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Discussion Starter #1 (Edited)
Hi all, I have gained a lot of information from this forum, but have not posted before. However, was I wondering if any others have the same feelings as me with regards the direction the Swiss watch industry has taken?

The story started when my mother sadly died and left me a small amount of money. I decided that I would like to use some of this to buy a watch as a keepsake, so every time I looked at it I could think 'My mum bought me this'. Thing was, what watch would be appropriate? I wanted something to keep 'for best' and which would potentially last the rest of my life, so a mechanical watch seemed the way to go. It also had to not be too ostentatious or cost more than my mum would have thought 'right'.

Anyhow, I spent many hours reading up on various watches and the more I read the more I began to feel that the Swiss watch industry has become something of a confidence trick.

First of all there is the whole 'Swiss made' thing. In effect this means that the case, bracelet, dial, hands and so forth could well be made in China or other low-wage economy, along with most of the movement, but as long as 50% of the 'value' of the movement came from Switzerland and the watch was assembled in Switzerland, than it can be sold as a 'Swiss' watch. Given the comparative production costs this would seem to allow a movement to be made almost entirely in China, with a few higher value Swiss parts being added to the mix, in order for the movement to pass the '50% by value' threshold. I know there is a move to change this to 60%, but this also allows other costs to be included, such as development and design, which could conceivably see an ever lower percentage of the watch actually being engineered in Switzerland.

Speaking of movements, it seems incredible that the Swiss have managed to convince people that having an unexceptional mechanical movement available retail for under $200, such as an ETA 2824, somehow helps to justify a price tag of perhaps many thousands of Dollars. There can be no 'development costs' to pay back, given how long the movements have been in production, and they are obviously mass produced and probably never are touched by a human being. The cost to a watch assembly company that buys in its movements will naturally be much less than retail, and the cost per unit to those who make them, such as Swatch, is probably only a few tens of Dollars each. Even the cost of more up-market movements hardly reflects the premium charged for them. The rule seeming being that if movement 'B' costs $100 dollars more to make that movement 'A', perhaps because it has a chronograph function, than this justifies a price premium of at least ten times this amount for the finished product.

(As a side-issue, why is that people pay perhaps hundreds of Dollars to have these mass-produced movements cleaned and serviced? Surely it would be much cheaper to simply put in a new one when it fails?)

Then there is the whole 'special' and in-house movement thing. It seems that taking out a few screws and adding a blue finish, refitting them and adjusting the mechanism is enough to increase the 'value' of the movement many times over. In many cases one of the mass-production factories, such as ETA, will have done this extra finishing themselves for a small premium over their 'base' model. Having an 'in house' movement seems to justify an even higher premium. However, when a company like Rolex is making close on a million watches a year their movements, albeit 'nicer', are still the product of modern, low-unit cost automated production lies just as much as those made by ETA, Seagull or Seiko.

Then there is the pricing. I bought an Omega Seamaster about 10 years ago and the price today would be over two and a half times higher than it was then. I know the businesses tend to charge as much as the market will bear, but such an increase seems unjustifiable, especially given the economic events of the last 10 years.

The only real reason I can see for the Swiss being able to sell mass-produced products, very probably with a high proportion of the actual engineering work being done in low-wage economies, for such high prices, is the power of marketing. It is almost like some manufacturers realized that for some simply being able to spend $10,000 on watch is enough to justify actually spending that amount, almost irrespective of what it actually cost to manufacture the item, and so that its what they charge. This justification is bolstered by frankly laughable 'aspirational marketing' where people are encouraged to think that by buying particular watch they become James Bond (who, most appropriately, is a fictional character), or by creating associations with such as such things as motorsport or transatlantic yacht racing. This is fine I guess, but only if you are aware that you are not actually paying for a watch as such but rather the marketing campaign or image that the company is 'selling'. (And ultimately it is always the customer who pays the cost of these things). Personally, when I buy a watch I want the price I pay to more closely reflect the true cost of the engineering that went into producing it, not the cost of keeping marketing types in new BMW's or whatever.

It could be said that in many ways the Swiss watch industry is a perfect illustration of modern neo-liberal capitalism, where that the relationship between cost and 'value' is has been totally distorted. That is, the 'value' is something created by marketing men playing on people's aspirations, fears, desire for status and so forth, whilst at the same time costs are minimized in order to create every last cent of profit possible, regardless of the social implications of this, mainly by outsourcing the actual production work to low-wage economies.

