Are Swiss movements really much better than Japanese ones? Why is there such a difference in price between Swiss and Japanese watches? Or is the difference not so much in the movement but in the other parts of the watch?

A "Swiss Made" is typically 60% Swiss 40% Chinese. A "Japan Made" or "Made in USA" by law is 99.9% made in Japan or USA. Let's get this out of the way first. 

Japanese watches are great value, high quality and beautiful pieces. Swiss has the legacy and heritage. USA used to be up there with Swiss in watchmaking, and in recent years we are seeing a slight come back. Some German brands are super popular as well, and there are many up and coming German watch makers who are getting insanely popular. 

TLDR; no Swiss movements are not better, and that's why players like Seiko and GS are beginning to gobble up market share

In modern manufacturing, cost differentials basically boil down to manufacturing process.  If you have an incredibly effective manufacturing methodology, you're able to drive down:

• Carrying cost - low inventories of parts and finished product, through "just in time" capabilities and supply chain efficiency, as well as through syncing your supply with fluctuations in consumer demand
• Labor costs - low re-work and effectively ensuring 100% of labor utilization is focused on value-added activities
• Etc., etc., etc.

As a result, you then are able to offer products that have higher performance and better quality and reliability.  Let's use a car analogy.  An Aston Martin Vantage is priced at $142k, while a Porsche GT4 is priced at $101k.  

• Because Aston uses antiquated manufacturing techniques, you get okay performance for the money, but none of the body panels actually fit right, parts fall off the car, the infotainment system feels like something out of an 80's Atari game, etc., etc.
• Because Porsche uses lean manufacturing, the GT4 is widely considered one of the most desirable enthusiast cars in the world, with out of this world performance, as well as quality and reliability that rivals Toyota
• Now, even though the Aston costs 40% more than the Porsche, their net margins are roughly ~0%.  Meanwhile, Porsche are able to achieve something like ~16% net margins - the highest in the industry

What this shows is that if you have the right manufacturing systems in place:

• The consumer gets more, for a lower price, and you earn more profit as well

In this example, Swiss = Aston, and Japan = Porsche.  And this would explain why Grand Seiko has gone from 25th in revenue in the U.S. in 2016 to 5th in 2020, without spending a single dime on billboards, sponsoring gold tournaments, hiring David Beckham to Beckham around everywhere.

Grand Seiko is on the top of my list. IMHO what sets Japanese watchmakers is the attention to detail, the craftsmanship and finish on these watches. The only problem with GS is they have a new model coming out every month and its super hard keeping track of releases.

Movements usually correspond to the complications featured on the watch. For standard complications the engineering behind these movements are well understood and executed, buy any luxury brand. There are not that many known bugs in the designs anymore. What I look for is. the dial, fit and finish and in recent days GS and Japanese watch makers have really upped their game. 

I called Vacheron over the weekend for availability on Overseas, the sales lady told me I need to be an existing customer, or buy a patrimony to get on the list for an Overseas. Which means according to her.. I need to buy a more expensive 40k watch to get on the wait list to buy an "entry level" 20k watch. This is assbackwards. OTOH I can buy online ( Pre-order) pieces from Grand Seiko with no problems. 

Swiss watch industry is setting itself up for a rude awakening when the massive recession hits the US and world in mid 2023. 

Meanwhile, at the Morgan garages...

(Note: I have nothing of value to add to this conversation)

In addition to the other excellent comments, I would posit that there is an element of what Thorsten Veblen called "conspicuous consumption," a way of selecting and purchasing goods and service that reflects not only wealth, but also culture and sophistication. It is sort of the attitude embodied by Archie Luxury; "anyone who knows watches knows Swiss watches are the best! Anything else is gaaaaaabage!" The fact that many of the comments in this discussion are about how Japanese movements and watches are every bit as good as Swiss watches just illustrates that people are aware of this perception. Personally, I think you find much better value and equal quality in Japanese brands.