixing initiative in all silver rings markets, let alone their domestic domain?
R. B. Selwyn, Kate’s Cottage, High Street, Selborne, Hants GU34 3LG, UK Copyright Financial Times Limited 1999. All Rights Reserved.