Anyhow, I did manage to find a watch. Thankfully it has no associations with fictional assassins, GP racing or multi-million Dollar yachts. It is understated and tasteful, has the supposed 'cachet' of an in-house mechanical movement. It is beautifully made and gives the impression that the cost of making it was a meaningful proportion of its selling price. It was also made not in China, but that most modern of countries, Japan. I also feel that I will see fewer of them around than I do Rolex watches so it could be argued that it even has the added value of 'exclusivity' that some seem to think is worth paying a premium of tens thousands for.

I bought a Seiko SARB021. It cost me $450…

Don't be too harsh. It is my first post!
 

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Sorry to hear of your loss. Nice buy on the Seiko.

Please don't be too harsh on the Swiss watch industry. They are hardly the only industry or set of companies to rely on advertising to build their legend. As you have figured out though, some Swiss brands are more Swiss than others. There is also a fair share of innovation occuring, although not always where it is advertised to be.

Now that you have done due diligence on the industry, however, you can make an informed decision and buy a Swiss watch with the blinders off if you choose to.

Take care and I hope that your Seiko brings you as much pleasure as mine have.
 

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Discussion Starter #3 (Edited)
Thanks for your kind reply Ken.

I am sure that there is some 'honest' Swiss watches out there, even if having the words 'Swiss made' is often little more than marketing smoke and mirrors. For example, I did look at the Tissot Heritage Visiodate which was a fair price, even if it can be almost guaranteed that most of the parts are Chinese.

That said there are just so many 'Swiss' watches out there that seem to be little more than a practical joke, both in terms of their garish and tacky designs and outrageous price tags. Pointing them out is like shooting fish in a barrel, but a good example I have seen might be the Graham 'Chronofighter Oversize'. Essentially sub-$500 movement (perhaps $250 to them) in a $17,000 watch that to my eyes is hideous, even if, as the people who market it claim it "will give you an extra sensitive perception of the world." Yeah, whatever you say!

I am not denying that the Swiss industry does not produce some high-quality products (or should that be, as often as not, their Chinese suppliers) but the whole game they are playing seems to carry the potential of ruin. Surely, sooner or later people will come to view the level of out-sourcing as undermining the authenticity of the product, and the ever-increasing prices as being a joke, and what will they do if people decide that they don't actually want to be associated with a product that screams 'F1 fan' or whatever?
 

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You are mistaking the 50-60% requirement as meaning that is all the Swiss manufacturers aim for. In that respect, the watches are likely more Swiss than you think.

That Tissot is cheap not because it is largely foreign made. It is cheap because it is designed and made to be cheap and its position within a large organisation means its pricing is partly subsidized by the other brands and their profits.
 

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Thanks for your kind reply Ken.

I am sure that there is some 'honest' Swiss watches out there, even if having the words 'Swiss made' is often little more than marketing smoke and mirrors. For example, I did look at the Tissot Heritage Visiodate which was a fair price, even if it can be almost guaranteed that most of the parts are Chinese.

That said there are just so many 'Swiss' watches out there that seem to be little more than a practical joke, both in terms of their garish and tacky designs and outrageous price tags. Pointing them out is like shooting fish in a barrel, but a good example I have seen might be the Graham 'Chronofighter Oversize'. Essentially sub-$500 movement (perhaps $250 to them) in a $17,000 watch that to my eyes is hideous, even if, as the people who market it claim it "will give you an extra sensitive perception of the world." Yeah, whatever you say!

I am not denying that the Swiss industry does not produce some high-quality products (or should that be, as often as not, their Chinese suppliers) but the whole game they are playing seems to carry the potential of ruin. Surely, sooner or later people will come to view the level of out-sourcing as undermining the authenticity of the product, and the ever-increasing prices as being a joke, and what will they do if people decide that they don't actually want to be associated with a product that screams 'F1 fan' or whatever?
You could have purchased a Rolex. They're overpriced but their vertical integration can't be beat among all the Swiss companies - you could have been sure that the vast majority of parts were created in house.
 

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Realize that part of it has to do with currency exchange rates. The Swiss franc has appreciated massively vs. other currencies. So the Swiss keep making the same products for the same money (their money) and the products end up costing a few times more to us. So it doesn't come down entirely to the Swiss wanting to screw us.

