ZURICH • When Mr Ricardo Guadalupe stepped into the Las Vegas shop of luxury watch brand Hublot earlier this month, something did not feel right.
"Our boutique was half empty," the chief executive officer of the LVMH-owned watchmaker said. "We see fewer Chinese travelling to the US. We have less traffic."
The restraint of a key group of consumers is the chief concern of top executives at this year's luxury timepiece expo in Basel, Switzerland. Watchmakers say they are caught in the middle of the US-China trade war - not because they face tariffs from either country but because the row saps growth prospects in the two largest markets.
As Chinese consumers travel less and hold back on splurges, growth in Swiss watch exports has been faltering since the middle of last year.
"The biggest risk and the one that scares most is the US-China trade war because of what's at stake," Mr Julien Tornare, CEO of LVMH's Zenith, said in an interview. While the "yellow vest" protests in France and Brexit are other threats, he said, they are more localised.
China's consumers account for about one-third of luxury spending and up to two-thirds of growth, but they have turned cautious amid the slowest domestic economic expansion in almost three decades.
Hublot's sales growth last year. The watchmaker expects this year's figure to be half of that.
Richemont, the owner of Cartier and Baume & Mercier, signalled a Chinese slowdown last November, warning that a weakening yuan or the trade conflicts could further weigh on sales.
Hublot expects sales growth to halve from last year's 16 per cent. Independently owned Chopard, whose timepieces range from 4,500 francs (S$6,100) to more than 200,000 francs, said it will not achieve the high single-digit growth of last year.
"The biggest risk is that the trade war won't be sorted out well," said Chopard co-president Karl-Friedrich Scheufele. "You need to feel good, also about the near-term future."
China is still considered the most promising growth market once trade tensions ease.
Alibaba CEO Daniel Zhang said in October that Chinese shoppers will probably make up almost half of the global luxury market by 2025.
Hublot's Mr Guadalupe said his brand's business could quintuple in China in the future.
At Breitling, CEO Georges Kern said it is not all doom and gloom. Watchmakers came back quickly after the global financial crisis in 2009, he said. "Situations like trade wars, Brexit, natural catastrophes per se put the brakes on demand, but it rebounds very quickly... The fastest rebound of the Swiss watch industry was after Lehman Brothers. Then came the great years."