JAPAN WATCH REPORT


Japanese watchmaking wants to change its image

ANALYSIS

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July 2019


Japanese watchmaking wants to change its image

Seiko, Citizen and Casio now offer models at prices that were unthinkable a few years ago. Japanese companies intend to move from a highly technological profile to a more emotional, refined and elegant brand image. It’s a long-term gambit for an industry that remains dominated by the central figure of the engineer.

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apan’s image as a nation has changed significantly since the 1980s. From an industrial country mass-producing cheap electronics and cars, it has been propelled into an ultra-refined nation, at the forefront of fashion and design, with a unique lifestyle and traditions preserved by its insularity. That is what attracts the millions of tourists who visit the archipelago, and the many Western teenagers fascinated by Japan’s unique culture.

The local watch industry is also looking to change its image. There is a growing movement to make the switch from a “tech” image to more “emotional” brand values (which have been so successful for Swiss watchmaking over the past two decades).

Each of the three major Japanese watch companies – Seiko, Casio and Citizen – has developed a clear strategy to achieve the same goal. Pierre-Yves Donzé, an expert in the watchmaking industry and a professor at Osaka University, has just published a paper on the evolution of the Japanese watchmaking industry since 1990*.

There is a growing movement to make the switch from a “tech” image to more “emotional” brand values (which have been so successful for Swiss watchmaking over the past two decades).

In the Elegance collection, a new dial combines Grand Seiko's signature Mt. Iwate pattern and “Suki-urushi” lacquer.
In the Elegance collection, a new dial combines Grand Seiko’s signature Mt. Iwate pattern and “Suki-urushi” lacquer.

Seiko plays the traditional card

“Seiko highlights Japanese craftsmanship and Japan’s manufacturing tradition through Grand Seiko,” explains Pierre-Yves Donzé. “This high-quality image is highly visible in Japan but not yet worldwide. Grand Seiko is already able to compete with Rolex, Omega and Cartier in the domestic market, but it has just begun its international expansion.”

In the opinion of Pierre-Yves Donzé, Seiko has adopted a strategy similar to that of the Swatch Group, with a diversity of collections – or rather brands – each with a distinct identity: luxury watches with Grand Seiko, hightech products with Astron, sports watches with Prospex, traditional mechanical watches with Presage and classic watches with a modern design with Premier. The group has many more brands at the domestic level, including licenses for Asics, Tsumori Chisato and Issey Miyake.

The expert writes: “The management adopted a new strategy after the Lehman shock, and one of its major aspects was to refocus on branding and move upmarket.” Two brands in particular play an important role in this charm offensive abroad: Presage and Grand Seiko.

Two brands in particular play an important role in this charm offensive abroad: Presage and Grand Seiko.

In 2004, Europa Star already highlighted the haut de gamme positioning of Seiko in Japan (Europa Star 3/2004).
In 2004, Europa Star already highlighted the haut de gamme positioning of Seiko in Japan (Europa Star 3/2004).

Citizen, the buyout strategy

Citizen has opted for takeovers: the group has successively taken over the American brand Bulova (2008), Swiss companies La Joux-Perret, Prototec and Arnold & Son (2012), as well as Angelus, and finally Frédérique Constant and Alpina (2016). “This allows for much faster growth,” says Pierre-Yves Donzé. “HQ has opted for decentralised management of these brands, which gives them a high degree of autonomy.”

In Japan, Citizen operates the Campanola brand, as well as the watch licenses of brands including Paul Smith, Margaret Howell Idea, Outdoor Products and Beauty & Youth.

The Citizen L collection is the feminine side of the Japanese brand.
The Citizen L collection is the feminine side of the Japanese brand.

“Citizen’s brand portfolio expresses a twofold strategy: the objective to move to the middle-upper global market through the acquisition of established brands, and a desire to occupy all the segments of the domestic market via a broad range of sub-brands,” writes Pierre-Yves Donzé.

