14 Sept 2005
Design Driven(HKTDC Watch & Clock, Vol 04,2005)
Cheng should know, having founded Planway in 1995 when he decided to strike out on his own after some 22 years' experience in the watch business.
Few men are better positioned to comment on industry trends than the former chairman of the Federation of Hong Kong Watch Trades and Industries and member of the Watch and Clock Advisory Committee of the Hong Kong Trade Development Council.
"Today we are doing much more ODM," Cheng observes. "We used to do a lot of OEM work, but today you can't sell the same product with the same design to more than one customer in the same market - it has to be unique for each customer."
Planway's design team currently comprises three designers at the company's ISO 9001-certified factory at Chang An, near Dongguan on the Chinese mainland, and one at its Hong Kong headquarters.
Cheng claims his company is known for classic men's and ladies' watches and more sportier styles. "We are constantly coming up with new designs," he maintains. "Every week we sit down with our R&D and marketing teams and make decisions on the 15-20 new case designs we produce each month."
Planway employs about 100 people at its factory, which was built in 2002 and currently produces about 1.5 million timepieces per year.
"It's convenient because there is a lot of supporting industry in the area that makes it easier for ancillary activities such as communications and delivery," Cheng notes.
He explains that as well as R&D the mainland factory is responsible for purchasing, incoming quality control and final assembly. "We buy movements from Japan and Switzerland, while cases and bands are sourced on the mainland," Cheng explains.
Much of Planway's business is with customers in the US, Germany and Brazil, many of whom have been dealing with Cheng since before he founded the company.
He is keen to develop the European business, but understandably admits he is wary of the potential problems caused by the differing demands of individual markets.
"Some markets accept products with only a slight modification - for instance Germany, Spain, Italy and the UK are very similar - but if you want to go to the Middle East it's a totally different collection," Cheng observes.
Planway takes pride in the quality of its watches, which are mostly positioned at the medium- to upper-end of the market. Most customers ask for stainless steel cases, stainless steel bands, and often watches set with small diamonds.
"Alloy-case watches start at approximately US$3 FOB Hong Kong each but people are increasingly looking for image and that means a stainless steel case, Swiss movement and a sapphire crystal, which costs an average of US$20 up to US$50 or US$60," says Cheng.
Delivery usually takes about two months from confirmation of order, although orders for stainless steel cases set with special stones can take longer, depending on availability of components.
Planway is looking to establish its own brands "in the foreseeable future", but as an experienced industry hand Cheng is approaching that area of the business cautiously.
"Developing brands takes time, additional human resources and additional investment," he maintains, revealing that Planway has two brands - Lorelli is registered in Hong Kong and Leonis in Switzerland for more prestigious watches.
Cheng is well aware that a brand doesn't mean anything until it's promoted. "When the advertising has been done, people get to know it," he says. "You have to invest a lot, and advertising is a big issue."
For the moment, though, Cheng and his team are continuing to focus on meeting the needs of existing customers. "I have some customers that have known me for 30 years," says Cheng. "The relationship is very strong and that builds business."
WRITTEN BY ROBERT PIERCE