Seiko Corporation

views updated

Seiko Corporation

6-21, Kyobashi 2-chome
Chuo-ku, Tokyo 104
Japan
(03) 3563-2111
Fax: (03) 3535-3594

Public Company
Incorporated: 1881 as K. Hattori & Co., Ltd.
Employees: 1,546
Sales: ¥421.78 billion (US$2.93 billion)
Stock Exchange: Tokyo

The watches of the Seiko Corporation are marketed with a multi-brand strategy that includes Seiko, Lassale, Jean Lassale, Pulsar, Alba, and Lorus. From the jeweled Jean Lassale styles to the models that incorporate miniature televisions or computers, they are intended to serve a wide variety of needs. Seiko Corporation is the nucleus of the Seiko group. It is one of the world’s largest clock and watch manufacturers. In the 1989 fiscal year, Seiko produced about 109 million watches and 32 million clocks. Seiko Corporation, formerly Hattori Seiko, is the only public company of the group. Its function is to market watches, clocks, eyeglasses, and other products made by the manufacturing components of the group: Seikosha Co. Ltd.; Seiko Instruments Inc., and Seiko Epson Corporation.

In 1881, in Uneme-cho, Kyobashi, part of Tokyo’s Ginza district, Kintaro Hattori, a jeweler, established K. Hattori & Co., Ltd. Although 21 years old, Hattori was already an eight-year veteran of the business world. According to the company typescript, “A Brief History of Hattori Seiko Co. Ltd.,” it was enough experience to lead him to observe, “On a rainy day, every retail shop will have less customers. However, jewelers can make good use of these slack days by repairing timepieces and thus not waste precious time.”

Near the end of the 19th century, increasing railroad traffic produced growing demand for accurate timepieces. In 1884 the adoption of the worldwide 24 time-zone system, with its reference meridian at Greenwich near London, produced a standardization of time that further increased that demand. In 1892 Hattori established the Seikosha clock-manufacturing plant in Ishiwara-cho, Tokyo. Initially employing ten workers, the firm made primarily wall clocks, at that time, the most popular type of timepiece. In October 1893 the plant was moved to its present site in Taihei-cho, Tokyo. Two years later, the main office was moved to new facilities at Ginza that included a clock tower which stood over 50-feet high. As tall buildings were a rare sight in Tokyo at the time, the tower garnered much attention.

The firm added pocket watches to its product line in 1895. Alarm clocks were added in 1899 and table clocks in 1902. As the market expanded, the company began exporting clocks to China, and by 1912 China received 70% of Japan’s total export of timepieces. In 1913, Hattori opened its first overseas branch, in Shanghai.

To partially satisfy the growing demand for pocket watches Hattori introduced its first line of wristwatches, which were sold under the Laurel brand name. The wristwatch gained in popularity worldwide, and by the end of the World War I, had replaced the pocket watch as the standard portable time-piece.

In 1917, K. Hattori & Co., Ltd. became a public company. In September 1923, an earthquake hit Tokyo, destroying the Seikosha plant. Hattori tried to compensate hundreds of customers, who had lost a total of 1,500 timepieces left for repair, with replacement clocks and watches. In 1924, annual production was less than 10% of the 1922 output. In 1924, also, the Seikosha plant introduced the first Seiko brand wristwatch.

In 1927, Kintaro Hattori, at age 69, was honored as the imperial nominee to the House of Peers, and Hattori launched its first ladies’ wristwatch, the smallest ever produced in Japan.

Using the micro-engineering expertise acquired in its clock and watch production, the Seikosha plant began producing camera shutters in 1930. Eventually, Hattori became one of the world’s largest suppliers of camera products, although its brand names do not appear on the products.

In 1934, Kintaro Hattori died, and his eldest son, Genzo Hattori, became president. Genzo Hattori chose to satisfy market needs by adopting a unique corporate structure. It allowed private plants to develop products to be marketed by K. Hattori. In 1936 K. Hattori & Co., Ltd. marketed a total of 2.06 million clocks and watches, the highest figure since the opening of the Seikosha plant, while Japan’s total watch and clock production came to 3.54 million. In 1939 the company started marketing Braille pocket watches.

