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Watches industry Report

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Content
Copyright Notice.......................................................................................................................................................... - 3 -  1  1.1  1.2  1.3  2  2.1  Overview of Watch Industry ...................................................................................................................... - 4 -  Definition of Watch Industry....................................................................................- 4 -  Watch Industry Certification....................................................................................- 4 -  Regulations on Production and Export Trade of Watch Industry ...........................- 4 -  Current Status and Prospect of Watch Industry .................................................................................. - 5 -  Current Status of Watch Industry............................................................................- 5 -  Historical Export Revenue..........................................................................................- 5 -  Modes of Export Trade ...............................................................................................- 5 -  Export Price of Products.............................................................................................- 6 -  Major Producing Areas ...............................................................................................- 6 -  Introduction to Major Products in Watch Industry...................................................- 6 -  Watches with their cases made of precious metals or metal clad with precious metal- 6 -  Watches apart from watches of precious metals, pocket watches and other watches- 6 -  Watch movement .......................................................................................................- 7 -  Watch cases, watch straps and accessories thereof .................................................- 7 -  Major Export Destinations of the Watch Industry ...................................................- 7 -  Analysis on International Market Demand of Watch Industry ................................- 8 -  Star Enterprises in Watch Industry .......................................................................- 10 -  Prospect of Watch Industry ..................................................................................- 12 -  Analysis on Characteristics of Alibaba Watch Industry Buyers .................................................... - 13 -  3.1  3.2  3.3  3.4  Continent Distribution of Buyers...........................................................................- 13 -  TOP 5 Countries/Regions with Most Buyer Feedback .........................................- 13 -  TOP 30 Most Searched Keywords .......................................................................- 14 -  Representatives of Alibaba Watch Industry Buyers (Partial)................................- 15 - 

        2.2          2.3  2.4  2.5  2.6 
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Copyright Notice
Alibaba.com Hong Kong Limited ("Alibaba.com") respects and rigorously abides by intellectual property laws. Accordingly, Alibaba.com rightfully expects the same of all parties who use this www.alibaba.com website (“Site”). Alibaba.com and/or its affiliates are owners or lawful licensees of all content (including but not limited to designs, logos, color schemes, graphic styles, text, images and videos) displayed on this website. Any unauthorized copying, publication, reproduction or distribution of copyrighted works is an infringement of the copyright owners' rights and is therefore prohibited. Any unauthorized use of Alibaba.com's patents, trademarks, service marks, logos, slogans, screen shots, graphic styles, designs, copyrighted materials or any branded features ("Alibaba Proprietary Property") without the prior written permission of Alibaba.com is strictly prohibited. If you infringe upon Alibaba.com's rights with respect to any Alibaba Proprietary Property, you will be ordered to cease such illegal activity and you will be strictly liable to Alibaba.com for any and all damages (including recovery of attorneys' fees) which may be suffered and/or incurred as a result of your infringement. If you are a legitimate copyright owner who believes that your rights have been infringed upon in any way through the content or services provided on this website, please notify us at: Alibaba.com Hong Kong Limited c/o Alibaba.com Hong Kong Limited Room 24F-05 Jubilee Centre 18 Fenwick Street Wanchai, Hong Kong Telephone No. (852) 2215 5100 Facsimile No. (852) 2215 5200

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Overview of Watch Industry
1.1 Definition of Watch Industry

By production process, watches can be classified into mechanical watches, radio controlled watches, and digital watches. By functions, it can be grouped into commercial watches, leisure and fashion watches, and sport watches. Generally, watches mainly includes wrist watches, quartz watches, fashion watches, sport watches, digital watches, mechanical watches, stopwatches, pocket watches, LCD watches, plastic cement watches, antique watches, multifunctional watches, and cartoon watches. 1.2 Watch Industry Certification As to watch industry certifications, different countries have their own standards, but most of these certifications are focused on product quality and safety. The followings are some of the most representative certifications: Logo Certification Institution Remarks Test whether products are in conformity with directives of Europe and New Approach to CE EU Technical Harmonization and Standardisation in aspects such as safety, sanitation, environmental protection, and consumer protection. Test whether the content of six RoHS EU harmful materials standard. The agreement of Product includes quality and metrology Quality Certification and Safety Certification BSI UK as testing, standards, and cooperative agreements such assurance, certification substances exceed in the raw set

(including legal metrology). Test the EMC QI of electronic and electrical products.

