CHINA'S WATCH AND CLOCK INDUSTRY

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CHINA'S WATCH AND CLOCK INDUSTRY

Post by eddiea on 2012-11-02, 14:36

An old piece I found interesting....would be cool to get some thoughts from Ron on this...



Mr. Wang Zhao Gang, Vice President
Clock & Optical Professional Community, Shanghai Commodity and Commerce Association

The past years saw an unprecedented growth in the watch industry of mainland China. Supply was abundant for watches of all shapes and sizes, including a number of branded items.

China's wide range of watches and its aggressive market development efforts have captured the attention of consumers. The wide array of designs complement the price range to capture all market segments. Watches carrying international brand names are being introduced in the China market, with prices ranging from tens of dollars to tens of thousands -- some even costing millions.

The watch industry has gone a long way since the days when watches were regarded as an important element in a wedding or a fashion statement instead of its important basic function. It was China's economic and social reforms that raised the consumer's maturity and brought about rapid development to China's resuscitated watch industry.

The dark ages of China's watch industry

The early years of reforms in China saw the Hong Kong watch manufacturing industry starting to migrate northward into the mainland in the 1980s. This led to significant changes in the industry and trade. Joint-venture manufacturing and assembly of watch parts became popular industries. Electronic quartz watches were introduced and made their mark in the mid-range market. These were followed by the launch of various imported and world-renowned brand-name watches that caught the consumers' natural curiosity towards novel products, thus creating a sense of excitement to China's watch market.

There was growing concern, however, from Chinese watch manufacturers about the effect that the entry of imported watches to the market will have on locally-made ones. Four major price cuts were effected between 1981 to 1987 in order to remain competitive, but this move proved to be detrimental to the local watch industry, with China-made watches being regarded as cheap products. It was an uphill climb to recovery, with companies either closing shop or exporting their products in areas not dominated by international brands. There were some though who tried to beat the odds by continuing production.

Getting back on its feet

The temporary setback served as an eye-opener to China watch manufacturers to shed their "closed-door" attitude towards importation. This led to a series of design innovations and quality improvements as part of their effort to reform and strengthen their industry. What used to be competition between companies and factories became cooperation to get China's watch sector out of the slump and on the road to recovery.

Watch production saw major improvements in the late 1980s and the silver lining finally appeared by the 1990s. Demand shot up because of the renewed interest of consumers in the new and innovative designs of China-made watches. Manufacturers in Shanghai even produced a watch to commemorate Mao Tze-dong's 100th birth anniversary, which caught the attention of astute watch collectors.

The success of the watch industry in the post-reform era did not escape the attention of the business community. A year ago, Shanghai Sanlian Commercial Group, which specializes in watches, invited a group of 38 light industry manufacturers to display their watches in an exhibition at Shanghai Manhattan Plaza. The 760 high-quality China-made watches on display mirrored the years of improvement and restructuring to come up with products that meet international standards. In Beijing, Tianjin and Shanghai, the market for brand name watches is starting to expand.

China's watch market today carries imported, joint-venture and China-made watches. It enjoys the advantage of having an abundant supply and broad distribution channels, with the retail sector experiencing an increase in demand from both local and foreign enterprises.

Many shopping complexes have been built in recent years in large cities like Beijing and Shanghai, and statistics show that in 1991, there were a total of 94 large-scale department stores and corporations which posted annual sales output exceeding Rmb120 million, and in 1995 at Rmb624 million. Today's figures are undoubtedly higher and in these new stores, watches are among the basic products.

The rapid expansion of the retail industry in China resulted in the spreading of sales not just to one store but to many. Similarly, on the production side, reports show that state manufacturing enterprises numbering 39 before has ballooned to over five hundred today. The continuous increase in import of watches to China has put joint-venture and assembly enterprises under constant development, and private/individual enterprises in direct competition.

Supplies and distribution channels have risen although consumer demand has been decreasing although the watch industry's total sales was kept at breakeven this year.

This may seem, to some people, as an indicator that the industry has become extremely competitive, but in fact it also points to a slow-down of the market. The retail segment has overheated, and new suppliers have flooded the market. There is a clear case of over supply, marking intensified competition between brand name watches in the China market.

'Quality' becomes the by-word

Thus the main focus of China's watch market today has shifted from "quantity" based in a planned economy to "quality" based one of a market economy. Also significant is the fact that from once being a "sellers" market, watches are now a "buyers" market. Therefore, current trends are not on fast growth but on improving quality and special features to corner a share of the market. An increasingly affluent lifestyle, especially in the urban areas, has ensured rapid product improvement. A large segment of these consumers own more than one wrist watch, and the product is in keeping with their lifestyle.