Otherwise, yes, I'm on the same page as you about aspirational marketing, the cost of movements vs. cost of the watch vs. cost of servicing, etc. I think a lot of this is just par for course with luxury goods. You can easily pay $5000 for a suit, $100000 for a car, $3000 for a women's handbag, $1000 for shoes, etc., and none of these prices would be remotely justified by the products' relative quality, exclusivity, etc. It's just rich people buying expensive things for basically emotional reasons. Most of us don't have the income/assets to be exposed much to these particular markets and it's a shock when you become aware of one, i.e., with watches. At least it was a shock to me. But basically not uncommon for watches or many other products.

BTW, I think there are exceptions. In particular, Victorinox. They don't make their own movements but I think they recently built a giant Swiss factory to make their watches (which were previously made at a Breitling factory, also in Switzerland). I think they make good watches and their prices are pretty reasonable (relatively speaking) and I'm not aware of them doing any aspirational marketing or trying to rely on their "heritage."

Also, I imagine there are small companies (e.g., Nomos... and I know they're German) that make expensive watches but the prices are justified because they're small shops and that's just what it costs for them to make a watch. Not saying it's a good value for the consumer, but at least 25% of your watch's price isn't going to Leonardo DiCaprio or whatever.

Congrats on your SARB021. The last two watches I've bought have been Orients, following basically the same line of thought as you have.
 

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So where do you think your was Seiko made? The majority of it was not made in Japan. Damn them Japanese Neo-Liberal capitalists.
Dunno, why do you think it wasn't made in Japan? Of course Seiko has factories in Malaysia that make their cheaper watches and watch parts but I don't recall seeing anything about their more upmarket watches being made anywhere other than Japan.
 

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Hi mate,

I agree with most of the things you said and similar things do get on my nerves, but I don't agree on these two points:

Then there is the pricing. I bought an Omega Seamaster about 10 years ago and the price today would be over two and a half times higher than it was then. I know the businesses tend to charge as much as the market will bear, but such an increase seems unjustifiable, especially given the economic events of the last 10 years.
When you think about things like petrol (In Australia, it jumped almost 3 times in last 10 years), gold (again, jumped almost 5 times over last 10 years), cost of milk tripled, cost of electricity in Australia jumped massively even in last year or two, cost of housing jumped up anywhere between 5-8 time around Sydney.. Considering all this, a watch price jumping by 2.5x isn't too bad..


I could be said that in many ways the Swiss watch industry is a perfect illustration of modern neo-liberal capitalism, where that the relationship between cost and 'value' is has been totally distorted. That is, the 'value' is something created by marketing men playing on people's aspirations, fears, desire for status and so forth, whilst at the same time costs are minimized in order to create every last cent of profit possible, regardless of the social implications of this, mainly by outsourcing the actual production work to low-wage economies.
lol, and stock markets and shares isn't?? if I was you, I'd be blowing up about the stock market and banks way way before blowing up at the Swiss watch industry :D
 

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any industry that invests heavily in research and development is going to have a lot of money tied up in products and designs that never make it to market. In short we are paying for failed designs as well as the ones that are used. This is similar in the pharmaceutical industry and people suggesting drug prices are too high. We are likely paying higher prices because a lot of companies are investing more and more into r&d due to changes in the industry. For instance swatch limiting the amount of movements they sell to non swatch group companies.
 

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any industry that invests heavily in research and development is going to have a lot of money tied up in products and designs that never make it to market. In short we are paying for failed designs as well as the ones that are used. This is similar in the pharmaceutical industry and people suggesting drug prices are too high. We are likely paying higher prices because a lot of companies are investing more and more into r&d due to changes in the industry. For instance swatch limiting the amount of movements they sell to non swatch group companies.
I strongly disagree with you. We're not talking about bleeding edge big pharma here. Almost any complication can be easily designed by any brand that wishes to. When the complications are too difficult to make in house, they just farm them out to specialists - there are companies specializing in the creation of tourbillons for instance. These prices are going up for a few basic reasons:
1) Developing market demand growth
2) Weakend USD
3) Low elasticity of demand for luxury goods

R&D costs would be about 10,000th on this list.
 

