NextFin News - Switzerland's "Swiss Made" label, one of the world's most valuable origin marks, is being squeezed from three directions at once: a March 2026 regulatory clarification that lets some companies display the Swiss cross even when production sits abroad, a counterfeit trade that the OECD values at USD 4.7 billion a year in fake Swiss goods, and an export downturn that has pushed mainland China from the watch industry's second-largest market to sixth. The label has survived tighter rules and copycats before. What is new is that the pressure to loosen it is now coming from inside Switzerland itself.
The situation: a standard built over a century, tested in one year
Switzerland has spent more than a decade hardening the rules around its national brand. The "Swissness" legislation that took effect on 1 January 2017 set hard thresholds: for industrial products, at least 60% of manufacturing costs must be incurred in Switzerland and an essential manufacturing step must happen there; for foodstuffs, 80% of raw material weight must be Swiss, and for milk and dairy products, 100%. Watches carry stricter rules still — the movement must be Swiss, it must be cased up in Switzerland, final inspection must take place there, and at least 60% of the watch's manufacturing costs must be Swiss.
On 23 March 2026, the Swiss Federal Institute of Intellectual Property (IPI) issued a clarification that changed what the Swiss cross can signify in practice. Under strict conditions, companies may now place the cross between the words "SWISS RESEARCH" or "SWISS ENGINEERING" even if the product as a whole does not meet the Swissness criteria. The cross's side length may be no larger than the uniform font size, and the marking must not be understood as a claim about the origin of the entire product. The IPI insists this is a clarification of existing practice, not a change in the law. The practical effect, however, is to decouple the country's most recognisable symbol from the requirement that the product itself be made there.
The immediate trigger was a long-running dispute over On, the Zurich running-shoe company backed by Roger Federer. On's footwear technology is researched and developed in Zurich, but the shoes are manufactured abroad. The company wanted to use the Swiss cross alongside "Swiss Engineering"; the IPI had previously dissuaded it from using the cross in Switzerland. The institute's stated rationale is economic: the strong Swiss franc and high US tariffs have forced many Swiss companies to move parts of production overseas, while research, development and design stay put — and those companies have a legitimate interest in signalling that Swiss contribution.
The numbers behind the pressure are concrete. Swiss watch exports fell 1.7% in 2025 to CHF 25.6 billion, the second consecutive annual decline, and the first half of 2026 was down another 0.7% to CHF 12.8 billion. Mainland China, the sector's second-largest market at the end of 2024, has dropped to sixth place after a 30% decline over two years in mainland China and Hong Kong combined. The United States, the largest destination at 17% of exports, fell 14.8% in the first half of 2026 after a tariff front-running surge in April 2025. Employment in the sector fell 1.3% in 2025, and the industry body says the moderate decline has continued into 2026, with some suppliers nearing the end of short-time working options and others already cutting headcount.
The label is a premium enforced by law — and it works only while the standard holds
A geographical indication is a promise with legal teeth. Its economic value is the premium buyers will pay because they believe the promise, and Switzerland has been willing to enforce it. In January 2026 the IPI announced a Commercial Court of Bern ruling ordering BDSwiss AG to remove "Swiss" from its name and the Swiss cross from its logo after complaints that the financial services provider's branding was misleading. That is enforcement against an outsider. The harder problem is dilution from within.
The scale of the external threat is large enough that it cannot be dismissed. The OECD estimates that in 2021, global trade in counterfeit goods infringing Swiss intellectual property reached USD 4.7 billion, equivalent to 1.3% of Switzerland's total exports that year — up sharply from USD 1.4 billion in 2020. Watches and jewellery accounted for USD 2.52 billion of that total, more than half. Customs seizure data are even more concentrated: watches make up 87% of seized items infringing Swiss brands and 94% of the seized value. For the watch sector alone, the OECD puts 2021 sales losses from counterfeiting at USD 1.08 billion, or 4.2% of the sector's sales, with roughly 2,537 jobs affected.
But customs seizures and court orders protect the label only at its edges. The value of "Swiss Made" rests on a shared belief about what it means, and that belief is updated by what consumers see on products, not by what regulators say in guidance notes. Country-of-origin research consistently finds that buyers use origin cues as mental shortcuts; they do not read footnotes. A Swiss cross placed between two words on a shoe manufactured in Asia still transfers Swiss equity to a non-Swiss product, however carefully the spacing is specified.
Cyclical pressures are forcing a structural decision
The forces pushing Swiss companies offshore are, in large part, cyclical. The Swiss franc has strengthened to levels that raise the price of watches abroad and compress exporters' margins. US tariff policy has disrupted trade with the industry's largest market. Chinese luxury demand has weakened for two consecutive years. Cyclical pressures revert: the franc can weaken, tariffs can be renegotiated, consumer confidence can recover.