In their pursuit of overall quality, China's watch manufacturers focus on the aspects such as the public image of the enterprise; building the brand; support services; features, design and style; reasonable pricing; and the overall value of the product. These are the important elements that determine whether or not the product makes a good impression on the consumer in China. Some world-renowned brand names go through an extensive pre-launch exercise of positioning, advertising, setting up retail and service networks etc. Only then is the product opened up to the consumer. In recent years most of these big brand name watches have sold reasonably well despite being very high-priced. For example, Heng Da Li Clock & Watch Company in Shanghai has sold over 2,000 pieces of four of the world's top watches in 1996 worth about Rmb 30 million.

Some of China's local brands like Candino, Titono, Enicar, Citizen, Fiyta, Tianwang, Rossini, Roman, Shanghai, Bao Shi Hua, Diamond, and Junque, Jingda have also worked hard on improving quality and positioning of their brands to corner a fairly sizeable chunk of the retail market.

However, on the other end of the spectrum are the cheap products that imitate big brands. It is this segment of the industry that create havoc in the market-place by churning out low-priced, high-volume imitations. Fortunately these products have been lagging in the market and are largely rejected by consumers.

The retail market for watches and clocks is largely dependent on factors like trust in the store, post-purchasing services and warranty, brand positioning and advertising etc. All these factors are indispensable in ascertaining whether a store can obtain a market share. This, however, varies from region to region throughout China.

In recent years, the watch industry in cities like Shenzhen, Shanghai and Beijing has undergone much change. More companies now indulge in increased level of promotion, taking part in exhibitions and the like in order to improve interaction with various segments of the industry, both within China and abroad. Shanghai Sanlian Commercial Group has identified Shanghai as its watch-manufacturing center, which is also a major market for retail sales. Today the Group has set up the Shanghai Professional Watch Center, which houses a trading, exhibition and shopping center under one roof. All in all, more China companies are moving toward meeting high standards in product innovation and quality as well as meeting the competition in a bid to establish a firm hold on the vast market for watches and clocks

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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by bigedsurf on 2012-11-02, 15:53

Interesting read............thanks for posting

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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by Mortuus on 2012-11-03, 04:42

Ditto. I wasn't sure if I'd enjoy it as much as I did, but as Big Ed noted above, it's a very interesting read. I got particularly tickled by the brand name of one of their higher end watch brands: Junque... Laughing

I too hope we hear from Ron on this...many thanks for posting it, Eddie...

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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by AlbertaTime on 2012-11-04, 15:47

First, Junque doesn't sound quite the same in Chinese as it might in, say, French lol! In Chinese it's phonetically more like like JunShia or Jensheh. But I laughed, too. cheers . Mind you, I also couldn't find a single reference to the Jungue company anywhere else than this article.

Anyways and onward...I'll continue by also noting that this article, consistent with the very much still prevalent inter-city competitiveness in China, was written from a decidedly Shanghai perspective (otherwise...where's the mention of Sea-Gull?!?!) and then by commenting on a couple of specific paragraphs:

Some of China's local brands like Candino, Titono, Enicar, Citizen, Fiyta, Tianwang, Rossini, Roman, Shanghai, Bao Shi Hua, Diamond, and Junque, Jingda have also worked hard on improving quality and positioning of their brands to corner a fairly sizeable chunk of the retail market.

Isn't it interesting to note that the article writer (who seems reasonably well-versed) notes Candino and Citizen as Chinese "local" brands? I've noticed that's not an uncommon view in China (and Casio gets that appraisal as well at times in China, on Taobao). Draw your own conclusions...I'm not sure what the full situation is, but I think there are possibly some "interesting" reasons for the perception.

Also, similarly posited as "local" brands in the article, Enicar and Titoni (Titono in this circa 2000 article) both have a long-standing presence in China and both were easily available in China during the 60s and 70s. I'm not at all jumping to the conclusion, but it wouldn't surprise me in the slightest if both had some degree of a Chinese manufacturing presence for their Chinese market pieces. They both still enjoy a warmly-regarded reputation in China.

