THE SPENDING POWER of the middle-class Chinese consumer is widely acknowledged to be a force to be reckoned with.
China’s consumer sector is set to benefit from a structural change in income levels of the masses moving from near-subsistence to a genuine “consumer” existence, says Nomura’s Asian head of consumer research, Michael Gilmore, in his July report entitled ‘Great Leap Forward’.
Michael sees the emerging middle-class Chinese, defined as those who earn above US$3,000 per annum, impacting China’s consumer demand in a big way with their newfound discretionary income. He believes there are 60 million such consumers and that this number is set to grow seven-fold over 2005-2010.
About 5%, or 65 million, of the Chinese population buy new watches each year, according to China Center of Information Industry Development.
Time Watch Investments Ltd, watchmaker and retailer of leading Chinese watch brand, Tian Wang, is riding on China’s rising wave of consumerism.
Owns No.2 Chinese timepiece brand Tian Wang
“Tian Wang reigned as China’s top brand when it was launched in the eighties,” CFO Tommy Lo tells Michael and Financial PR managing director Kathy Zhang.
Kathy and Michael visited Time Watch’s Shenzhen plant recently. The plant operates 7 days a week and is able to assemble about 80,000 watches each month: 40,000 to 50,000 Tian Wangs and 30,000 OEMs.
Tian Wang ranks No.2 in sales volume among domestic brands after Rossini.
“Most Tian Wang watches sport men’s designs. Their look and feel is reminiscent of Rolex, but with a retail price of only Rmb 500 to Rmb 4,000,” says Tommy.
“We want the Chinese consumer who attains middle-class income level to choose Tian Wang when buying his first branded watch. A Balco purchase symbolizes his coming of age in financial prowess,” continues Tommy.
The company is targeting 2nd and 3rd tier Chinese cities with the made-in-China watch label.
A showroom at Time Watch’s Shenzhen plant showcases the entire range of over 240 designs for the Tian Wang timepiece. Tian Wang’s latest model features a pair of dragon and phoenix watches for lovers and couples.
Balco is the other brand owned by the integrated watch company, and it was introduced in 2001 to meet demand for quality Swiss-made timepieces.
By virtue of its prestigious Swiss-label, Balco retails for Rmb 1,000-6,000 per piece.
To carry a Swiss-made label, 50% or more of components in a watch have to be made in Switzerland. The watch movement also has to be cased up and inspected in Switzerland.
Balco watch movements are assembled by Ronda Ltd, maker of the Ronda quartz movement founded 1946.
Some 615 boutiques and booths in shopping malls in 35 cities all over China retail timepieces made or sourced by Time Watch.
Tian Wang and Balco watches contributed HK$180 million (21%) to Time Watch’s top-line for FY2007.
The company took a 51% stake in two watch contract manufacturers, Switzerland’s Tick Tack AG, and Hong Kong’s East Base Ltd at the start of FY2007.
The two watchmakers are original equipment manufacturers for established global brands such as POLICE, Jacques Lemans, S Oliver, Aigner, and Swiss Military.
Tick Tack is also the designer of Time Watch’s Balco.
Contract manufacturing began contributing to top-line in FY2007 with HK$228 million (27%).
Watch movements trading
Group operating subsidiary Winning Metals is a major trader of watch movements in Hong Kong and has been around since 1980.
Over 700 models of watch movements from major manufacturers worldwide are sourced by Winning Metals and resold wholesale to over 230 distributors and watchmakers worldwide.
Brands brought into Hong Kong by Winning Metals include Japan’s Seiko/ Epson, Citizen/ Miyota and Ricoh, America’s Timex, Switzerland’s Ronda, ISA/ Prestige Time and Swatch/ ETA, and France’s Epoch/ Technotime to name but a few.
Watch movements trading contributed HK$448 million (52%) to Time Watch’s top-line for FY2007.