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ABSTRACT
This research report presents a strategic analysis of Hong Kong's and the
PRC's timepieces industry. The study revealed that although North America, Western
Europe and Japan together consume more than half of the timepieces produced by the
world annually, their market attractiveness is on the decline as these markets are
nearly saturated and market growth is minimal. The study also revealed that the
mechanical watch is in the decline stage while the digital LCD watch is in the early
maturity stage.
Only the quartz analog watch is still in the growth stage and
constitutes an attractive market segment in the future. In these major markets, the
consumers are moving up-market rapidly. Hong Kong, which so far follows the cost
leadership strategy to become the largest volume producer of low end timepieces,
needs to revise its strategy since it is no longer the lowest cost producer. Most local
watchmakers favor the idea of moving up-market but the competitive arsenal to
compete directly with Japan and Switzerland seems to be lacking. Meanwhile, the
PRC intents to become a market leader in the low end market. However, it faces
many problems, mostly in product design and marketing areas. The study suggests
that a strategic alliance between Hong Kong and the PRC can help each party to
achieve its goal. Hong Kong shall adopt the best-cost producer strategy while the
PRC shall adopt the lowest-cost producer strategy. The study suggests that, with the
strategic alliance formed, Hong Kong should put its effort on product differentiation.
The aim is to match its rivals, Japan and Switzerland, on all product attributes. The
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PRC shall put its effort on attaining self-sufficiency in producing all components and
raw materials used in timepieces manufacturing. The aim is to achieve the lowest cost
of production. With this division of labor, Hong Kong shall take care of the PRC's
product design and marketing areas so that their products will have competitive
product attributes to excel in the lowest end market. In return, the PRC shall act as
a reliable supplier of low cost components and raw materials for Hong Kong. The
result will be that Hong Kong can eliminate the bargaining power of Japan and
Switzerland as Hong Kong's supplier of key components. Hong Kong can then
compete directly with them in the same market segments, selling comparable products
at a lower price. The PRC can dominate the low end segment by selling marketable
products at the lowest price. The report ends with a summary of business and
functional strategies for Hong Kong and the PRC.