Fiyta, Tianwang and Rossini are all really Hong Kong based brands with some percentage of their manufacturing in the PRC (e.g. Tianwang in Shenzen but parent in HK) and so they come from a decidedly different parentage than the mainland brands like (Tianjin Sea-Gull or) Shanghai, BaoShiHua, Diamond/ZuanShi and Jingda.

...and these last four are all now (or were in the case of Jingda) Shanghai Watch Factory products although at one time Baoshihua was produced by Shanghai Watch Factory #2, and Diamond/ZuanShi used to have quite separate facilities as well, although it has a long history of cooperation with Shanghai #1, the main Shanghai brand factory today. (Those who wish more details on these relationships, can read more here)

I bring up the distinction between mainland and HK brands because the impact of HK sensibilities on PRC watches has had very mixed effects. Certainly some companies like Fiyta for example have developed a good reputation; Fiyta's claim to fame is that they produced the watches for the PRC astronaut program.

But the HK influence has also had some poor effects. Before the unification of HK with the PRC, it was HK that was unarguably the Asian capital for fake watch production, and for cheap and shoddy watch production. When the walls started to fall and the HK watch industry realized the number of skilled unemployed watch factory workers that were being made available...

...well, that led to this:

However, on the other end of the spectrum are the cheap products that imitate big brands. It is this segment of the industry that create havoc in the market-place by churning out low-priced, high-volume imitations. Fortunately these products have been lagging in the market and are largely rejected by consumers.

Now, not all the cheap junky stuff is fakes or homages. That's evidenced by the proliferation of the AK Homme, IK Coloring, Winner, Goer and "mushroom brands" producing watches that are a crapshoot at best when it comes to quality and durability, and are very unfortunately many a newbie's first encounter with Chinese watches because they look sort of OK and they're very inexpensive.

The problem is that these...time pieces Rolling Eyes ...very much spoil the reputation of the more legitimate Chinese manufacturers like Shanghai, Sea-Gull and Beijing, all three of which produce a wide range of watches that are reasonable to very good contenders in their price ranges, even at the lower end.

(It would be very much the same situation if people's first contact with Swiss watches was usually the pin-pallet drek of the earlier-to-mid 20th century. Heck, I'll put a Shanghai, Beijing or Tianjin/Sea-Gull watch from the 50s or 60s against that stuff any day.)

In my view the article is a cross between dated and hopeful, but not totally off the mark.

The domestic Chinese market still quite reasonably holds Swiss, German and other European watches in the highest regard. However, just as outside China there is a slowly growing recognition that there are serious manufacturers in China, inside China I'm seeing evidence that the younger generation is both recognizing more that things are improving with the better domestic manufacturers, and hoping for better local products for reasons of both price and, very understandably, national pride.

I won't name the writer since it was a private communication, but I'll end these comments by noting that I received an email from a new PRC Chinese contact only a few days ago. The writer is very polite and thoughtful young man (late teens/early 20s, and very new to watch collecting) and he had this to say:

A few weeks ago, i spent some time visiting the watch factory of Guangzhou, they have a retail shop there, too. What really dissapointed me was that the new models were really not of my taste. And they change the brand-name into some Western style. Dixmont is it called now.


Last edited by AlbertaTime on 2012-11-04, 16:56; edited 3 times in total
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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by bigedsurf on 2012-11-04, 16:09

Many thanks for your in-depth perspective on this article and the Chinese Watch Industry in general.

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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by Mortuus on 2012-11-04, 18:03

Excellent write-up, AT, and a very good read.

I had also seen the Citizen name in that grouping and had simply assumed that it was just a translation from the Chinese word of the same meaning; given that we're discussing the Peoples' Republic of China, this assumption made sense. Nonetheless, I find it fascinating that Citizen and Casio have become prominent enough in the Chinese market to be considered 'local.' Ultimately, such 'emotional inroads' as these should be the goal of every profit-based company on the globe, irrespective of market or product.

When I was a grad student at the U.S. Naval War College back in '99, I hypothesized that, given China's amazing earning and growth potential, they would quietly embrace capitalism and it would be communism that would ultimately "wither away," as opposed to the state, as Marx asserted. Perhaps I'm reading far too much from these simple 'tea leaves,' but I tend to see today's China in much the same way history sees Japan of 60 years ago; poised to begin an even larger economic/industrial ascent with virtually no limits.