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Don't forget the law of supply and demand. Something is worth what someone is willing to pay for it, regardless of the cost of manufacture. When there is high demand on a product, prices naturally rise (of course there are other reasons why a price might rise, but this is a significant one). It takes a firmly honest company to keep prices level even under high demand (the Stowa watch company comes to mind here).

If their are buyers out there for highly over-priced $10,000 watches, then that's what they'll sell for. Unfortunately that's just the nature of free markets.
 

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So essentially, this is just another post where the OP is bigging himself up by telling us how he knows the industry better so he bought the "better", more honest watch instead of the rest of us fools who all fell for the Swiss hype?

Swiss manufacturers pay for sponsorship and advertising and other aspects of marketing. Well, in case you didn't know, so do Seiko.
 

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So essentially, this is just another post where the OP is bigging himself up by telling us how he knows the industry better so he bought the "better", more honest watch instead of the rest of us fools who all fell for the Swiss hype?

Swiss manufacturers pay for sponsorship and advertising and other aspects of marketing. Well, in case you didn't know, so do Seiko.
Nope, sounds like a post written by somebody who has become disillusioned with the Swiss watch marketing machine. Happens to a lot of people, myself included.

Lately, when I go to European cities, they are FULL of window dressing and billboards with George Clooney wearing an Omega or Leonardo DiCaprio wearing a TAG, etc. I know where my money is going when I buy one of these watches.

The last time I went to Tokyo, I don't remember seeing a fraction of that kind of marketing being done by Seiko.
 

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Dunno, why do you think it wasn't made in Japan? Of course Seiko has factories in Malaysia that make their cheaper watches and watch parts but I don't recall seeing anything about their more upmarket watches being made anywhere other than Japan.
The Seiko Sumo is known to have a case marked 'China' despite being marked "Made in Japan." It seems likely that the same is true for other Seiko watches at the price point and cheaper.

While on the subject, "Made in Japan" is even more relaxed than "Swiss Made." To qualify for the label, the movement and watch just have to be assembled in Japan.

Sent from my cm_tenderloin
 

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I've come to understand that when it comes to watches, there is no such thing as a free lunch. A $450 watch is exactly what it is, a $450 watch - the major firms are very clever and will charge as much as the market will bear. Just because something costs $500 does not mean it plays in the same league as something that costs ten times as much. These are also luxury items that carry their own luxury cachet - there certainly isn't $8,000 of engineering that goes into a Rolex Sub-C, but they seem to have no trouble selling them because of the reputation and perceived quality. In the end, folks will pay what the watch is worth to them - a $17,000 Graham chrono might seem ridiculous, but not to someone who is wowed by the steampunk look and wants to brag to others that they are wearing a $17,000 watch. That is the whole point of a luxury item (the same goes for a $450 Seiko, which to the rest of the world, is also a luxury item).

Sure, Swiss Made is a stamp that permits companies to source parts from all over the world. I have no problem with that. In the end, I feel that folks should just purchase the design or look they like, and if it happens to be a no name brand, great. If it happens to be one of the big watch houses, also great. It's better than whipping out the cell phone to check the time!
 

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How does the entire Barcelona football team compare?
Where TAGHeuer used to sponsor and supply timing equipment to Formula 1 and where Rolex are known for their golf sponsorship, Seiko have a long connection with world athletics events.
You see just as many adverts for Seiko as you do for any other brand on billboards and in magazines in Hong Kong and recently, Grand Seiko have been making appearances on the London Underground.
Going back to Hong Kong, there are plenty of local celebrity ambassadors. In one way it is worse because Seiko seems to have and hence create and manage marketing campaigns for specific markets whereas the Swiss tend to have the one single campaign used globally.
 

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So your argument is that because you don't about it, it means it doesn't exist?

How about if you don't know about it, it means it was money wasted?


Incidentally, I did approximate sums a while ago and the TAGHeuer spend on marketing works out to average around $120-150 per watch sold.
 

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Not sure if you're trying to belittle my point or prove it for me. I can name several brand ambassadors for Omega and TAG Heuer each. I had no idea Travolta was one for Seiko.
What you do or do not know is immaterial to the fact that Seiko does exactly the same thing as everyone else. Here are a couple you probably didn't know:
Seiko Signs Hope Solo as Brand Ambassador
Landon Donovan Joins Seiko as U.S. Brand Ambassador | WATCHTIME.COM

I found those two in 15 seconds.
 
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