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[Part4]JAPAN: Radio, GPS watches allow makers to compete with the Swiss






Kunio Koike of Seiko Epson Corp. points his watch to the sky, as if aiming at a distant point in the Earth's atmosphere. Indeed he is, at an orbiting satellite too high to see.


“It's now showing Beijing time, but if I press this button it switches to Japan time,” the engineer says.


The watch's hands spin around, and after a few seconds it displays a time one hour later than the previous one.


Seiko's GPS solar watch Astron uses satellite signals to detect the wearer's current location, which makes it possible to switch to local time anywhere in the world at the touch of a button. It has been six years in the making, and Koike describes it as a world's first. “We started out by making a special GPS-receiving chip and antenna from scratch, so they would fit inside a watch housing.”


The Astron was launched at an international exposition in Basel, Switzerland, in March 2012, and went on sale in autumn of that year. The cheapest model still costs around 150,000 yen ($1,500), but a more expensive type that retails for more than 200,000 yen is the hottest item in the range.


“Up until recently, there had been a glass ceiling for Japanese watches,” says Yukinori Kato, Seiko Watch Corp. director and senior vice president. That “ceiling” was the 100,000 yen price barrier. “By incorporating new technology that the Swiss can't replicate, we've finally found a way to break through that barrier.”


In the 1970s and 1980s, Japanese manufacturers developed quartz watches and forced the Swiss watchmaking industry to the brink of collapse. However, the Swiss turned the tables in the early 1990s by enhancing their brand value. Japanese watchmakers were subsequently unable to compete with their Swiss rivals, who emphasized their adherence to tradition and a handmade ethic.


Then in the latter half of the 1990s, mobile phones grew in popularity.


“We became concerned that people would no longer need to wear watches, which made it difficult to predict what lay in store for us,” recalls Koike.


The turning point was the radio-controlled watch developed by Citizen Watch Co. It receives radio waves from transmission towers in Japan, the United States, Germany and China, and automatically adjusts the time. A solar power unit was later added, and the watch enjoyed particular success in the Japanese market.


Other companies developed watches with new features, and their prices gradually rose. “At first they were 60,000 yen, then 70,000 yen, and now they sell for over 100,000 yen,” says Yuichi Masuda, general manager of Casio Computer's watch division. “Every time new products go on the market, the top-of-the-line models sell best.”


Electronic devices usually go down in price with time, but Citizen Watch President Ryota Aoyagi points out an exception to the rule.


“Japanese watches are unusual because their price keeps rising,” he said.


A major reason is that domestic manufacturers have maintained factories within the country and safeguarded their know-how from leaking to foreign competitors, which has prevented the likes of China and South Korea from emerging as rivals.


In late August, at a Citizen factory in Iida, Nagano Prefecture, robots of various shapes and sizes were lined up along an automated assembly line 100 meters long. This entire system has been developed in-house. This particular line is for the assembly of quartz movements, which in car terms equates to a watch's engine and gearbox.


Small robots along the line take screws and ultra-thin cogs measuring less than one millimeter in length and put them together inside the watches' inner housing. Once hands and watch faces are attached, the finished movements are placed inside their cases.


Citizen and Seiko sell their movements to watch assembly manufacturers in various countries, and these two companies alone ship out more than 500 million units annually, according to 2012 figures. With an estimated 1 billion watches produced around the world each year, it is safe to assume that one in every two is equipped with a Seiko or a Citizen movement. Competition between them has driven down the cost, and low-end movements sell for less than 100 yen each. The general consensus is that a new rival will not arrive on the scene for some time.


Even so, on the flip side, there is also the dilemma that mass production of cheap movements does not lead to profit growth, no matter how many are made.


Annual shipments of watches and movements by Japanese manufacturers including Seiko, Citizen and Casio total 590 million units. Of that figure, finished watches account for 67.1 million units, as opposed to 522.9 billion movements. Even though production of movements is nearly eightfold the production of finished watches, they only represent a third of the earnings.


By way of contrast, Swiss manufacturers export only 30 million finished watches annually, with total earnings of 20.2 billion francs (2.196 trillion yen, or $22.17 billion). Their brand power guarantees that they sell well all over the world despite their expensive price tags.


Japanese watches may have broken through the 100,000 yen price barrier with the help of GPS and radio-controlled models, but they do not yet have enough brand value to compete on an equal footing with Swiss luxury watches. “How far can we enhance our brand power with technology that's unique to Japan?" asks Citizen Watch President Aoyagi rhetorically. “We're at a critical turning point.”


(The first portion of the article was written by Ikuya Tanaka, senior staff writer of The Asahi Shimbun.)





JAPAN'S WATCHMAKING INDUSTRY


Watchmaking in Japan began in the Meiji Era (1868-1912). The first domestically manufactured watch did not see the light of day until 1913, two decades after Kintaro Hattori founded Seikosha. Perhaps thanks to the Japanese aptitude for performing detailed tasks, the nation's watchmaking industry continued to develop.


In 1969, Seiko made the quartz watch commercially viable, bolstering Japan's clout in the global market. Various watch functions and designs emerged in the years that followed, such as the development of the LCD digital watch, Citizen's Eco-Drive, and Casio's G-Shock. These two companies and Seiko produce the majority of watches manufactured in Japan.


(This section of the article was written by Shinya Wake, GLOBE staff writer.)


Translated by The Asahi Shimbun AJW. More related stories available at http://ajw.asahi.com/category/globe/feature/.



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