It's all in the name ... well almost

January 2004

Hong Kong, the Special Administrative Region of China (SAR), is renowned for its mid-to lower-priced watches. Its watch industry manufactured 666.7 million complete watches in 2002 and there has been an increase of 14% for the first eight months of this year. 75% are destined for its OEM (Original Equipment Manufacturing) business or Private Label production, but Hong Kong manufacturers are at last beginning to see the light and are visibly making tracks into the consumer world with their branded timepieces.

One of the harshest criticisms levelled at Hong Kong's watch manufacturers is that they have the expertise to copy existing watch designs but are incapable of creating anything original.
By way of reply, it is fair to say that the companies specializing in the OEM business generally enjoy a reputation as manufacturers par excellence (around US$ 6 billion of sales annually), but what doesn't help their cause is many of the companies utilizing these private label manufacturers actually ask for models resembling a Rolex, Cartier, Gucci, Panerai or Longines. So where does the blame lay for this controversial reputation? At whom should we point the finger, the manufacturer or the purchaser?
Their main stumbling block in the case of branding however, is that establishing, marketing and distributing a watch under a brand name requires time and a substantial financial outlay, something the average Hong Kong watch manufacturer doesn't usually have since (a) they primarily work in the OEM market which means selling with an extremely tight profit margin because it is such a highly competitive business and (b) many are only interested in the quick buck and having made it they can and often do disappear from the watch arena as quickly, if not quicker, than they appeared!
Another fact of life is because Hong Kong is Hong Kong, everybody wants to pay the minimum for the maximum. With the average price for a complete watch being around four and a half US dollars, little room is left for investment in research and development in both design and manufacturing. And if that is the average price, with Hong Kong made watches selling between US$ 1 and US$ 200 depending on the models, it's clear for all to see which end of the scale the majority of manufacturers sit.

Nevertheless, all this is slowly, but surely changing. A few years ago, one could count the number of Hong Kong brand names on the proverbial one hand. Today, however, a new pattern is emerging, that of branding. If seventy-five per cent of Hong Kong's exports is OEM production, then twenty-five per cent, or more precisely 166.6 million watches, now carry a brand name.
So where do all these branded watches go?
The USA is by far and away the largest importer of Hong Kong watches, followed by Japan, Germany, the U.K., China, Spain, the UAE, Spain, Italy France and Switzerland. Although these countries are the main importers, if you do your homework and some window shopping you will almost certainly find a Hong Kong brand in almost any country in the world. Nevertheless, the problem remains that Hong Kong brands are not household names and this stems from the fact that the majority still do not have the necessary expertise in the all-important domains of distribution and consumer marketing.
A few companies have already developed the expertise, but today there are more and more trying to learn and learning, as I have already said, takes time and money. What's more, for those who have recently established a brand name (often companies who maintain their bread and butter OEM business) their problem now is how to grab the attention of competent distributors and convince them that their watches are worth the more elevated price that a branded watch demands.

Who's making waves?
One company that has set about getting into the branded market is Jacques Farel (see The Passion of Jacques Farel in this issue). A family business headed up by Jacques Froidevaux, its concept is to enter the kid's watch market with innovative watches at very accessible retail prices. Then when their saleability and quality is recognized by the retailer the company offers an interesting array of collections in other categories.
Kool Time, headed up by Rajneesh Swami, produces a striking collection of 'fun' watches at prices everyone can afford and he has put the company on the map by regularly travelling throughout the world, participating at the Basel Fair and sheer dogged perseverance. The company is now reaping its rewards in the consumer market via big chains stores. Voilà, another relatively new brand headed up by the husband and wife team or Roger and Serena Khemlani, has invested in their design and production capabilities and are winning clients through the pure aesthetic creativity of its products.
Another company enjoying success is o.d.m. A part of the Sweda Group whose Chairman is Paul W. K. So, this versatile manufacturer specializes in the production of innovative digital watches, although they also produce exciting analog and combined analog/digital collections.
Other companies worth their salt are Solar Time which has successfully introduced Giordano and Triumph watches onto the market, Wowi with its beautifully designed sports collections, Tunlees with its floral interpretations, Momo Design and Kentex with their chronographs, Latitude with its vertical read-out timepieces, Goldlion with its Chinese indices and Arbutus a company that has recently changed hands and is offering an attractive range of excellent automatic watches.

Humanizing names
Hong Kong manufacturers have excellent facilities. They either produce or have access to excellent cases, bracelets, straps and all the necessary movements and parts. What they have to learn is how to mix and match all theses elements and the thousands of different styles and combinations to meet any emerging trend at the drop of a hat. Should the watch be in gold or stainless steel? What sort of movement should it have, hand-wound, automatic or quartz? Should it be a dress or sports watch? A chronograph or a perpetual calendar with a leather strap or steel bracelet? A guilloché or plain dial, Roman or Arabic numerals, digital or analog read-outs, sapphire crystals front and back or steel screw-down casebacks, Breguet-style or Dauphine hands?
The alternatives are seemingly endless but they know their strengths and are aware of the enormous challenge they face in trying to become a brand. However, becoming a brand also entails finding a name, one that won't leave the consumer mumbling “I liked that watch by whatsitsname!” Names like Wing Woo Fat and Ko Tai Kwong don't roll off the tongue in the manner of Rolex or Cartier and probably won't win many friends in the non-Asian countries.
Most still have to devise and establish a congenial brand name and then convince the consumer to actually ask for it in the retail outlets. Easier said than done you say. True, but when the Hong Kong manufacturers set their mind to the task, the gap between the old and the new approach will dramatically narrow.
Watches have to look good and they have to perform, but they also have to have a good name. As Rolex will affirm ... it's all in the name ... well almost!

hkwatchesThe annual Hong Kong Watch & Clock Design Competition is sponsored by the Federation of HK Watch Trades & Industries, the HK Watch Manufacturers Association and the Hong Kong Trade Development Council. The Pin Clock by Daka Development was the Open Group Champion and The Loop Watch by Leung Yat San was the 2nd runner-up.