Korean watch makers hope they can turn back the clock

Watch and clock making in Korea once was considered a promising business. But starting from the late 1980s, the Korean watch making industry has struggled as high quality items from Switzerland were imported and cheaper products from China and Taiwan began flooding the market.

But the industry started coming back to life three years ago with increased domestic demand. To stay a step ahead of the overseas competition, Korean watchmakers are shifting to fashionable trends to embrace a wider range of customers.

The "watch and clock street" in Jongno-gu, Seoul, where approximately 500 watch dealers, including street stalls are located, bustles with customers and retailers from outside the city. Kim Hee-kyung, who has been running a store there for more than three decades, said, "Things were difficult after the financial crisis, but they started getting better last year. Products in the 250,000 to 350,000 won range sell very well." She said the number of dealers in the area has increased 20 percent over the last 2 years.

Korea's watch making industry is coming back to life, it seems. Manufacturers are hopeful the lush days of the mid-1980s are returning. Back then, new products were snapped up by customers dazzled by the window displays. With their purchasing power increasing, Koreans spent money on status symbols, with domestic watches near the top of the list.

But after the lifting of import restrictions in 1988, low priced watches made in China, Hong Kong and Taiwan started flooding the Korean market. To make things worse, watches were excluded from a list of strategic export items that the government drafted in 1991 to diversify Korea's export base. Changing social traditions also took a toll. Large companies jumped into the market increasing supply but fewer people were getting married, pushing down demand for watches as wedding gifts. In 1980, 400,000 couples were married but only 320,000 were wed in 2001. And mobile phones with screens that display the time have made things more difficult for the watch industry.

Last year, Korea's watch sales reached 550 billion won ($470 million), a return to its 1996 level, a year before the financial crisis. Wristwatches accounted for 80 percent of total revenue.

Kim Dae-bung of the Korea Watch and Clock Industry Cooperative said, "The quality of Korean made watches has progressed to a level comparable with that of the Swiss, and recognition from consumers has also improved." He said that Korean watches are made with movement parts imported from Switzerland or Japan and domestically produced plates, bands and glass cases. These parts are also exported to Swiss watch makers. Exports last year totaled $200 million, three times the amount of 1980.

Many Korean watch makers are optimistic on the industry's future, as more people look upon watches as an important accessory rather than a time machine. Many people possess mobile phones and clocks are in most homes and offices but they seem unwilling to give up watches.

Today's fashion wristwatches are a lot different from wedding gift time pieces. They come in a variety of colors, designed with the tastes of youth in mind. People in their teens and the early 30s often purchase a number of watches and wear a different one to match different clothes and occasions. Most designs have a life cycle shorter than a year. Watches with special underwater features or functions for hikers are also very popular. Forty-five percent of watches sold at watch stores are fashion watches, meeting the demand of people in their 40s and 50s also.

"Fusion watches," with various functions, are expected to be increasingly popular. Professor Jo Sun-hyung of Dong Seoul College said on the future of watches, "Soon we will be seeing watches capable of downloading weather reports, news and other digital information. Others equipped with global positioning systems, MP3 players, digital cameras, mobile phones or even PC features will also be available."

Currently there are more than 250 watch manufacturers in Korea. Seventy of them manufacture full products and the rest make parts. The industry is lead by the "Big 4": Romanson, Orient Co., A-Dong Industrial Co. and SWC Corp. Romanson, which was established in 1988, is the largest producer, posting 40 billion won in revenues last year, including 23.4 billion in exports. Thirty percent of the companies are small shops, with revenues of less than 2 billion won. Only a handful of companies have 30 or more workers. Increasing labor and material costs are adding to their difficulties.

Foreign watch firms are expanding in Korea. With 40 percent of the market, foreign makers are aggressively opening their own stores and directly facing consumers without going through other dealers. Omega last October opened its own store in Seoul's Lotte Department Store and Cartier runs 6 direct sales branches. Park Chang-in of Swatch Korea said, "Watch makers are looking at Korea as an attractive Asian market along with Japan and China."

The biggest obstacle to Korean watch makers is imitations products of foreign luxury brands, which account for 20 percent of watches sold in Korea.


by Kim Sang-woo <goman@joongang.co.kr>


2003.01.25