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EPTE Newsletter from Japan: Watches Made in China

It was nearly 40 years ago when I got my first job as a freshman in Japan, and to celebrate my success, I bought a high-end watch made by Seiko--a large watch manufacturer in Japan. The watch was 100% mechanical, but the accuracy was incredible; it was only off by one second of the correct time over a seven-day period. The price of the watch was 50,000 yen, and my monthly salary was 57,000 yen. I justified the lavish expense by telling myself it was reasonable since I reached the status of an elite businessman (I was young). I loved that watch and wore it for over 15 years until I replaced it with a digital quart watch. The new watch was made in Japan and maintained its time accuracy within one second per month. Prices ranged between 10,000 and 20,000 yen. 

A couple of years ago, I was shopping at a department store and came across a bunch of low-priced watches. They were part of a product line from a Japanese watch company, but manufactured in China. They were pretty bland, but suited my needs. There were only two price points for these watches: 1,000 yen and 2,000 yen. The prices were determined by the countries of origin for the parts. The parts for the low-end priced watches were manufactured in China, and the parts for the higher priced watches were manufactured in Japan.

The metallic watch bands are adjusted at the store, and were included in the price. Since this took about 20 minutes, I though this labor could be the most expensive variable in determining cost. I commented to the store manager about the labor cost for such a low-priced watch, and asked him if he was making any money on my sale. He smiled and explained that the cost of the watches shipped from China is less than half of his selling price. That’s amazing! Analogue watches are made up of six main components: A tiny sliver of quartz, a metal wrist band, and a bunch of other parts--all this including assembly for only 500 yen (about US $5.00)!  

I was sold on the low prices, but I was concerned about the reliability. I hedged my bet and bought three watches for 3,000 yen, that way, if one or two of them break a back up will be readily available. It’s been well over two years, and all three are still working. I set one for Japanese time, one for Eastern Standard Time (U.S.), and one for Pacific Time (US).

I was very impressed with the quality and reliability from the watches. I wondered if the quality control measures from this Chinese manufacturer played a part in this. A common problem with the watches is a short battery life. The batteries for all three died within 18 months, much sooner than I expected. The problem was due to a poor circuit design that was not effective for the electric power consumption and it could not prolong the battery’s life to its full expectancy.

No big deal. I returned to the store where I purchased them to exchange the batteries. The cost was 525 yen for each one--more than half of the original price! The initial purchase was not substantial and the watch manufacturers are probably enjoying brisk sales because of its low price point. As the saying goes...you pay cheap, you get cheap.   

Another year is almost over. The publication department at DKN Research will be closed for the next few weeks to celebrate the holiday season. Happy Holidays to you your families!

Dominique K. NumakuraDKN Research, www.dknresearchllc.com

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Headlines of the Week(Please contact haverhill@dknreseach.com for further information on the news.)1. Furukawa Electric (Major cable manufacturer in Japan) 12/5 The manufacturer has developed a new ploymer-free carbon nanotube wire manufacturing process. The new CNT wire has 20X higher conductivity.2. Panasonic FSC (Major assembling equipment supplier in Japan) 12/6 The supplier has rolled out a new solder paste screen printer. The new printer has a short cycle time (15 seconds per board) for a broad range of sizes.3. Shibaura Mechatronics (Assembling machine manufacturer in Japan) 12/10 The manufacturer has unveiled new fully automatic chip-on-glass (COG) assembling machine, “TTC-2500,” which combines outer lead bonding and flip chip bonding.4. AUO (Major display panel manufacturer in Taiwan) 12/11 The manufacturer is actively investing in development and manufacturing activities for matrix-type OLED panels. AUO is optimistic it can improve the current low process yields.5. Pioneer (Major electronics company in Japan) 12/11 The company has unveiled the world thinnest and lightest BD/DVD/CD writer (133 mm x 12 mm x 133 mm) for Windows 8-based mobile PCs.6. Kyocera (Major electronics company) 12/12The company has introduced an atomic diffusion bonding process for a new quartz device that improves reliability.7. Panasonic FSC (Major assembling equipment supplier in Japan) 12/12The supplier has developed a new hybrid assembling process combining chip-on-glass (COG) and flex-on-glass (FOG) for mobile devices.8. Panasonic (Major electronics company in Japan) 12/13The company has begun volume production at new plant in Malaysia. The new plant includes complete processes, from wafer processing to final assembly.9. Toshiba (Major electric and electronic company in Japan) 12/14 The company will roll out a new white LED-based on GaN-on-Si structure as a lighting source. The structure is cost competitive compared to traditional sapphire-based LEDs.

10. Innolux (Major display panel supplier in Taiwan) 12/16The supplier plans to expand its global market share  from 15 to 20% with new orders of Windows 8 mobile PCs.Recent Articles from DKN ResearchTo view the complete list of DKN Research articles, click here.