Seiko is undergoing a major transformation. Since 2001, the watch division of the Seiko Corporation, still belonging to the founding Hattori family, has become an autonomous entity named Seiko Watch Corporation (SWC). Europa Star spoke with its former President, Mr Tsutomu Mitome, recently appointed Advisor to Seiko Corporation and Seiko Watch Corporation, during the BaselWorld Fair in order to better understand the changes that are redrawing the future of Seiko watches. Mr Mitome accepted to declare loud and clear what the plans are for Seiko in the 21st Century. Swiss watchmakers are advised to pay attention!

Europa Star: Mr. Mitome, you were the first President of the new Seiko Watch Corporation. Visibly, the creation of this new structure was not just simply a reorganization for accounting or operational purposes but is intended to profoundly transform Seiko...

Tsutomu Mitome: The creation of the Seiko Watch Corporation is not a cosmetic operation. It is the beginning of a new era. We must redefine what Seiko is. It is the passage from one culture to another, a response to the historical transformations of the watch sector that we are witnessing now. Today Seiko is everywhere and has addressed everyone. What has been our strength up to now has become a risk in the new environment of the watch industry. Because of our intention to offer watches to everyone, we ended up by not having a specific target clientele. Everybody is nobody, you could say. Even if our brand awareness is very strong around the world, its perception differs greatly from one market to another. In fact, Seiko, in the desire of pleasing everyone, has been too 'nice', too flexible. We are going to become much more affirmative in our actions.

ES: Listening to you, we get the impression of a somewhat genetic transformation...?

TM: It is a new management philosophy. We are passing from basically a sales oriented company with a deeply pragmatic philosophy to one dominated by marketing management. Up to now, it was our product offer that made our identity. Starting now, it is our brand identity, or brand identities if I add Pulsar and Lorus, which must determine our product offer. This is obviously a major reversal. We want to promote one and the same image around the world, while being attentive to the necessity of local adaptations. The local adaptations must take into consideration our overall and clearly defined image.

ES: What are the market changes that are causing you to proceed with this major reorientation?

TM: On this point, we have to make a trip back in time. The decisive advance that we were able to take during the quartz revolution, to the detriment of Swiss watchmakers, has since gradually disappeared. Contrary to what people believed at the time, quartz did not entirely replace the mechanical watch. The consumer has shown, including in Japan, that even if mechanical watchmaking is technologically out of date, it maintains a greater power of attraction and will endure. In addition, the advantage that we enjoyed with our automated quartz production capabilities melted away when faced with the emergence of inexpensive Chinese production, principally in the explosion of new fashion brands. New players proliferated, often with names well known in the global fashion industry, in sports or perfumes. Niches were systemati-
cally explored, nibbling away at larger and larger pieces of the market. In reaction to this new phenomenon, Seiko wants to clearly identify a target clientele for each of its products. Our strategy is to find multiple niches inside a global image that will allow us to respond to the new challenges. We call this strategy 'Innovation and Refinement'.

ES: Can you explain in more detail the two terms, 'innovation' and 'refinement'?

TM: These two terms are equal in importance. Innovation is deeply engraved in Seiko's history and practice, both in terms of industrial organization - Seiko, I might remind you, is the precursor of verticalization - and in terms of technology. Might I also remind you of Seiko's major innovations in the domain of mixed technology movements such as the Kinetic and Spring Drive. The big difference is that we are no longer content with having only this excellence. We realized, for example, that one major, if not revolutionary, technological advance is nothing if it does not have a corresponding design, a recognizable style and a soul that people can relate to. What we call 'refinement' is the other side of the coin. It is a heightened and continuous attention to the excellence of our products, our global activities, the creativity of our offer, the originality of our products, and the qualitative consistency of our activities. This double term 'Innovation and Refinement' dictates the basis of our activity, far beyond our simple product strategy. Our communication, the way we promote our products, right up to the way we distribute our watches and place them on the market have been transformed.

ES: Precisely, what are the changes that your distributors and retailers should expect as you move forward?

TM: In the past, we took all the opportunities that presented themselves to sell the greatest number of watches possible, whatever the sales point, even to the risk of altering our image. The concept of 'refinement' obliges us to rethink our distribution network and to avoid any deviation from our strategy. At present, almost no Seiko watches are available on parallel markets. We have cleaned our network from top to bottom and have greatly improved its quality. The qualitative improvement in our distribution is a corollary to the 'refinement' of our product offer.

ES: By this, do you mean that we should expect to see Seiko moving upmarket?

TM: Certainly. And, it is a road that does not worry me. We are following our natural road. You know, the perception of Seiko in Japan is very different than in the rest of the world. In Japan, we sell extremely sophisticated and expensive mechanical collections such as the Grand Seiko and Credor lines that can reach US$10,000. We also sell watches ranging from US$150 to US$600. Abroad, on the other hand, Seiko is primarily considered as a brand of comparable quality, which offers excellent products that are less expensive than those made in Switzerland. It is a double-edge sword. If it is a definite advantage that consumers see Seiko as having an excellent price/quality ratio, it is also a disadvantage that they expect, at the same time, to pay less for a Seiko than another watch. This is a handicap, especially for a company like ours, which in fact offers haut de gamme timepieces. The perception of consumers around the world is too diverse. Some see Seiko as an inexpensive brand. Others admire the high level of technological inventiveness. Still others consider it the symbol of Japanese industrial design. To this diversity, there is only one answer, and that is to have only one and the same strong identity!

ES: You speak of your capacity for innovation. You talk about your mastery over the mechanical watch. You demonstrate your potential in terms of production. But how can these different parameters converge to give birth to the Seiko of the future?

TM: We introduced the Kinetic technology and have mastered all its developments. We developed the Spring Drive technology and mastered its developments. Objectively, these technologies are revolutions and represent perhaps the future of watchmaking. But we don't sell a product solely based on its technology. That is not why a consumer buys a watch. Technology is important but the customer will make his decision based more on the design, finishing, attractiveness and overall image of the product. We must therefore incorporate our technologies into products that are stylistically and qualitatively attractive, and that are part of a clearly identifiable Seiko universe. Innovation is not enough by itself. We must combine fashion and technology, whether it is mechanical, ecologically responsible, or avant-garde.

ES: How does the creation of the Seiko Watch Corporation contribute to the implementation of this new strategy?

TM: When I analyse the history of the company and try to understand what caused the decrease in our growth at the end of the 20th century, I realized that we did not have a precise strategy for our very important industrial pole. Thanks to their excellent results, the manufacturing units themselves were deciding their future, so well that sometimes these decisions were not going in the same direction as that desired by the watch production. The decisions were collegial and marketing was not able to impose its views. The units drew a large part of their revenues from non-watch products and moved away from the core of our industry. With the creation of the Seiko Watch Corporation, we have moved the watch back into the centre of our concerns. And, we have strengthened the organic relationship with our Epson factories, with which we now collaborate based on information coming back from the markets. We have passed from a purely industrial culture to a leadership role in marketing.



1. The watch production line at Morioka Seiko - probably the largest in the world.

2. CREDOR FIFA WORLD CUP SKELETON
Limited Edition of one piece with a chronograph movement and a power reserve indicator.


Europa Star Magazine
Aout - Sept. 2003 issue