Or maybe I'm just full of BS...after all, China has also been embracing a steady growth in militarism and military hardware, spending an increasingly large percentage of their GNP on 'defense.' Perhaps they're more like the USSR of 60 years ago...? If so, then perhaps it's time to dust off all those Cold War Tactics Techniques & Procedures manuals... Suspect

I had to look up the term 'pin-pallet,' but the effort was well worth it; any time I can increase my level of horological knowledge is good time. However, the phrase "pin pallet dreck" made me smile even before I understood the term's meaning. What a Face

Great thread, gents!
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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by eddiea on 2012-11-04, 19:59

AlbertaTime wrote:
Isn't it interesting to note that the article writer (who seems reasonably well-versed) notes Candino and Citizen as Chinese "local" brands? I've noticed that's not an uncommon view in China (and Casio gets that appraisal as well at times in China, on Taobao). Draw your own conclusions...I'm not sure what the full situation is, but I think there are possibly some "interesting" reasons for the perception.
Also, similarly posited as "local" brands in the article, Enicar and Titoni (Titono in this circa 2000 article) both have a long-standing presence in China and both were easily available in China during the 60s and 70s. I'm not at all jumping to the conclusion, but it wouldn't surprise me in the slightest if both had some degree of a Chinese manufacturing presence for their Chinese market pieces. They both still enjoy a warmly-regarded reputation in China.
Let me first thank you for the detailed reply....
I will like to add that, althought I don't have definitely proof , Citizen as well as Casio maintain a big presence in mainland China , no question in my mind .... (people tend to forget that Seiko maintain both assembly and or production facilities for the non Japanese market in Malaysia , Singapore and China) and I think Citizen is doing the same thing with the diference, that Citizen actually clone their Japanese only market models, for the non Japanese world offerings with somewhat diferent materials and a diferent model #...
I will probably will give a test drive a new or pre-loved ST1940 or ST1901 & ST1908 fittted watch if, I can find one.

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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by AlbertaTime on 2012-11-04, 20:54

eddiea wrote:Let me first thank you for the detailed reply....
I will like to add that, althought I don't have definitely proof , Citizen as well as Casio maintain a big presence in mainland China , no question in my mind .... (people tend to forget that Seiko maintain both assembly and or production facilities for the non Japanese market in Malaysia , Singapore and China) and I think Citizen is doing the same thing with the diference, that Citizen actually clone their Japanese only market models, for the non Japanese world offerings with somewhat diferent materials and a diferent model #...
I will probably will give a test drive a new or pre-loved ST1940 or ST1901 & ST1908 fittted watch if, I can find one.

Thanks Eddie and Don and (I presume) Ed...Bigedsurf...

As much as I like the ST-19, it pays to be aware that the design has it's known weak points and so if it's intended as a very occasional use chrono, I'd say fine...but if it's heavy chrono use, go Swiss. There's a good reason the 7750 has the reputation it has.

Beyond that, as always, buy the seller not the watch. Right now, if I was buying an ST19, I'd buy US or Tianjin Sea-gull, so yes to the Tianjin Sea-Gull D304 but no to the Tsinlien/HK 1963 (which looks wonderful but has some history of QC issues) or I'd buy a Perpetual chrono from Alex at Perpetual Watch.

That said, if I was to recommend a Chinese watch simply for an affordable example of the quality and workmanship available, I'd go Beijing Watch factory and get the Beijing ZhuFeng (Everest) which you can read about here or the BeHei which you can also see in that thread. Both carry this movement, the SB18 (thanks to "Abbaz' for the photo):



...and foghorn's terrific photo reminded me of the very beautiful US Sea-Gull somewhat limited edition Wuyi (500 pieces)...I think it's a bargain at $200.

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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by eddiea on 2012-11-05, 08:38

Thanks Ron, had already sent Perpetual a note , waiting on their reply I believed they have issues with shortness of straps.
As far as the ST19 goes ? I like the better adjustability , pusher action and that is not a clone of anything...I seldom use my chrono functions anyway.

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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by eddiea on 2012-11-05, 09:33

UPDATE...from Alex at Perpetual
"Due to many orders have still not been fulfilled yet, we have stopped accepting any new chronograph orders until early 2013."

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Re: CHINA'S WATCH AND CLOCK INDUSTRY

Post by AlbertaTime on 2012-11-05, 12:07

eddiea wrote:As far as the ST19 goes ? I like the better adjustability , pusher action and that is not a clone of anything...I seldom use my chrono functions anyway.

One good thing, and it's a solid plus, Lysanderiii mentioned that many times Venus parts are a top-notch and not hard to source replacement part for the ST19 if the Sea-Gull part isn't readily available.
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