Watchmaking in Japan

“Japanese brands have all come to the same conclusion: move upmarket”

June 2024

“Japanese brands have all come to the same conclusion: move upmarket”

Hirota Masayuki has been the face of Chronos Japan magazine for two decades. He is also one of Japan’s leading watch market specialists. We asked him about the current status of the Japanese watchmaking industry as a whole, as well as his predictions for the domestic market.


s part of our special Japan report, we met Hirota Masayuki of Chronos Japan magazine, a leading watch market specialist, and asked him about the current status of the Japanese watchmaking industry as a whole, as well as his predictions for the domestic market.

Europa Star: What impact did the pandemic have on the Japanese watch industry?

Hirota Masayuki: Japanese watch brands have never recovered their pre-pandemic sales volume, for several reasons. One is the decrease of foreign tourists buying inexpensive watches. The spread of smartwatches is another. The Japanese watch industry has not done so well compared to, for example, Switzerland or Germany, because it has not been able to break out of the entry-level mass-produced, quartz genre. Nevertheless, as with the Swiss watch industry, mechanical watches are resilient and average prices are rising.

 Masayuki Hirota. ©Mikio Ando
Masayuki Hirota. ©Mikio Ando

Unlike Swiss watchmaking, Japanese brands benefit from a large domestic market.

Actually, not so much. Last year, watch sales in the Japanese market reached JPY 871 billion (USD 5.6 billion), of which only 20% were generated by Japanese brands. This percentage has remained stable over the past few years. The turning point came in 1989, when the Japanese government switched from a 25% import tax to a 3% value-added tax. In 2023 Japanese brands sold 5.5 million watches on the domestic market. In contrast, imports reached 15 million pieces (excluding smartwatches). Turning to the average unit price, the weakness of Japanese manufacturers is clear. As far as I can tell, the average price of a Japanese analogue quartz watch in the Japanese market is only JPY 5,042 (USD 32), while a Japanese digital quartz watch costs JPY 2,147 (USD 14). At the same time, the average price of a Swiss quartz watch was USD 319. The average price of a Japanese mechanical watch was higher, but still only USD 133. This is one tenth of the average Swiss mechanical watch price of USD 1,500!

What strategies are Japanese brands employing?

As the market contracts, Japanese watchmakers are trying to concentrate on mechanical watches, move upmarket and export. The more they are exposed to the entry-level and domestic market, the more they suffer. Casio, for example, is suffering from the current weakness of the Japanese domestic market as well as from competition from smartwatches and foreign electronic watches. Everywhere, the conclusion is the same: focus on higher-priced watches.

Chronos Manga“Watch Paranoias” – “The revolutionary dawn of G-SHOCK's 40th anniversary.” ©Ando Mikio and Chronos Japan • Manga: Ando Mikio • Editing: Kon Hideo • Supervision: Hirota Masayuki
Chronos Manga“Watch Paranoias” – “The revolutionary dawn of G-SHOCK’s 40th anniversary.” ©Ando Mikio and Chronos Japan • Manga: Ando Mikio • Editing: Kon Hideo • Supervision: Hirota Masayuki

And export them?

Indeed they do. Seiko and Citizen have the advantage of not being overly dependent on the domestic market. In the case of Grand Seiko, its internationalisation strategy is beginning to bear fruit. Currently, the ratio of sales is 50% domestic to 50% international. However, the domestic market remains important for the majority of Japanese watch brands, especially brands such as Citizen.

Are department stores still the dominant players in the Japanese watch retail market?

First, to understand the structure of this market, we need to understand its history. At the beginning of the twentieth century Seiko dominated the Japanese watch market, with a strong network of dedicated representatives. After the Second World War, Citizen sought to catch up with Seiko by setting up its own network of reps. As a result, many new entrants at that time embraced the retail sector. Orient, on the other hand, did not have a strong sales network in Japan and thus focused on export from the outset. This changed again in the 1970s and 1980s with the arrival of Casio; as it came from the world of electronics, it relied on superstores and department stores rather than specialist watch retailers. But historically, department stores have always been a major player in luxury goods retail in Japan.

