At the most recent Hong Kong Watch and Clock Fair, I had the opportunity to talk with people and companies from Asia about business in general and specifically their markets.
Wang De Ming, the manager of Chinese movement giant Sea-Gull, has seen a downturn in his exports. “From last year, we are down 20 per cent,” he details. “The USA used to be 40 per cent of our production, now it’s 20 per cent. 60 per cent of our movements are sold inside the country and then re-exported. Only 20 per cent of our movements are for inside the country. The Chinese market has not been influenced much by the crisis.”
The other large Chinese watchmaker, Shanghai, has seen a downturn as well. ”We are down 30 per cent in volume, but we have made up for it in value because we have more expensive products,” says Ni Hai Ming, General Manager, Shanghai Watch Industry Co., Ltd. We are slowly working to upgrade the quality of our watches and movements. We have a famous name in China. The problem is that we built our name on affordable watches. Now, we have to upgrade our quality and our perception. The Chinese market is growing fast and people want to buy better watches. Now, watches are a way to show who you are, what your taste is, how cultured you are. The Shanghai brand is becoming very sought after.”

Value for money important
Leslie Chang, Distributor, Leslie Chang Pte Ltd. (Singapore), points out that good value for price watches have held steady. “Anything below US$100 has not been affected by the downturn,” he says. “We offer value for money watches, which is important in these times. According to other distributors, the high-end is down about 30 per cent. Late July and August were strong, however, as people are buying again.”
“In some Asian markets, business is quite slow,” admits Vishal Tolani, Director, Solar Time Ltd. “Some people are cautiously bullish. Our customers are mostly importers, though we do sell to some retailers who are close by. Business is quite challenging.”





Jack Kwong, Brand Manager, o.d.m. confirms that business was tough at the beginning of the year, but it’s getting better now. “Confidence is still down,” he says. “Hong Kong is pretty stable and China is strong. Things are better for us with the Chinese market in support, because we still have the growth from the Chinese market to offset other downturns. We have about 70 retailers in China and we will soon be over 100. We are only in the coastal areas right now and there is still a lot of new areas to go into.
Digital watches are very strong in China. Fashion is big in China as well. They like American hip hop styles, Japanese street culture. China is a good market for o.d.m. because they are willing to try new things.”

Airport business taking a beating
Nuance-Watson (HK) Limited is a big player in Hong Kong International Airport (HKIA), and airport retail has certainly been impacted by the recession. Airport retail is highly conditional to air passenger traffic,” says Alessandra Piovesana, Nuance-Watson (HK) Ltd. Regional Managing Director – North Asia. “Looking at the trend of HKIA’s passenger traffic, cumulat-ive figures for the first and second quarter of 2009 were down between 7 and 9 per cent when compared to the same period in 2008. In July, it further decreased by close to 10 per cent. This progressive declining trend reflects that the full effects of the continuous weak global economy aggravated by the threat of H1N1 are felt in HKIA.
“Not only we are hit by air traffic contraction, the other element that really affects us negatively is customers losing the propensity to buy,” she continues. “The gloomy economic outlook continues to dampen spending desires among consumers. The airport is the last port of call for visitors and in general, airport shopping is discretionary. Airport re-tailers are always the first to feel the effect of an economic downturn.”
Nuance-Watson has responded with a series of ‘anti-crisis’ promotions and activities in collaboration with brand vendors and strategic partners. “Luckily we have the advantage of a diversified retail portfolio of over 40 stores in 18 different licenses,” Piovesana says. “Our extensive range of products and brands gives us more flexibility in adjusting our offer to adapt and counteract to the change in weight and proportion of different nationalities of passengers and their willingness to spend. Among all categories, Food and Beauty are relatively accessible, so far sales of these categories are on a relatively steady path in these troubled times. Clearly, high-ticket discretionary categories such as luxury watches and jewellery, fashion and electronics are hit hardest, the latter bearing as well the unfavourable currencies trend from key targeted nationalities.”
Piovesana foresees that the near future will remain challenging, as it will take some time before overall air traffic and retail performance return to pre-crisis levels. “Hence, we will pursue with an extra cautious approach and tighten our risk control,” she details. “However, we remain prudent. The Mainland economy is relatively more stable and stronger than other economies worldwide and this gives Hong Kong and HKIA an advantage.
“On one hand, we aim to sustain growth through the listing of new brands and of course, continue working in partnerships with brands and vendors to bring in newness and attractive value offers with strong visibility through well coordinated and value added activities in order to drive performance and recruit new customers in line with their current expectations,” she continues. “On the other hand, we will keep investing in our customer relationships, service skills, store presentations, infrastructures and technologies to ensure we will be in a position to stay competitive when the market eventually recovers, and has enough capacity to meet long-term demand and provide a level of service that will continue to set global standards. Customer awareness and loyalty is a valuable asset that is difficult to recover once it’s lost.”

Holiday season critical
Vo!lÀ Watches is an established international brand, exhibiting at BaselWorld every year. According to Serena Khemlani, Co-Owner of Vo!lÀ, business is going pretty well. “Vo!lÀ being a budding brand growing organically, opening new accounts prior to this recession drove our sales,” she explains. “Today jewellers are overly cautious with their inventories, and their showcases are clogged with slow moving or dead stock. During these tough economic times new/novelty brands are usually shunned. Therefore this part of our business has suffered and perhaps will only recover once the overly cautious jeweller realizes these new novelties are the key to bringing back old and new clients into their store.
“Vo!lÀ’s collections are available in luxury or studio versions and sales in our reasonably priced studio lines are far better than luxury collections as smarter jewellers are stocking up new novelties in cheaper studio or sapphire setting versions,” she continues. “Retailers use these collections to attract discount shoppers and at the same time use them as examples to book orders on our diamonds/luxury collections.”
Khemlani knows the Thanksgiving and Christmas gifting seasons are crucial in setting the pace for the 2010 recovery and beyond. “If jewellers continue to be overly cautious and fail to offer novelties to the end consumer, they will loose sales to e-retailers or the competition stocking novelties and the holiday allowances will be spent on gadgets other than watches.”
The silver lining in the storm clouds of the recession has been China, which has remained relatively untouched by the world’s economic woes.
“The Chinese market is still going strong,” says Raymond Yip, Assistant Executive Director, HKTDC. “It is showing eight per cent growth and China is determined to keep this growth. China is also committed to opening up its markets.
They have introduced a four trillion RMB, US$600 billion stimulus package, part is for infrastructure and some is for domestic consumption and import demand. It is much easier to export to China now because of the improved climate.”
The conventional wisdom is that the United States was going to lead the recovery, but it’s quite possible that with China supporting the region, the recovery may come from the East.


Source: Europa Star October-November 2009 Magazine Issue