Hong Kong needs watch and clock wholesale market to revive the industry
The world’s largest exhibition of watches and clocks, the Hong Kong Watch and Clock Fair, came to an end on Sept 9 after five busy trading days. The grand occasion, from the eyes of an industry insider, reminds us of Hong Kong’s imperative need for a wholesale market for watches.
During the 1980s to 1990s, Chungking Mansions in Tsim Sha Tsui was the distribution hub for made-in-Hong-Kong watches. At that time, numerous African buyers came here to purchase Hong Kong watches in bulk; they then resold them in Africa. Back then, watches made in Switzerland and other European countries were considerably more expensive while those made in Japan were also relatively expensive as manufacturers there started to build up their brands. As a result, African buyers couldn’t afford to buy those watches, and Hong Kong watches naturally became what they regarded as fine wares at low prices.
The watch industry in Hong Kong started to move production lines northward when the Chinese mainland implemented the reform and opening-up policy in the 1980s. But this didn’t affect the role of Chungking Mansions as a wholesale center, as it was difficult for African businessmen to enter the mainland before Hong Kong’s return to the motherland in July 1997. Chungking Mansions still served as the intermediary center for watches made by Hong Kong manufacturers on the mainland to tap the African market.
The situation did not change until 2000, when the mainland market became more accessible to African buyers. Mainland private companies also matured enough to take up a considerable share in the low-end watch market, becoming the new “favorites” for African buyers. These buyers bypassed Hong Kong and purchased goods directly from the mainland; hence Chungking Mansions gradually lost its position as a wholesale center for watches. By mentioning this long-past history, I am, in fact, mourning the loss of the one and only wholesale center for watches in Hong Kong.
The Trade Development Council says Hong Kong’s watch and clock exports have been declining in recent years, falling 5 percent to HK$76.7 billion in 2015 from HK$80.3 billion in 2014 and a further 11 percent to HK$68.4 billion last year. When it comes to domestic exports, the situation is even worse. Exports of Hong Kong-made watches and clocks fell 26 percent to HK$670 million in 2015 from HK$900 million in 2014 and a further hefty 73 percent to HK$180 million last year. For this industry, which is more than 90 percent dependent on exports, the plummeting decline suggests a devastatingly deteriorating business environment.
How can we change this sorry situation? Economies of agglomeration are crucial for any industry’s prosperity. Therefore, it is imperative for Hong Kong to re-develop a wholesale center for watches if it is to shore up this industry. Redevelopment of a wholesale center, of course, cannot follow the old style of Chungking Mansions, which was relatively unorganized and sub-standard; instead, we should take advantage of Hong Kong’s position as the world’s major distribution center for watches, to build a wholesale center that will be the bellwether of the industry globally.
As a matter of fact, in terms of value, Hong Kong was the world’s largest importer of complete watches and second-largest exporter of complete watches and complete clocks in 2015. The annual Hong Kong Watch and Clock Fair, organized by the HKTDC, is a major event for timepiece companies in the world, showing Hong Kong’s leading role in this industry. Aside from this, Hong Kong doesn’t have foreign-exchange controls and value-added tax while its efficient transport and logistics network ensures the swift movement of ex-import cargoes. What’s more, Hong Kong also has an all-round legal system and enjoys a strong business reputation. With all these factors combined, we’re more than ready to develop a wholesale watch market in the city.
If successfully developed, the wholesale market will serve as a never-ending trade fair, providing a trading platform for industrial players as well as a place of interest for tourists and local people to visit and shop. In the past, Chungking Mansions targeted mainly African buyers; the proposed brand-new watch wholesale center will have a much broader vision, targeting markets along the Belt and Road routes as well.
However, the development of a large-scale wholesale center cannot rely solely on the spontaneous actions of individual companies. Rather, it entails official efforts along with private endeavors. In her election manifesto, Chief Executive Carrie Lam Cheng Yuet-ngor suggests that the role of the government should not only be a supervisor and public-service provider but also a promoter and facilitator. We have high expectations for the new government to put in efforts to help rejuvenate Hong Kong’s watch and clock industry.