President's Foreword





Foreword

For many of our member colleagues, the business environment in 2010 to date has been full of challenge. We have just marked the second anniversary of the financial tsunami set off by the Lehman Brothers saga in 2008. Although the global financial markets experienced a great rebound in 2009, Hong Kong’s timepiece export trade sustained a continuous decline during the same period.

According to statistics, the total value of Hong Kong’s timepiece exports in 2009 reached 43.73 billion Hong Kong Dollars, down by 20.8% compared to 2008. In contrast, the total value of timepieces exported from Hong Kong during the first 5 months of this year topped 20 billion Hong Kong Dollars, an about-turn rise of 20.5% compared to the same period last year; moreover, exports destined for Mainland China recorded an even higher rebound of 33.7%.

However, just as export volumes were beginning to pick up, word came of a multi-national debt crisis in Europe, causing a drastic decline in the Euro exchange rate against the US Dollar, which seriously affected European buyers’ purchasing power. Statistics show that from January to May this year, the proportion of Hong Kong’s timepiece exports to European markets dipped by 1.9% compared to the same period last year. The European market is the largest export destination for Hong Kong’s timepiece industry, and the debt crisis on this occasion has thus exerted a not inconsiderable impact on the local industry.

In addition, the expose of the Foxconn incident in May of this year set off a precipitous rise in line-worker’s wages in China. This development has been likened to adding salt to the wound for many industry players, whose operating margins were already paper-thin. The continuously rising wages have also boosted inflationary pressure on the Mainland, so that a rise in Mainland interest rates is widely expected to be merely a matter of time. Meanwhile, the financial tsunami has caused a large number of upstream industry players to go out of business or to cut back production; given the current rebound in demand, problems related to the extreme tightness in the supply chain are bound to appear. Another recent development has been the resumption of the turning of the great wheel of RMB revaluation.

The various difficulties outlined above have been putting a damper on the business activities of many industry colleagues; those who have persevered are working assiduously to find their own paths to survival. I have summarized a few salient points as follows: (1) The ability to implement a transformation from contract/OEM manufacturing to the sales model of distributing proprietary labels; (2) Putting an emphasis on technical R&D and innovation, enhancing added value in the product line; (3) Timepieces have evolved from utility items to outfit accessories, so that in order to achieve good sales, designs must closely follow fashion trends and popular styles; (4) Good staff training is imperative, with market acumen required at all levels in the company; (5) The younger executives in the company still need to keep in close touch with the preceding generation of entrepreneurs when it comes to developing new business models, in order to avoid exposing the company to excessive risk.

Faced with the situation of continuing economic slump in Hong Kong’s main timepiece export markets, the Mainland market has benefited from domestic stimulus policies, with the result that domestic consumer demand is growing. The population of more than 1.3 billion in China offers a market potential of enormous proportions. In the 30 years since the initiation of reform and opening inside China, Mainland people have amassed no mean measure of wealth, and the demand for consumer items is growing day by day. Their expectations for product quality and brand labels are also continuing to rise. I note that many industry colleagues have been using their resources to forge their own proprietary labels and to develop their domestic Mainland markets. To this end, the Association will certainly endeavour to win further support from the governments of China and Hong Kong and to strengthen intellectual property protection, thereby supporting the industry’s development in this fiercely competitive market.

I am most honoured to have been elected the 42nd President of the HONG KONG WATCH MANUFACTURERS ASSOCIATION. I look forward to carrying on the excellent traditions maintained by my predecessors, and to continuing to work with each of the current board directors to serve our members. Moreover, I also anticipate receiving the full support of our members, which has been and will continue to be invaluable in enabling the business of the Association and its various members to grow and flourish. Finally, I would like to take this opportunity to wish each member prosperous business and good health!


Mr. Paul So, President
Hong Kong Watch Manufacturers Association