Watch Industry Quarrels Over Swiss-Made Labels David Gray/Reuters A worker adjusts a display of Mont Blanc watches at a store in Beijing. China is a growing market for Swiss watches. BASEL - Lest anyone doubt that the watches it makes are Swiss, Swiss Mountaineer emblazons Switzerland's national flag on the dial of each timepiece. Does it matter that except for their Swiss movement, the watches" components are made at a factory in Shenzhen, China? Under Swiss rules that are as precise as its clockworks, Golden Hawk can label its watches Swiss-made as long as at least 50 percent of the value of the movement comes from Switzerland. But as part of a growing national "Swissness" movement, the Federation of the Swiss Watch Industry and its most powerful member, the giant Swatch group, are out to change those rules. They want to tighten the labeling requirements, which they see as necessary for protecting the value and quality reputation for an industry that is a pillar of the Swiss economy. "More and more foreign companies, particularly from Asia, have realized how easy it is to call a watch Swiss-made and in effect mislead clients and sell at higher prices than what they could otherwise justify," said Jean-Daniel Pasche, president of the watch federation. "Even if everybody in Switzerland isn't perhaps happy about what we do, there's nothing they can do about it because we follow the rules," Mr. Chan said in an interview last month at Baselworld, the world's biggest watch fair. Most of the approximately 500 members of the watch federation support the demand for tighter rules, which would raise the percentage of Swiss-made components to 80 percent of a watch's total value - not just the movement, or time-keeping mechanism, covered by the current rules, which were established four decades ago. But some smaller Swiss companies oppose the proposed rules change. They warn that the country's watch sector risks undermining itself by wiping out smaller Swiss players that buy components from China and elsewhere to remain competitive. The small companies say they can probably not afford to invest more in local production because of Switzerland's strong currency and high labor costs. Mr. Pasche predicted the opposition could be overcome. "We're aware that stricter rules could hurt some of our companies," he said. But the problem can be limited if a transition period is provided for them to adjust to new rules. Swatch, based in Biel, is the world's biggest watch maker, with revenue last year of $7.8 billion. Its products include its ubiquitous Swatch watches and luxury brands like Breguet, Blancpain, Omega and Longines. "I've got no problem with the Chinese and others buying in Switzerland," said Nick Hayek, the chief executive of Swatch, "as long as everybody plays by the rules and helps protect the value of what is being made in Switzerland." The watch federation draws inspiration from the so-called Swissness bill that passed in one of Switzerland's two parliamentary houses in March and is meant to protect virtually everything produced in the country - whether machine tools or Emmentaler cheese - against counterfeiting or misleading use of the Swiss brand. A vote in the other legislative chamber is expected before the end of the year. Parliamentary endorsement of the Swissness bill would be "a good first step," Mr. Pasche said. But updating the 50 percent rule would require the Swiss government to approve a new decree specifically for the watch sector. There is little question that few manufactured products derive more value from their association with a specific country than do Swiss watches.