As Japan entered World War II, K. Hattori’s normal marketing activities were hindered, as reflected in the Seiko group’s 1945 production figures. Only 6,260 clocks and 13,318 watches were produced by K. Hattori’s affiliates for marketing by K. Hattori. Production was slowed in part because members of the Seiko group, like many other Japanese companies, were ordered to produce military items, such as time fuses and ammunition.

By 1953, however, K. Hattori & Co., Ltd. had recovered to its prewar sales level. In that year, the company purchased a total of 2.46 million watches and clocks from group plants, representing 54.3% of Japan’s total production, and exported 101,000 watches and clocks. By the late 1950s, the firm’s watches were gaining international attention, and Hattori had begun marketing watches in the United States and other countries. The company marketed its first self-winding wrist-watch in 1955. Utilizing conveyor-belt production technology, by 1959, production of watches then reached three million per year.

In 1964, Chairman Genzo Hattori died. Shoji Hattori, president since 1946, recognized the need for the company to strengthen its global marketing after a visit to Europe in 1962, during which he was asked if there was a watch industry in Japan. Seiko, with the reputation earned by its quartz clock, became the official timer of the Olympic Games in Tokyo, an honor previously held by the Swiss. The company supplied the games with 1,278 stopwatches, made up of 36 different styles plus the world’s first portable quartz chronometers. The sponsorship of various events, including tennis, golf, soccer, track, and other sports, resulted in increased international recognition. Its quartz technology allowed production of a full range of precision timing equipment, designed to meet the needs of sports competitions under varied conditions. This expertise has since helped the firm to become the sponsor or official timer of more than 150 international sports events annually.

Like other Japanese companies, K. Hattori employed a global marketing strategy, and looked to overseas expansion. With advertising of new styles and substantially lower prices, it successfully challenged the Swiss in Asian markets, in Hong Kong, Bangkok, and Singapore. Hattori (Hong Kong) Ltd., a new subsidiary, was established in 1968. Marketing was then directed to Britain, West Germany, France, Spain, Italy, and Greece. In the mid-1960s the United States, initially a difficult market for the Japanese to penetrate, presented an additional challenge. Rather than competing with cheap American brands or with high-priced Swiss watches, K. Hattori entered the mid-range of the market, offering jewel-lever watches with an average price tag of $50.

In 1969 K. Hattori began marketing the world’s first quartz watch, under the Seiko name. The watch resulted from a “technology contest” between Suwa Seikosha and Daina Seikosha—two K. Hattori affiliates. The new watch, Seiko Astron 35SQ, was encased in 18 karat gold and featured an accuracy within five seconds per month. Developed and manufactured at the Suwa Seikosha plant, it was launched to the Japanese market with a retail price of ¥450.000.

By the early 1970s—a few years after the introduction of the world’s first quartz wristwatch—the Seiko brand soared in popularity, and Seiko adopted the slogan, “Someday all watches will be made this way.” In 1972, Hattori marketed the world’s first ladies’ quartz watch, also made at Suwa Seikosha. A year later, it introduced the first Seiko liquid-crystal display (LCD) digital quartz watch. Also manufactured at Suwa Seikosha, the product included built-in illumination and six-digit numerical readout that displayed the time in hours, minutes, and seconds.

In 1970, the firm established Seiko Service Centre (Australia) Pty. Ltd., and Seiko Time Corporation in the United States, the latter adding a Canadian office in the following year. In 1971, the firm expanded into the United Kingdom with Seiko Time (U.K.) Ltd. Seiko Time GmbH was established in West Germany in 1972. Global expansion of the sales effort continued with the opening of Seiko Time Ltda., Brazil, in 1974; Seiko Time (Panama) S.A. in 1977; Seiko Time S.A., Switzerland, in 1978; Seiko Time AB, Sweden, in 1979; and Hattori Overseas (Hong Kong) Ltd. in 1979.

In 1975 the company introduced its plastic ophthalmic lenses. Initially, in 1977 the lenses were exported to a U.S. supplier but since 1986 have been marketed in the United States under the Seiko name. Also in 1975, the firm began marketing digital quartz chronographs.