“Citizen’s objective is to move to the middle-upper global market through the acquisition of established brands.”

As shown in our archives, the 1990s were a boom time for Japanese watchmaking (Europa Star 2/1991).
As shown in our archives, the 1990s were a boom time for Japanese watchmaking (Europa Star 2/1991).

Casio, the power of G-Shock

Even the watch most symbolic of Japanese technology is moving up the range, with the use of Japanese craft techniques and far greater use of analogue displays.

“In 2004, facing stagnant sales, Casio adopted a new strategy, engaging with the segment of high-quality analogue watches; until then, it had traditionally focused on digital products,” writes Pierre-Yves Donzé.

“The company developed R&D facilities to equip its watches with new technology (e.g. solar batteries, wavereceptors, and GPS) and launched new brands, such as Oceanus, Edifice, and Sheen. In this context, Casio rebranded the G-Shock and developed analogue sports watches with the new G-Shock incarnation in 2011; today, roughly half of all G-Shock models are analogue.”

“Today, roughly half of all G-Shock models are analogue.”

A special high-end series of the MR-G line from G-Shock (Casio) is produced with the help of a Japanese craftsman specialising in the design of traditional swords.
A special high-end series of the MR-G line from G-Shock (Casio) is produced with the help of a Japanese craftsman specialising in the design of traditional swords.

Domestic dominance

Unlike Swiss watchmakers, who have always had to look to the international market, Japanese brands can rely on their domestic market in the event of a drop in global demand. Pierre-Yves Donzé has observed the growing importance of the domestic market since the mid-2000s: “According to data from the Japan Clock & Watch Association, complete watches shipped in Japan represented 45% of global shipments in 2015, the highest mark since the association began publishing data on this statistic.”

In 2015, the average value of a watch sold in Japan was 13,905 yen, compared to 2,646 yen for a watch shipped abroad. This compares with 3,728 yen and 1,351 yen respectively in 2000. The upscaling of Japanese brands happens first on the national market, which acts as a laboratory, before expanding internationally.

Unlike Swiss watchmakers, who have always had to look to the international market, Japanese brands can rely on their domestic market in the event of a drop in global demand.

Knot is a new entry-level watch brand that relies much more on Japan's cultural rather than technological appeal.
Knot is a new entry-level watch brand that relies much more on Japan’s cultural rather than technological appeal.

Changing the entrepreneurial spirit?

Another feature of the Japanese watch industry is its insistance on sticking to highly technical (and often discouragingly cryptic) names for its timepieces, in a global age that celebrates straight-to-the-point branding… “Japanese watch companies should internationalise more to successfully expand into luxury,” says Pierre- Yves Donzé. The expert cites an example from Seiko: Carsten Fischer, a former manager of Procter & Gamble and Shiseido, became the first foreign nonexecutive director appointed to the board of Seiko Holdings in 2015.

The dynamics of change seem to be under way. It is also telling that a new Japanese brand, Knot, plays much more to Japanese culture than to Japanese technology. It allows customers to choose their own dial and strap, and its aim is to convey the Japanese “way of living” in a very affordable niche.

However, it would be a mistake to believe that, tomorrow, everything will revolve around branding. “This greater attention to brand management does not mean that Japanese watch manufacturers have given up on technological innovation as a basis for growth,” stresses Pierre-Yves Donzé. “The database of patent applications for solar watches demonstrates that these companies, especially Citizen and Seiko, have continued to pursue and develop their research activities in solar watches since 2000.”

It would however be a mistake to believe that, tomorrow, everything will revolve around branding.

Japanese watchmaking thus continues to seek a balance between a stronger emphasis on the culture and crafts of the country, and the pursuit of technological research that has made it historically successful.

*Technological Innovation and Brand Management: The Japanese Watch Industry since the 1990s, Pierre-Yves Donzé and David Borel, Journal of Asia-Pacific Business, Routledge, April 2019

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