EMC

EU

1.3 Regulations on Production and Export Trade of Watch Industry

As the EU ROHS directive the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment in July, 2006 has come into effect, while testing whether a batch of finished watches are in conformity with the directive costs between RMB 8,000 and 20,000, the average cost for producing a watch increased by approximately 15%, which affected export of watches in China. In 2007, China exported 5542 watches to EU, declining by
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11.8%, and exported 110 million watches to USA, declining by 5.1%.

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Current Status and Prospect of Watch Industry
2.1 Current Status of Watch Industry In recent years, the watch market in China has been heating up. The high-end watch market has an

outstanding performance. Its sale in the first quarter of 2006 was RMB 450 million, increasing by 36.4% compared with the previous year. As to the high-end market, according to the latest survey carried out by Shenzhen Watch Industry Association, import volume of finished watches of precious metal and of metal clad with precious metal in the first half of 2007 increased by 270% compared with that in the same period of the previous year with the export value increasing by 171%. The average unit import price for these finished watches is over USD 2000. There are over 200 domestic and import watch brands among which over 60 are import brands including OMEGA, RADO, LONGINES, ROLEX, TISSOT, TUDOR, TITONI, ENICAR, and CITIZEN. The domestic brands include FIYTA, EBOHR, ROSSINI, TIAN WANG, POSCER, and KINGTIS. Historical Export Revenue In recent years, export of watches in China has developed rapidly, particularly in 2004. The export of reached USD 1.36 billion. However, export volume of watches declined slightly since then and rose again in 2007. According to statistics from China Customs, export revenue of watch products in China from January to December in 2007 was USD 1.62 billion, increasing by 29.6% compared with the previous year.

Modes of Export Trade In 2007, China exported 520 million watches through processing trade, declining by 6.8% and taking up 81.3% of the total export volume of watches in the year. The number of watches exported through general trade was 64.51 million, declining by 22%. Export volume of storage of transit goods in bonded warehouses and inbound and outbound goods in bonded warehouses was 49.18 million which was same as that of last year.

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? Mode s of Export Trade
Processin g trade 81%

Others 4%

General T rade 15%

Export Price of Products Most of China’s exported watches are electric watches, among which, electric products with only mechanical indicators account for over 70% of the export volume. In 2007, export volume of such products was 450 million, decreasing by 7.9%.; the average unit price was USD 1.9, increasing by 40.8%. Export volume of electric products with only photoelectric displays was 120 million, increasing by 4%; the average unit price was USD 1.1, increasing by 17.7%. Export volume of the other electric watches was 44.05 million, declining by 36.7%. The average unit price was USD 2, increasing by 57.9%. Major Producing Areas

China is one of the largest manufacturing countries of watches. The watch industry in China has formed a cluster-type development structure with small-and-medium-sized enterprises as its main body. Private enterprises and foreign-funded enterprises are expanding rapidly (taking up over 70% of all the enterprises in China). Six major producing areas have been formed, which are the Pearl River Delta in Guangdong, Fujian, Zhejiang, Jiangsu, Shandong and Tianjin. 2.2 Introduction to Major Products in Watch Industry Watches with their cases made of precious metals or metal clad with precious metal Export revenue of finished watches of precious metals or metal clad with precious metal reached USD 5.63 million in 2005 while declined by 23% in 2006. In 2007, export revenue of this category of finished products rose again to USD 6.65 million, increasing by 45.2% compared with the previous year. Hong Kong is the major export destination of these products and USA, France, and Japan follow behind.
Export Revenue (Unit:100 million US$)
6.65 5.63 4.58 3.64

Major Export Destinations
US 25%

France 12% Hong Kong 52% Jap an 5% Oth ers 6%

2004

2005

2006

2007

Watches apart from watches of precious metals, pocket watches and other watches Though export revenue of products belonging to this category kept declining in the past few years. It rose rapidly in 2007 to USD 1.19 billion, the peak in recent years, increasing by 26.6% compared with the previous year. Hong Kong is the major export destination of these products, taking up 55.3% of the market share and USA, Japan, Germany and Spain follow respectively.

