WatchUSeek Watch Forums banner

1 - 12 of 12 Posts

·
Registered
Joined
·
633 Posts
Discussion Starter #1 (Edited)
Article - China: The World’s Watchmaker

Interesting article from the New York Times about one of the world's largest watch makers.

The World’s Watchmaker

By ROGER COHEN
Published: February 8, 2010

NEW YORK — I’ve been thinking about Eddie Leung. He had lunch with me the other day at his factory in Dongguan, China, and appeared wearing a black yarmulke. “All my friends are Jewish,” he said.

Leung’s a good salesman, charming guy. He makes watches, about 1.5 million pieces a year. He makes sterling silver watches for the QVC home shopping network and watches with the famous crocodile emblem for Lacoste. He makes Juicy Couture’s hot young line.

Tommy Hilfiger, Jennifer Lopez, Coach, Titan, Trump — name the brand and Leung is manufacturing their watches in China’s southern Guangdong Province, the place that is now the world’s factory.

Leung was wearing a great hulk of a watch called a Bonja. It’s big in Gulf states, where it retails for about $4,000. Leung told me he’s paid $200 for this model and that leaves him a comfortable margin. For Juicy Couture watches that retail in New York for $95, he gets eight dollars. He’s still making money on that. In general he receives about 8 percent of the retail price, or about 40 bucks for a $495 Lacoste watch.

That’s called working the nuts and bolts of the high end. His company, Dailywin Watch Products, has been doing that since 1978.

Interesting work, Leung’s, for several reasons, one being how it illustrates the power of branding. Develop a cool brand and you can charge a crazy mark-up. Even for a product like a watch that nobody needs any more. Every electronic device from a basic cellphone up tells the time. So a watch is now redundant, no more than a fashion accessory.

It’s thriving in that role. You can be all-American like Hilfiger, or very French like Lacoste. Then you get China to develop that image at low cost. Authenticity is fungible in a world where Chinese men wear yarmulkes. (An affectation that Leung said draws a laugh from his New York clients.)

The quality here is not Swiss, but it’s high — “we are at 85 to 90 percent of the quality of Swiss made,” said Matthew She, the general manager. As a longtime U.S. resident of southern China put it: “Does America have a choice of a cheaper place for a quality product?”

Short answer: nope. China has the United States about where it wants it. You can make your own calculation of President Obama’s leverage over Beijing — and it’s heading south.

The average worker at Dailywin earns about $150 to $200 a month, before overtime, ranging higher for supervisors. About 70 percent of the more than 400 workers are women, many from inland provinces, living six to a room in on-premise dormitories and sending their earnings home.

I found conditions in the factory good — clean, a groomed garden, a large canteen. I also found Leung, for all his bonhomie, in a pensive mood. It’s been a rough 18 months in Dongguan since the Great Recession began. About two million jobs have been lost in the region, including a few hundred at Dailywin. Countless factories have closed.

Leung said his sales last year were down more than 20 percent over 2008, with the sharpest drop (over 40 percent) in January 2009. After a decade of smooth expansion, this was a shock. He’s had to slash costs. Labor and raw materials are becoming more expensive. Above all, Western consumers have taken a deep breath: “Now, you don’t just buy, you are looking for quality or real necessity, or you won’t spend.”

So, I asked Leung, given all these difficulties, what do you think of Obama’s demands that China revalue its currency, the renminbi, or yuan, which America thinks is undervalued, placing the United States, in the president’s words, “at a huge competitive disadvantage?”

Leung laughed. He’s a friend of Obama’s half-brother, who lives nearby, and he wishes the president well. But business is business. “Look,” he said. “Too much of that and we lose. Even a 3 percent appreciation is not good for me. Nations act in their self-interest. If President Hu Jintao told Obama to adjust the dollar because it would be good for the world, would he do that?”

The low renminbi rate is about growth, jobs and exports. That’s the fundamental underpinning of the Chinese Communist Party’s hold on power. China came through the downturn but, as Dailywin’s difficulties suggest, it did not come through unscathed. Jobs were lost, painful adjustments made. I don’t see China risking its renewed growth to cool U.S. Congressional ire over high American unemployment.

Leung’s got to sell his watches. All the ships carrying America’s toilet paper and aluminum foil and disposable razor blades through the Pearl River Delta — Guangdong Province alone accounts for over a third of U.S.-China trade — have to keep sailing or there will be unacceptable political risk. Exports still drive 9 percent annual growth, whatever the development of the domestic market.

A dollar at 6.83 yuan keeps Chinese-made global brands with their colossal mark-ups in the global mall. That’s an imperative even mighty America battles in vain. Which is why Eddie Leung’s time is not about to run out.

:think:

http://www.nytimes.com/2010/02/09/opinion/09iht-edcohen.html
 

·
Registered
Joined
·
470 Posts
Re: Article - China: The World’s Watchmaker

Interesting articles, I knew the actual cost of watch usually 1/10 of retail cost. Similarly to the eye wear glasses 1/15 of the retail cost! o|o|o|
 

·
Registered
Joined
·
3,213 Posts
Re: Article - China: The World’s Watchmaker

They are cheap until you see the MOQ :-d OUCH!!
 

·
Registered
Joined
·
633 Posts
Discussion Starter #4
Re: Article - China: The World’s Watchmaker

:-s What's "MOQ"?
 

·
Registered
Joined
·
5,773 Posts
Re: Article - China: The World’s Watchmaker

I had read an article on him last year when many of the middle level China watch companies folded. Leung had to make a decision, so he began to upgrade his company with better quality control systems to offset laying off workers and saving labor costs. He was committed to his business and opted to produce better quality controlled watches for the name brand companies which were his clients. The article mentioned he had started in 1989 in Hong Kong and then moved his factory to mainland China for lower labor costs.

Great article! thanks for posting.
 

·
Registered
Joined
·
2,407 Posts
Re: Article - China: The World’s Watchmaker

:-s What's "MOQ"?
Minimum Order Quantity.

For the US$ 8 (wholesale) fashion watches as described above the MOQ is usually in the 1000s of pieces range - absolute minimum would be 500.
 

·
Registered
Joined
·
2,189 Posts
Re: Article - China: The World’s Watchmaker

The allergist I recently visited has done a lot of work and teaching in China, and upon seeing the Pam homage I made, commented that he had an opportunity to tour a huge watch factory there. I don't think he's in to watches (had the same simple Timex on-wrist both times I saw him), but he said virtually ANY watch you can think of were made there. I would love to be able to verify specifics, but I don't doubt a huge amount of work is done there for any number of makes. Interesting, for sure.

Clair
 

·
Registered
Joined
·
1,550 Posts
Re: Article - China: The World’s Watchmaker

thanks for the link, China wants to move up the market through fashion brands.:-d
 

·
Registered
Joined
·
633 Posts
Discussion Starter #10
Re: Article - China: The World’s Watchmaker

Minimum Order Quantity.

For the US$ 8 (wholesale) fashion watches as described above the MOQ is usually in the 1000s of pieces range - absolute minimum would be 500.
Ah, gotcha.;-)
 

·
Registered
Joined
·
6,160 Posts
Re: Article - China: The World’s Watchmaker

Interesting article.
Thanks for sharing.

No real surprises here. As long as there's not a near parity with China's currency, they'll remain our primary supplier of inexpensive consumer goods.

China is on the ascent. It's their turn.
 

·
Registered
Joined
·
405 Posts
Re: Article - China: The World’s Watchmaker

Why am I not surprised... the same with guitars, virtually all "big name" guitar manufacturers have their entry-level stuff made in China and Korea by one and the same company (Samick).
 
1 - 12 of 12 Posts
Top