The IPI's decision, by contrast, is structural. It redefines what the Swiss cross can signify — from a guarantee about where a product is made to a marker of where it was designed. That change does not reverse when the franc weakens. Once the symbol is legally separable from production, the precedent exists for the next clarification and the one after that. The watch industry understands the risk. Georges Kern, chief executive of Breitling, has said design, engineering, assembly and quality control will remain in Switzerland for any serious luxury brand, but he has also warned that flexibility must not dilute the label:
It remains one of the strongest assets our industry has.
Switzerland cannot have it both ways, and that is the real constraint. If the franc stays strong and tariffs stay high, companies that cannot move design and R&D offshore will still face a cost disadvantage against Italian, German and Asian rivals whose origin labels carry fewer production constraints. The IPI's calculus appears to be that losing a little precision on the symbol is cheaper than losing the companies that give the symbol meaning. The counter-risk is that the companies do not leave — but the standard does.
The second-order threat: the mid-market hollows out first
The export data already shows where the squeeze bites first. In the first half of 2026, watches in the 500–3,000 franc segment fell 5.7% in value, while the volume of mechanical watches priced below 500 francs rose 23.8%. The mid-market is thinning. That is the segment most exposed to a weakened label: a buyer spending CHF 1,500 on a watch is more sensitive to whether "Swiss Made" still means something than a buyer spending CHF 50,000, whose purchase is driven by brand heritage and scarcity rather than the origin stamp.
The second-order effect runs through the supplier base, and it is the mechanism by which a labeling decision becomes an industrial one. The label protects the premium; the premium funds the domestic suppliers; and the suppliers are what keep the 60% Swiss-cost threshold achievable in the first place. If mid-market brands respond to a diluted label by cutting costs — moving more components abroad while staying above the 60% line — the supplier network that makes Swiss production possible begins to shrink. Once enough of it is gone, the 60% threshold is met not by Swiss substance but by Swiss accounting. That is how a label dies: not with a repeal, but with a series of compliant relocations.
The adversarial case: flexibility is what keeps a label alive
The strongest argument against reading the IPI's move as dangerous is that rigidity kills labels faster than flexibility does. Roberto Martullo, chief executive of Kuenzli SwissSchuh, which manufactures in Albania and Portugal, says the new practice will "severely devalue the 'Swiss Made' label" and has pledged to exhaust legal avenues against it. His position is principled: a label that does not mean made-in is a lie.
But a label attached to companies that have all left is worth nothing either. Switzerland's population and cost base cannot support mass manufacturing, and never could. If the alternative to "SWISS ENGINEERING" on an On shoe is no Swiss shoe company of scale at all, then the clarification preserves more Swissness than it surrenders. The IPI's framing — that research, development, design and brand identity are real value creation, and that they deserve recognition even when assembly has moved — is not frivolous. In modern supply chains, the highest-value work is often the work that leaves no physical trace.
The weakness in that argument is measurement. "Swiss research" and "Swiss engineering" are not yet defined by the IPI. Until they are, the gate is open to companies whose Swiss presence is a design studio with three employees and a mailbox. The falsifying signal is specific: if within two years the IPI has not published a substance test for those terms, or if no application for the cross has been refused for insufficient Swiss R&D content, then the clarification has become a loophole rather than a targeted relief. A second signal would be legislative: if the watch industry's own 60% threshold comes under formal review for reduction, the exception has become the precedent.
What to watch: three signals and three scenarios
The near-term outlook for Swiss watch exports is stability rather than collapse. The Federation of the Swiss Watch Industry expects 2026 to be roughly flat against 2025, with India, up 31.5% in the first half, and Mexico, up 14.9%, replacing some of the demand lost in China and the United States. But replacement demand is not recovered demand: Indian and Mexican buyers are not yet purchasing at the price points that Chinese and American buyers abandoned, and the sector's centre of gravity has shifted downmarket even as its premium positioning depends on the opposite.
The long-term question is whether "Swiss Made" remains a production standard or becomes a brand umbrella. The IPI's March 2026 clarification points toward the latter. That can work, but only if the institute draws and enforces a hard line around what counts as Swiss research and engineering, and only if the watch industry's 60% threshold survives the next lobbying cycle.
Three signals decide which path the label takes. First, whether the IPI publishes a definition of "SWISS RESEARCH" and "SWISS ENGINEERING" with a genuine substance test. Second, whether mainland China stabilises — a further year of double-digit declines would push more brands toward cost-cutting and offshore assembly. Third, whether US tariff policy extends to Switzerland directly; the sector has already absorbed a 14.8% first-half hit from tariff front-running distortions, and a direct levy would force the offshore decision the IPI is trying to manage.
The base case is that the label bends and holds: the cross appears on more non-Swiss-made products, but the core watch standard stays at 60% and enforcement against outright fakes continues. The downside case is a slow drift — no single dramatic change, but a series of clarifications and cost-driven relocations that leave "Swiss Made" meaning Swiss-designed and assembled wherever is cheapest. The upside case is that the strong franc and tariff pressure prove cyclical, demand in China recovers, and the clarification remains a narrow exception that never becomes the rule.
Switzerland is betting that a symbol can stretch without snapping. The risk is not that the cross disappears from products. It is that it stays on them — and comes to mean less each time.
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