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Export Revenue (Unit:100 million US$)
11.90 10.00 9.50 9.40

Major Ex port Destinations
US 17% Jap an 6% Germ any 3% Hong Kong 55% Spain 2% Others 17%

2004

2005

2006

2007

Watch movement Major export destinations of watch movements are Hong Kong and Switzerland, accounting for 65.4% and 16.3% of the total export revenue. Due to the increasing export of finished watches in recent years, export of watch movements has been dropping. In 2007, its export revenue was only USD 130 million, declining by 38.5% compared with that in 2004.
Export Revenue (Unit:100 million US$)
1.80 1.50 0.90 1.30

Major Export Destinations
Switzerland 16%

Hong Kong 66%

Japan 12% US 3%

2004

2005

2006

2007

Others 3%

Watch cases, watch straps and accessories thereof Export of watch cases, watch straps and accessories have remained a steadily growing trend. They grew fast particularly in 2007 with an export revenue of USD 259 million, increasing by 36.3% compared with the previous year. Hong Kong is still the major export destination of these products, taking up 75.4% of the market share and Switzerland, Japan, Pakistan follow behind.
Export Revenue (Unit:100 million US$)
2.59 1.56 1.72 1.90

Major Export Destinations

Hong Kong 75%

Switzerland 13% Japan 3% Pakistan 2% Others 7%

2004

2005

2006

2007

2.3 Major Export Destinations of the Watch Industry Watches in China are mainly exported to Hong Kong and the USA. In 2007, export revenue of watches exported to Hong Kong was USD 950 million, accounting for 59.1% of the overall export revenue in 2007. Other major export destinations are USA, Japan, Switzerland and Germany, taking up 13.4%, 6.4%, 4% and 1.9% respectively.

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Major Export Destinations
Hong Ko ng 60% U S 13%

Japan 6% Switzerland 4% Germany 2% Others 15%

2.4 Analysis on International Market Demand of Watch Industry USA USA is one of the largest markets in the world. In the past few years, the USA market has kept expanding. With wider and wider name recognition of watches (high-end watches in particular) in the USA, retailers and brand vendors have had seen a increase in business volume. According to surveys, apart from the lowest-end products (at a price between USD 150 and 299.99), sales of other products has had an increasing trend. Products at a price between USD 5000 and 9999 have had the largest growth rate of 19%. Growth of watches at different prices Unit price(USD) 150-299.99 300-499.99 500-799.99 800-999.99 1000-1499.99 1500-2999.99 3000-4999.99 5000-9999.99 10000Total Market share(10 thousand) 65259 57646 25712 13089 22051 56639 65345 83276 93587 482604 Growth rate -1% 13% 10% 7% 11% 10% 4% 19% 14% 4%

According to statistics, import value of watches in USA in 2007 was USD 3.88 billion, increasing by 12.46% compared with that in the previous year. The growth rate is the greatest in recent years. Its major import source is Switzerland, taking up 54.2% of the market share which is over half of the total market in USA. Japan, China, Thailand, and Hong Kong follow behind respectively.
Export Revenue of China's Watch Industry (Unit:100 million US$)
31.80 33.60 34.50 38.80

Major Export Destinations of China's Watch Industry
Japan 25% Switzerland 61%

Thailan d 4% Hong Ko ng 3% Others 7%

2004

2005

2006

2007

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Fashion trends of watches in USA In USA, both men and women’s watches have a tendency to become larger Larger watches and larger. Watch manufacturers redesigned their original watches or brought out new larger watches. This trend of wearing big watches also exists in other places in the world apart from USA. Mechanical watches are now enjoying great popularity in USA. High-price Mechanical watches watches sell better than any time before. The expansive watches with complex workmanships have gained the most rapid growth. Development of high-end watch business is extremely good and customers express great interest in high-end mechanical watches with complex workmanship. Diamond watches are extremely popular now. To most watch brands, a watch Diamond watches with diamonds sells better than a watch that is of same type but without diamonds even though the watch with diamonds is much more expensive. Men’s diamond watches are becoming more and more popular while women’s diamond watches still take the largest sales proportion. With some new emerging sport watch brands, sport watches have taken up Sport watches an important market share in USA. These “able to do anything” watches are fashionable in that the wearer need not to worry about the watches regardless of where they go or what they do. In order to succeed in the USA market full of intense competition, watch Individualizatio n manufacturers must do something alluring and unique. It is not enough to only to “imitate” products. People are willing to buy limited edition watches or sold in a limited amount. This gives them a sense of exclusivity and they can show their uniqueness with something that other people don’t have. Hong Kong Hong Kong is one of the regions with a relatively large demand for watches. Some of the watches are for local consumption while a larger proportion is for intermediary trade. Import value of watches in Hong Kong dropped by 7.6% in 2006 while increased rapidly in 2007 with the import value as much as USD 4.76 billion, the peak in recent years, increasing by 25.26% compared with the previous year. Its largest import sources are in order, China, Switzerland, Japan, Singapore, and Thailand.
Import Revenue (Unit:100 million US$)
47.60 39.40 40.90 38.00

