Hoeness recently claimed that Jurgen Klopp's side are a "regional thing" because of their lack of success in Europe in recent years.
"Bavaria is not the national all-illuminating global player and we in this country are no regional brand," Watzke told Bild. "That is nonsense.
"When Uli Hoeness and I cross swords, it has nothing to do with a lack of appreciation. The real reason that Hoeness sometimes has to use such words against us probably lies in the lack of titles in the last two seasons for his club.
"They are hurting over there in Bavaria apparently for what happened in the past two years. I can understand."
Dortmund won the Bundesliga in 2010-11 and 2011-12.