Is this situation changing?

Nisshindo is still the biggest luxury watch retailer in Japan. Chronos is another important player, owned by Seiko. But today, specialist watch retailers are making a strong comeback: Yoshida, The Hour Glass, Kamine, Oomiya, Ishida. In recent years, some groups such as Richemont have put pressure on these retailers to open single-brand boutiques or franchises. The recent opening of TimeVallée in Tokyo with Ishida is one example of this. The challenge for department stores is training, as their sales staff have to be competent in many different types of products. Specialist retailers, on the other hand, appeal to watch connoisseurs because they rely on highly qualified and educated staff. One major new phenomenon is the “Gaisho”, personal assistants for very wealthy customers, who take care of all their purchases, from toilet paper to diamonds! Department stores rely heavily on staff who may not necessarily be watch experts. In the end, they are all competing for access to wealthy collectors.

How has the customer profile changed in Japan?

There’s a new generation of connoisseurs. They’re more daring, less conservative – the collector known on social media as ChronoPeace is a good example. They are no longer content with three-handed Haute Horlogerie models; they prefer models with a strong, preferably unique, design – as do many collectors in the United States or Singapore. They like to show off with these models and share their passion on social media. They are also an important audience for our websites! But I’d say that the common denominator between these different generations is their high standards and level of expertise. The requirements that consumers look for in a luxury watch have not changed. One of them is a robust case. If the case is not strong enough, it can damage the movement. Some brands face problems because of this and quickly lose their reputation. Fortunately, quality service centres are developing throughout Japan.

Which brands perform best in the Japanese market?

Rolex, Patek Philippe, Richard Mille and Audemars Piguet are doing well, as they are elsewhere in the world. Patek Philippe, in particular, is very well established in Japan. Their watches sell for JPY 22,000,000 (USD 140,000) on average, three to four times more than elsewhere. Last year Patek Philippe held a major exhibition in Tokyo, with a strong focus on traditional Japanese culture. Among major group brands, Hublot, Cartier and Breguet are doing well. And of course so are independent or artisanal brands such as F.P.Journe, which opened a boutique in Tokyo in 2005. But the main problem with these brands is the difficulty of getting hold of watches.

In the entry-level segment, Japanese brands are facing stiff competition from smartwatches. Some of them have developed Bluetooth connection systems, but these were relatively complex to use compared to the very intuitive experience of an Apple Watch, for example.

Competition from smartwatches is one of the reasons why Japanese watchmakers are looking to move upmarket and increase their average price. However, smartwatches are no longer necessarily invincible. The Apple Watch is also becoming more difficult to use as it becomes increasingly independent of the iPhone. Previously, the phone was the ‘master’ and the watch merely the ‘servant’. Now you can control everything with the Apple Watch, but that also reduces the ergonomics. At the same time, Casio launched its own app last year to improve the usability of its watches’ smart functions. I think companies like Casio in Japan or Tissot in Switzerland still have a role to play in this segment. And even the connected G-Shock is now available in a metal case, as part of the move upmarket that I mentioned.

Today, Swiss watches reign supreme in the watchmaking world. Do you think Japanese watchmaking could one day re-establish itself as a major rival and reclaim market share from the Swiss, as it did in the 1970s?

I am convinced that competitors from Japan, Germany and France will return. Perhaps China will rise as well. But it will take time. The biggest challenge for Swiss watchmakers is the lack of essential competition: remember that in the 1940s and 1950s, Switzerland dominated the world. Then came the advent of quartz, and the rise in the price of gold and the Swiss franc, which took a toll on Switzerland, but it rallied again and is now invincible. But without intrinsic diversity in the market, the watch market would resemble a stamp collecting. Competition and diversity must be maintained so that watches do not become the toys of the aristocracy.

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