Metal watches

	Model MW-3054 from HK Feiliu is a watch with a zinc alloy case and band, brass and copper dials, and a stainless steel back.

China makers of classic watches are seeking assistance from government and industry associations to improve their competitiveness during the economic crunch.

Exports of this type of timepiece with basic functions and enduring aesthetic appeal began slowing down in October 2008. Some companies even reported a decline of 50 percent. National authorities responded immediately in November by increasing tax rebates for watches from 11 to 13 percent.

Local administrations are also launching marketing and product development programs. For example, offi cials in Zhangzhou, Fujian province, are pooling resources to help makers attend trade shows in Hong Kong and Switzerland.

A budget of $2,940 is available to suppliers in Qingdao province who would like to advertise on international B2B media.

The government of Shenzhen, Guangdong province, is offering R&D subsidies, especially for the creation of in-house brands. The value of the endowment is 20 percent of project costs, but no more than $147,000. Short-term loans of up to $735,000 can also be approved without asset assessment. This can help factories ease cash fl ow.

In addition, companies are helping each other weather the storm.

Makers are teaming up to purchase components and packaging provisions in bulk. This allows them to negotiate a 10 percent discount from providers.

As factory activity slows, some suppliers are also looking to train employees during their free time in order to improve effi ciency. Controllers are even sent to management courses that cost about $400 per head. Two to five representatives are enrolled.

Such programs are available from industry organizations, including the China Horologe Association.

The topics are manufacturing techniques, law, fi nance and resource supervision. Classes have increased in frequency since last year. A new session is held every month instead of quarterly.

The Shenzhen Watch & Clock Association also set up an intellectual property database to encourage members to initiate design projects.

Both groups provide a support system to members by holding regular meetings among managers where they brainstorm on possible solutions to factory challenges.

China-made classic watches utilize both QA and mechanical movements. The former accounts for 80 percent of exports.

Makers are incorporating subtle design elements to enrich the aesthetics of releases. Ceramic cases and bands are popular. When used in a neutral hue such as black and white, the opaque material achieves a modern look. It can have a matte or glossy fi nish.

Subtle color accents are also added. Rose gold lends a warm touch to models that are mostly silver or black. Dark dials come in gunmetal or gray for a softer appearance. It can be complemented with bar or dot indices for a clean, uncluttered style.

For mechanical varieties, skeletonfaces are being utilized to fl aunt the workmanship of the movement.

Leather straps feature exotic patterns such as alligator.

Prices start at $1 and may exceed $15 depending on the quality of components.

QA movements are less expensive than mechanical versions. Day and date functions, and higher water resistance contribute to cost.

Metal is the most commonly used material for cases, case backs, bands, clasps and bezels. Zinc alloy is considered low-end while stainless steel and tungsten are midrange. High-end watches come in titanium, silver or gold.

Options for the dial and hands are plastic, iron, brass, copper and mother- of-pearl. The crystal is either in acrylic, glass or sapphire.

The majority of materials are sourced locally, although some suppliers purchase stainless steel and tungsten from Japan and South Korea. Imported stainless steel costs approximately $5.90 per kilogram, while the domestic counterpart is $3.70.

Conversely, imported movements are the mainstream for export models. They represent about 70 percent of shipments. Japan-made varieties are between $0.45 and $15, while those from Switzerland start at $0.50. The least expensive locally made mechanism is $0.29.

The radical increase of the value of the yuan and material costs in mid-2008 cut profi ts of roughly 10 percent per piece by half. Manufacturing inputs have since retreated to the past year’s lowest levels. This, combined with the prevailing currency stability, is prompting makers to uphold quotes.

The exception is for prices of designs with ETA-brand ebauches, which increased by 12 percent in February due to limited supply of the component.

China is home to 300 exporters of classic watches, more than 80 percent of which are locally owned. The rest is foreign-invested.

The supplier base shrank by at least 5 percent in 2008 because of sluggish demand. Most factories that closed were small makers that carried out assembly for large companies. Fewer orders mean that the latter are able to fulfill deliveries without the need for subcontractors.

Small plants have fewer than 200 workers, five of which are product development specialists who create samples and guides for assembly. All components are outsourced.

QC inspectors compare the appearance of output with approved prototypes.

Operations with up to 500 employees are considered midsize. The R&D department usually has 10 members.

Manufacturing includes the processing of case, band, dials and hands, as well as assembly. A few can even make QA movements. Apart from visual and tactile checks at all stages of production, many have machines for testing the durability of straps. Examinations for water resistance are either done in-house or subcontracted. Materials are purchased only from ISO 9001:2000-certified suppliers to ensure quality.

The number of workers at large companies can reach 2,000, with about 50 assigned to R&D. The design and production of most components are done in-house.

Laboratories contain equipment for analyzing strap durability, timing accuracy, water and shock resistance, and thickness of electroplating.

Other tests are subcontracted to third-party institutes such as SGS and Intertek on request.

Regardless of size, the majority of makers offer various types of timepieces, including multifunction, sports and fashion watches, and clocks.

The cities of Shanghai and Tianjin, and the provinces of Guangdong, Fujian and Zhejiang are the main sourcing centers.

Nearly all output from Guangdong consists of midrange QA watches fitted with Swiss and Japan-made movements.

Fujian companies usually produce low-end and midrange models with the clockwork made in-house. In fact, the province generates 55 percent of the global output of movements.

Yiwu in Zhejiang is home to traders with subcontractors from Guangdong. Low-end designs with domestic or Japan-made movements dominate.