Major Import Sources
Sing ap ore 2% Netherlands 3% Others 7% Switzerland 35%

Japan 15% China 39%

2004

2005

2006

2007

Japan Japan is a large manufacturing country as well as a large consuming country of watches. In recent years, import of watches has kept a steady growing trend. Its import value of watches in 2007 was USD 2.01 billion, increasing by 5.8% compared with that in the previous year. Its major import source is Switzerland, taking up over 70% of the market share and China, Hong Kong, and Thailand follow in sequence. China, as the second
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largest trade partner of Japan for watches, has great export potentials.
Import Revenue of Japan's Watch Industry (Unit:100 million US$)
15.70 17.80 19.00 20.10

Major Import Sources of Japan's Watch Industry
China 15% Ho ng Kong 4% Thailand 1% Others 6%

2004

2005

2006

2007

Switzerlan d 74%

Singapore

Singapore has a small population. Consequently, the general scale of the consumption market is not very large, but it holds a premier position in Asia as to aspects of import & export volume of watches, transit trade and sales of high-end watches. Though Singapore doesn’t produce watches in large quantity, the watch industry in Singapore has extensive contacts and business transactions with many famous watch manufacturers in the world, hence being able to provide customers with choices of diversified products at competitive prices. Singapore has now become an important watch trade center in Asia with various brands and a wide range covering high, middle and low-end products. The high-end and luxurious watch market is very active. Singapore also takes a large market share. 2.5 Star Enterprises in Watch Industry Domestic Star Enterprises
Star enterprises in watch industry in China Shenzhen Fiyta Holdings Ltd. TIAN WANG Electronic (Shenzhen) Co., Ltd. Ebohr Luxuries International Ltd. Tianjin Seagull Watch Group Co., Ltd. International Star Enterprises World-renowned watch enterprises It’s the largest Swiss watch manufacturing Swatch Group company possessing famous brands such as OMEGA, LONGINES, and SWATCH. In the 1920s, Rolex produced the first waterproof watch which was officially ROLEX registered In 1926. The design style of Rolex has always been “dignified, practical and avoiding flashy” which is popular with people from all walks. Established in 1919, Titoni specializes in manufacturing TITONI automatic mechanical watches and is one of the rare independent family watch-making enterprises. It is located in Grenchen which is the center of
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Shenzhen Rarone Watch Industry Co., Ltd. Zhuhai Xonix Electronic Co.,Ltd. Guangzhou Timemix Clock& Watch Co., Ltd. Zhuhai Gree Rossini Watch Industry Co., Ltd.

watch

manufacturing

industry

and

possessed and operated by the establisher Schluep family. Citizen was established in 1918 and is engaged in developing and manufacturing CITIZEN of watches. The first watch it produced in 1924 which was named by mayor of Tokyo at that time as “CITIZEN” which means all citizens in the world. Richemont is a Swiss luxuries company established by Anton Rupert, a South Richemont Group African billionaire in 1988. The company owns famous watch brands including Cartier, Van Cleef & Arpels, Vacheron Constantin, A.LANGE & SOHNE, Jaeger LeCoultre, Panerai, IVC and Piaget. • Switzerland------taking up 99.6% of the high-end wrist watches in China In 2005, export revenue of Swiss wrist watches broke CHF 12.3 billion (about USD 9.6 billion), increasing by 11% compared with that in the previous year. Finished watches and high-end wrist watches have the greatest export profits. China is one of the traditional export markets of Swiss wrist watches. At present, Swiss wrist watches have taken up 99.6% of the high-end wrist watches in China. Export revenue of Swiss watches exported to China last year was as high as CHF 351.3 million, increasing by 25.7% compared with that in the previous year. The increase in export value of Swiss wrist watches exported to China in 2005 was much higher than the average increase in the world market. China is the only market with an average annual growth rate as high as 17.5% in the global export market of Swiss high & middle-end wrist watches.
Export Revenue of Switzerland's Watch Industry (Unit:100 million US$)
129.50 86.70 96.40 106.60

Major Export Destinations of Sw itzerland's Watch Industry
France 6% Italy 7% Japan 9% Others 46%

