The watch industry was turned on its head in the 1960s when Switzerland largely rationalised its ‘marginal’ markets to concentrate on its core strengths. Australia was impacted as a marginal market and, as the Swiss went quiet, the Japanese brands moved in with eagerness. The Japanese brands duly arrived with reliable, everyday models but were notable for their complete lack of style. However, there was choice, the price was right and the retail market
was flooded.
The quartz chaos started in 1969 when Seiko marketed the first humble quartz analogue watch called the Astron. This precipitated the global quartz revolution in the 1970s, which shook the world market by the scruff of the neck, causing international chaos and corporate failures. In particular, many inefficient traditional Swiss makers suffered and closed.
Swatch Group’s emergence during this chaos was directly attributable to the far-sighted Nicolas Hayek Senior who was engaged by the Swiss banks to restore order to the industry. Hayek acquired many famous Swiss brands and under his expert guidance, these classic remnants of Swiss heritage were revitalised and re-released into international markets under hugely influential corporate conglomerate SMH Swiss Corporation for Microelectronics and Watchmaking Industries, now known as Swatch Group.
As an aside – and with some irony – the first digital watch, a Pulsar, was launched in 1972 by The Hamilton Watch Company, which was owned at the time by SMH. Pulsar became a strong brand name and was acquired by Seiko in 1978.
So where do the Japanese brands sit today after this structural industry upheaval? The three principal Japanese brands – Seiko, Citizen and Casio – have staked a claim to significant leading-edge technologies.
Today, like its celebrated 1969 predecessor, the latest Seiko Astron ushers in a new age of timekeeping technology and, along with Citizen’s Eco-Drive, is arguably one of the most intelligent watches ever built.
The early Japanese models lacked Western styling and were constrained by their history. Today they produce watches immeasurably more attractive than earlier efforts – however, they remain largely shut out of the luxury category.
This is caused as much by their own choices as it is by market forces. An example is the aforementioned Astron where, despite justifiably generous technical accolades, it is simply not collectible as ‘High Horology’ and sells for something less than $5,000.
Many believe the Astron is under-priced but regardless, it was never a contender for ‘luxury’ or collector status, which mostly centres on classic mechanical gravitas.
Citizen’s president, Ryota Aoyagi, best expresses the Japanese market position: “Among our prominent achievements is Eco-Drive, an original, light-driven technological breakthrough, and the satellite timekeeping system. This unique approach towards innovation has been the core of our DNA for over 80 years.”
It’s a statement that speaks for all Japanese brands that have staked a claim to significant leading-edge technologies – Seiko thus presents its new Astron GPS Solar, which combines solar power and GPS function in a magnificent design; Citizen has its latest Eco-Drive Satellite Wave F100 with a high-sensitivity antenna; and Casio launches its G-Shock GPW-1000, the first watch that is capable of receiving both radio wave and GPS signals.
Indeed, the Japanese were at the forefront of ‘smartwatches’ well before the techno buzzword was conceived!
Significant as these qualities may be, consider that the three largest Japanese watch manufacturers together represent only 9.4 per cent of global market share – less than that of Rolex.
But, as always, that is not the whole story.
We know that these days few retail watch brands make their own movements. Swiss manufacturers were hit hard in the mid-1970s with the advent of cheap quartz calibres and many brand manufacturers went out of business. Most of those that survived now employ ‘ebauche’ movements, manufactured by Swatch Group’s ETA and a few other specialist factories.
And, as before, given the Swiss engage in restrictive supply policies, the Japanese (and soon Chinese) have a catalogue of ‘drop-in’ calibres ready to take up the market capacity not supplied by the Swiss.
Many of the Chinese brands use their own movements or import those made by Tianjin Sea-Gull (China) and other Chinese watch factories. However, a wide spectrum of mid-range watches made in Japan, China and Europe use a very decent Japanese quality product from Miyota, a house brand within the Citizen group that is of course ‘Made in Japan’.
The manufacture of Miyota calibres is fully automated and large numbers are exported from Japan into the yawning gap created by the monopolistic – and many suggest suicidal – restrictive policies currently implemented by the Swiss conglomerates.
During 2013, total shipments of Japanese complete watches and watch movements decreased in units by 2 per cent, amounting to 575 million units, but increased in value by 16 per cent to JPY 283.6 billion (AU$3.2 b) compared to the previous year.
In addition, where mechanical calibres increased in units by 4.55 per cent, their value increased 8.46 per cent, indicating higher price-points for buyers. One can also speculate this was because of the higher demand for middle order Miyota mechanical movements, yet again, as was the case 50 years ago, taking over the market segment vacated by the Swiss.
History, as they say, repeats itself, which is why we find that as in the 1960s when the Swiss rationalised its global markets and the Japanese took advantage of the vacuum, the same scenario is being played out again today. This means that just as before, the Japanese watch industry is perfectly poised to take full advantage of the Swiss decisions, which seems to suggest that the sun never stops shining for the Japanese makers.