In 1974, Shoji Hattori died, and Kentaro Hattori, Shoji’s nephew and Genzo’s oldest son, took over as president. The year 1977 saw record earnings and new products for Hattori Seiko, many of which appeared under brand names other than Seiko. The firm developed Lorus clocks for the export market in 1977. The clock line, which included a pendulum wall clock, a battery transistor wall clock, and alarm clocks, was first sold to countries in Southeast Asia. In the same year, the firm began marketing the digital quartz calculator, a digital quartz world timer, digital quartz alarm chronograph, quartz watches with 100-meter-depth water resistance, and quartz watches with five-year batteries.

In 1978, Seiko introduced twin quartz watches, with two crystals, which offered accuracy within five seconds per year, and quartz divers’ watches with 600-meter-depth water resistance, followed in 1979 by the ultra-thin quartz watch with 0.9 millimeter movement, along with the analog alarm quartz watch. In addition, K. Hattori introduced the Alba brand in Japan, which included digital quartz, and began exporting the Alba analog and digital quartz to Southeast Asia. On the other side of the globe, it began marketing the Pulsar brand watches in the United States. The United States also saw the first Lorus quartz watches in 1983.

Despite the busy production years of the 1970s, success came to a sudden halt in the 1980s. During the decade’s first few years, profits were far less than those of the late 1970s. “In a boom that has sent prices of many high-technology companies to record levels, Hattori’s shares have fallen to the mid-700-yen range (about US$3.50), barely half their top price in 1978,” reported Business Week, June 15, 1981.

The firm acquired Jean Lassale, a Swiss subsidiary, and developed a product that combined Seiko’s quartz movements with a very-thin Swiss-style case. By seeking higher profit margins from luxury products, the company expected to make up for declining profit margins on its less expensive products. The Jean Lassale purchase was part of a pricing strategy to offer a more expensive line to complement lower-and medium-priced watches and appeal to a wider range of customers.

As the yen began to rise in the mid-1980s, competition tightened and the company faced difficult times. New competitors entered watchmaking, from fashion designers to companies who bought watch parts from other watchmakers. With marketing and manufacturing handled by separate companies, trying to compete was difficult.

In 1983, the company changed its name from K. Hattori & Co. Ltd. to Hattori Seiko Co., Ltd., partly to further promote the Seiko name. Watches that featured a black-and-white liquid crystal display TV screen entered the market in 1982. The intention, according to Ichiro Hattori, was not to fill a niche for a frivolous product but to promote the company’s name and image. The success of the Seiko TV watches proved that some people liked their watches to do more than tell time. Consequently, in 1984, Hattori Seiko introduced the world’s first computer wrist watches, manufactured at Seiko Instruments & Electronics Company. At the same time, Hattori Seiko launched the world’s first LCD battery-operated, pocket color-television.

Reijiro Hattori, Kentaro’s brother, became president of Hattori Seiko in 1983. Kentaro remained as chairman. Four years later, Reijiro stepped up to chairman when Kentaro died. Ichiro Hattori, president of Seiko affiliates Seiko Instruments Inc., and Seiko Epson Corporation, also died that year. Hattori Seiko then appointed for the first time a non-Hattori-family person to the top. Shiro Yoshimura became president. In 1989 Hattori Seiko introduced a new subsidiary, Hattori (Thailand) Ltd. In an effort to prepare for a new global economy, the Seiko name was brought into heavy use throughout the world. In June 1990, the parent firm changed its name from Hattori Seiko Co., Ltd. to Seiko Corporation. As of 1990, watches accounted for 57% of Seiko Corporation’s sales; and clocks were 12.5%; jewelery was 7.3%, and opthalmalic products, personal-care-products, and other products were 23% of sales. Seiko Corporation has a market share that covers more than 100 countries, including 30% of the medium- and high-quality watch market in the United States alone.

Principal Subsidiaries

Seiko do Brasil Ltda. (Brazil); Seiko Canada Inc.; Atlantic Time, S.A. (Panama); Seiko Corporation of America (U.S.A.); Seiko Optical Products, Inc. (U.S.A.); Compagnie Générale Horlogère S.A. (France); Seiko Deutschland GmbH (Germany); Seiko Nederland B.V. (Netherlands); Seiko Sweden AB; Jean Lassale S.A. (Switzerland); Seiko U.K. Limited; Seiko Hong Kong Ltd.; Hattori Overseas Hong Kong Ltd.; Alba Time (Hong Kong) Ltd.; Seiko (Thailand) Ltd.; Seiko Australia Pty. Ltd.