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By Pierre-Yves Donzé (auth.)

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Extra info for A Business History of the Swatch Group: The Rebirth of Swiss Watchmaking and the Globalization of the Luxury Industry

Example text

In the 1990s, the main reason why American, European, and Japanese industrial companies opened production units in China was to take advantage of low-cost local labour for products intended for world markets, not to penetrate the domestic Rationalization of the Production System 43 Chinese market. Watchmaking was no exception, and China also became the world’s watch factory. The other event which no doubt helped convince the Swatch Group to open a subsidiary in China was the arrival of Citizen Watch Co.

Many watch manufacturers exported only naked movements (44 per cent of the total volume of watch exports in 1980),16 which were encased in Hong Kong or the main markets on which they were sold. This strategy provided a means of cutting production costs, which were high in Switzerland, and offering consumers products that matched local tastes. The design, functions, price, communication, and image attached to brands often varied considerably from one country to another, to such an extent that one cannot speak of a “global brand” during this period.

Afterwards, from the end of the 1970s onwards, product innovation, in the form of quartz watches, reinforced this competitive advantage. The examples of Hong Kong and the United States clearly illustrate this phenomenon. 4). At the time, the watch market was controlled by the Swiss, who had not yet encountered Japanese competitors. 29 Yet Swiss watchmakers gradually lost market share as the Japanese penetrated this market. 7 times in 1965 and to less than 2 in 1968. 4 Imports of watches and clocks into Hong Kong, in HKD thousands, 1960–1980 Source: Hong Kong Census and Statistics Department, Hong Kong Trade Statistics.

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