Originally Published on Europa Star October-November 2009 Magazine Issue, by Keith W. Strandberg
To be honest, Fossil put Chinese movements on the map and on the right track. Fossil’s initial order of 800,000 Sea-Gull mechanical movements (total purchase to date is estimated at over 1.2 million and counting) sent a message to the watch world that Chinese movement manufacturers were and would become a force with which to be reckoned.
Currently, the Chinese market is growing, even in the face of a worldwide recession. Estimates are that there is a 300 million person middle class and they are soon becoming, if they are not already, interested in the finer things in life, and for men that means watches.
The biggest Chinese watch and movement manufacture, Sea-Gull, is at a crossroads. Founded in 1955, its primarily mission has been to manufacture affordable timepieces for the laobaixing, the masses. Now, however, the company is improving quality and slowly leaving that market, heading to more expensive, more complicated timepieces. It’s a huge shift for this company, but it’s also not something that can happen overnight.
Located in Tianjin, China, Sea-Gull is a complete manufacture, in the Swiss sense of the word. Sea-Gull makes everything, from screws to springs. With 6,000 workers, it’s a huge operation and it has evolved to the point where 80 per cent of Sea-Gull’s movement production is sold inside the country, to other watch companies, and then exported. “Only 20 per cent of our movements are for watches to be sold inside the country,” says Wang De Ming, Manager, Sea-Gull. “I think that within the next five to ten years, we will have some products that will be at the same level as the Swiss. There are some areas where we are not yet up to the Swiss.
“We have a different mindset,” Wang admits. “We have a long history. The decoration and attention to detail is where we fall down against the Swiss. Changing people’s attitudes is the hardest thing, we have to work on this, because people know Sea-Gull as a low-cost manufacturer.”
This year at the Hong Kong Watch and Clock Fair, Sea-Gull introduced a new tourbillion with a sapphire bridge, as well as a new minute repeater with perpetual calendar. The watches looked good – the quality and attention to detail were not up to Swiss watch industry standards, but they were pretty good, at incredible, definitely non-Swiss prices.
Many smaller companies, both Chinese and international, use Chinese movements in their watches. Quality is a concern, but price conquers all in some markets.
For example, the Ingersoll brand is a classically styled brand using watches made in China, with automatic movements from Sea-Gull. The range in price is US$290 - US$500 (about 200 – 250 Euros), all mechanical.
“There was initial resistance regarding the Chinese movements,” admits Robert Dorfman, Vice Chairman, Zeon Limited (Ingersoll’s parent company). “We do quality control on everything, because we know we only get one chance. Over the last five years, there has been a noticeable improvement in the quality of Chinese movements.
Germany is the best example of the acceptance of Chinese movements, we have been selling them there for five years already.
“The price is the main thing, it’s very good value,” he continues. “The finish is fantastic, largely designed in Germany. We are trying to put Ingersoll back on the map — Gandhi wore an Ingersoll watch and so did Mark Twain.”
Stuhrling, based out of New York city, is another example of a company using their own designs around Chinese movements. They have been successful selling on television and in catalogues, offering mechanical watches for the price of quartz, from US$150 - US$500 (about 100 – 350 Euros).
“We wanted to bring a look of a high-end luxury brand to the customer at an affordable price,” explains Yossi Gleiberman, CEO, Stuhrling. “We have been inspired by other brands and we are careful not to copy, we are a legitimate product. More than 50 per cent of our line is automatic, using movements from Seagull. In 2007, we started international distribution. We are in 17 different territories like Turkey, Greece, Middle East and Taiwan.”
Eric Hui, Director of Innovate, uses Chinese movements, as well as ETA movements, all depending on what his clients want. “The Chinese movements are getting much better, more stable,” he says. “We are one of the major exporters of Chinese movements from Hong Kong. We do 20,000 mechanical watches a month. The retail ranges from US$30 to US$2,000 (about 20 – 1,350 Euros). We select only quality movements and we check them carefully before we assemble the watches.
“At this level, though, it’s all about price,” he continues. “The Swiss have the best quality, but also the highest price, and they are the hardest to get. The quality of the Japanese movements is good, not up to the Swiss level, with simple functions. The Chinese offer more choice, better price, but we need to do lots of work to get it up to the quality our customers expect. We learn from experience, so we check everything. Lots of companies are using Chinese movements and they don’t check as well as they should, so it has been harming the market. They are hurting the reputation of Chinese movements, giving them a bad name.”
Innovate has a tourbillon in their collection for US$250 (200 Euros), as well as a co-axial tourbillion for US$400 (270 Euros). Hui says that he sells about 1,000 of these complicated watches a year and the return rate is about 3 – 5 per cent.
Some companies use a mixture of movements – Chinese, Japanese and Swiss – offering watches at all price points. “We use Seagull movements, as well as Miyota mechanical movements, in watches that range in price from 85 – 600 Euro,” says Hulusi Borucu, Owner, GAB Trade GmbH, Breytenbach Watches. “The Chinese and Japanese movements are cheap, accurate and offer good quality. I give a five year warranty for the Miyota movements, two years for the Chinese movements. I buy the movements from Seagull, then a Hong Kong company does all the quality control and the assembly. We have less than 3 per cent returns. I come to Hong Kong every month to inspect the watches before they are shipped to me.”
Arbutus New York uses Chinese movements for its regular line watches, though they say that they switch out key components, like the barrel, for better reliability, but uses ETA movements in their limited editions. Recently, Arbutus offered a limited edition Seagull tourbillion timepiece for US$6,000 (4,100 Euros), and sold out.
Everyone agrees, even the big Chinese movement makers themselves, that Chinese movements are nowhere near the quality of Swiss movements. They are also not nearly the price of Swiss movements.
They are, however, getting better.
The big dilemma for the Chinese is a chicken or the egg kind of problem – people won’t respect Chinese movements until the quality, precision and finishing is much better, but the big makers are reluctant to invest in better equipment, more training and state of the art facilities as they aren’t sure of a return on investment. What if they spend a ton of money getting up to speed, then no one buys their more expensive movements?
For now, Chinese movements makers are content to take tiny steps, improving quality and precision step by step, raising prices incrementally, while not walking away from current business, but still keeping one eye on the future...and the Swiss.
The Swiss, and the Japanese for that matter, better look over their shoulders. Chinese movements are getting better and better and will eventually (Five years? Ten? Twenty?) be a competitor.
That sound the watch industry is hearing?
It’s thunder out of China.
Source: Europa Star October-November 2009 Magazine Issue, Keith W. Strandberg, OCTOBER 2009