China 15% US 17%
2004 2005 2006 2007

• Japan----Asia as its largest export market In 2007, the total export volume of finished watches (including products exported from overseas factories and ports) in Japan was 71.4 million, increasing by 1% compared with that in the previous year and the total export revenue was JPY 122.2 billion, increasing by 7% compared with that in 2006. Quartz analog watches took up the largest proportion in export volume and export revenue which were 68% and 77% with a increase compared with that in the previous year. Export volume and revenue of digital quartz watch dropped compared with that in the previous year, taking up 27% of the total export volume and 11% of the total export revenue. The export volume and revenue of mechanical watches were the same as those in 2006, taking up 5% and 12% respectively. As to export market, Asia is the largest export market of finished watches in Japan. The export volume
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and export revenue to Asia in 2007 took up 42% of the total export volume and 29% of the total export revenue, which increased compared with that in the previous year. Its second largest export market is North America. Both the export volume and export revenue to Asia in 2007 were lower than those of the previous year, taking up 20% and 25 respectively in the total export volume and total export revenue. Europe is the third largest export market. Japan’s export volume to Europe in 2007 was 16% of Japan’s total export volume which was the same as that in the previous year. Japan’s export revenue to Europe took up 22% of the total export revenue, declining by 1% compared with that in the previous year.
Major Import Sources of Japan's Watch Industry (Based on the amount) Midd le and
So uth America 9% North Am erica 20% Asia 42% Middle East 11% Oceania 2% Europe 16%

Major Import Sources of Japan's Watch Industry (Based on the Price)
Middle Oceania East 4% Middle and 9% South America 9% North America 23%

Europe 27%

Asia 28%

2.6 Prospect of Watch Industry Though the watch industry in China has achieved great development, it should not be ignored that credit worthiness and influence of Chinese enterprises and brands are still very low in the international market. There also exist some problems in the watch industry. The transformation of the industry lags behind upgrade of consumption structure and there is acute structural problems of watch products. The overstock of middle & low-end products is very serious and the productive capability is excessive. There is a lack of effective supply to meet the demands of high level consumers and high-end famous brands products with high technological content and good quality remain dependent on import from other countries. Therefore, the watch industry in China is now in need of speeding up its technology development and innovation, developing enterprise’s core technology, improving product quality, manufacturing top quality domestic watches, adjusting product structures, adapting to the market changes, building up competent staff, and recruiting and training talent, so as to enhance the international competitiveness of the watch industry in China.

The eleventh five-year plan has clearly defined the aim of the watch industry and formulated corresponding policies and measures. The plan also looked into the future that in 2015, the watch industry in China will become one of the best production countries of watches in the world and reach the level of countries with a developed watch industry in the aspects of market share, export trade value, variety structure, level of techniques and technology, and marketing method. It will have an important influence in the global watch industry.

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3

Analysis on Characteristics of Alibaba Watch Industry Buyers
3.1 Continent Distribution of Buyers
Distribution of global buyers via Alibaba
Middle and South America Oceania 4% 5% Africa 5% North America 27% Middle East 8% Europe 30%

Hong Kong, USA and Japan are major export markets of China’s watch industry. In the distribution of Alibaba

Asia 21%

buyers, 48% which is about half of the market share are from these regions. They have great potential for market development.

3.2 TOP 5 Countries/Regions with Most Buyer Feedback Continent Country/region United Kingdom Europe Spain France Germany Poland Australia New Zealand Oceania Fiji Guam United States Minor Outlying Islands Central & South America Brazil Argentina Venezuela Peru Guatemala North America United States Canada Mexico Middle East Asia Africa Continent Country/region South Africa Egypt Nigeria Kenya Benin Hong Kong India Singapore Philippines Malaysia Iran, Islamic Republic of Turkey United Arab Emirates Israel Saudi Arabia

Note: The above data quoted are from Dec.1, 2007 to May 31, 2008.

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3.3 TOP 30 Most Searched Keywords
Rank of Hotest buyer-searching keywords

led watche gift watch designer watches watch winder top brand watches sports watch men's watch stopwatch chronograph watch movement watch promotional watch bracelet watch watch case plastic watch brand watch icd watch swiss watches automatic watch analog watch sport watch branded watches ceramic watch pocket watch ceramic watch pocket watch digital watch watch box stop watch fashion watch quartz watch wrist watch watch

Note: The above data quoted are from Jan.1, 2008 to May 31, 2008. Special Recommendation-----The keywords drawing great attention recently in watch industry
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Keywords drawing great attention recently in watch industry Fashion watch Wrist watch 3.4 Representatives of Alibaba Watch Industry Buyers (Partial)

NOTICE: Above all, Some Sources are from: China Customs Ministry of Commerce of the People’s Republic of China UN data statistics China Industry Research

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