30 May 2008
Defining Moments(HKTDC Enterprise, Vol 06,2008)
Watches & clocks
Attractive design and branding skills keep Hong Kong's timepieces industry ticking over nicely
Facing intense market competition, Hong Kong's watch and clock manufacturers are racing against time to climb up the value chain by placing a greater emphasis on design and branding.
Long known for its product quality, reliability and diversity, the traditionally OEM sector is increasingly expanding into ODM and even OBM.
"The industry is in transition right now. We're at the beginning of the OBM stage, and that should be our strength in the long run," believes Hong Kong Trade Development Council (HKTDC) Economist Alice Tsang.
Many local manufacturers also agree that Hong Kong must move up the value scale. "We are not able to compete with very cheap watches. We need to produce watches with higher value-added content," says Stanley Lau, Chairman of the HKTDC's Watches & Clocks Advisory Committee.
As watches steadily evolve into fashion items, industrialists realise accuracy and reliability alone do not suffice - design and styling are becoming more important considerations.
"Now, Hong Kong's major strength is its good designs and fashion-oriented watches," notes Mr Lau, who is also Managing Director of Renley Watch Mfg Co Ltd.
Exemplifying the industry's growing engagement in design and branding, Renley has developed its Temporis brand of youthful, casual-style quartz watches.
"We've had the brand for about three years. All Temporis models are designed and manufactured in Hong Kong," Mr Lau explains, adding that Renley also owns three acquired Swiss watch brands: Jean D'Eve, Buler and Sultana.
Similarly, Chung Nam Watch Co Ltd purchased the Swiss label, Roamer, under which it has been selling watches on the Chinese mainland for the past 13 years.
"Roamer's style is classic and traditional," advises Michael Chong, General Manager of the Brand Marketing Division at Chung Nam. Focusing on mechanical watches, the brand is aimed mainly at men aged 35 years and up.
Meanwhile, veteran manufacturer Sweda Ltd has set up an ODM subsidiary, aptly named o.d.m. Design & Marketing Ltd, which develops its o.d.m. brand of watches for export worldwide.
"We have a young line for those aged 16-25 years, which has a very funky, hip-hop look, and a more mature line for people 20-40 years of age," says Jack Kwong, Brand Manager at o.d.m. Design & Marketing.
Design is also playing a more important role in clock manufacturing. "At our company, for example, ODM now makes up about half of production compared with 10% a decade ago," says Alan Chan, Designer and Manager at Arrow Timepiece Ltd, an OEM/ ODM producer of clocks.
The US and Europe are Hong Kong's largest timepiece markets, together accounting for more than 40% of total exports in 2007.
Close behind with a 13% share was the Chinese mainland, whose contribution looks set to grow as more local players make inroads there. However, this potentially huge market does present challenges to Hong Kong manufacturers.
"When it comes to watches, many people in China prefer international brand names. That's the most important factor right now," says o.d.m. Design & Marketing's Mr Kwong.
The solution lies in brand building. "Our company is growing fast in Europe. We're positioning ourselves as an international brand name. Succeeding in overseas markets gives us a chance in China," Mr Kwong remarks.
He adds that another setback on the mainland is the as-yet limited demand for fashion watches, a product category in which Hong Kong excels. "The China market for them isn't that mature, but fashion watches should become more popular in the future."
Besides the mainland, clock manufacturers are eyeing expansion in the Middle East, Southeast Asia and Eastern Europe. "We may benefit from the improving economies of these regions," says Arrow Timepiece's Mr Chan.
As the world's second-largest exporter of complete watches and clocks after Switzerland, Hong Kong's timepiece exports totalled US$6.41bn in 2007, up 6.3% from the previous year.
The sector's mainstay is watches, ranging from analogue to digital, metal to plastic, fashion to classic, and novelty to sporty. Battery-powered wrist watches with non-precious-metal cases, for example, accounted for almost 56% of aggregate timepiece exports last year.
Nonetheless, market competition is fierce and comes from all parts of the world, including Swiss companies with their revered brand names and expertise and Japanese enterprises with their technical reliability and production capabilities, as well as Chinese mainland factories with their low prices.
With design and branding added to their long list of strengths, Hong Kong's watch and clock manufacturers can certainly expect even better times ahead.
TEXT BY BONNIE MCGUIRE