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Seiko takes on the World: Japanese Dragon vs Swiss Monopoly

Seiko takes on the world banner

“Step by step walk the thousand-mile road.” – The book of five rings

Introduction

Today we will turn over a page and look at the country and the brand that has done more than just maintain traditions, but instead innovate the market and teleport it into the 21st century: Japan and their family-owned, 100% vertically integrated, billion dollar superstar company: Seiko

Seiko House Ginza
Seiko House Ginza

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Humble beginnings

The year is 1881. There is no Rolex, there is no Quartz, in fact the concept of wristwatches isn’t even fully fleshed out yet. A young man aged 21, called Kintarō Hattori, opened his first watchmaking shop. While it didn’t carry the name yet, that small store would eventually carry the foundations for Seiko.

Seiko Founder
Young Kintarō Hattori

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Following eleven years of importing, repairing, and trading watches Hattori decided to develop his small shop in 1892 by creating Seikosha, the House of Exquisite Workmanship. This marked the transition from a service company towards a manufacturing one.

The Initial success in clocks inspired Hattori to expand his product palette to also include pocket watches in 1895 and, more significantly for our story, Japan’s first wristwatch. In 1913 the Laurel was released, a design that is still alive in the current collection.

First Seiko watch

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Not a smooth ride

Any good story needs its ups and downs. Unfortunately, for Seiko, this involved them being caught in the midst of one of the highest casualty natural disasters of the 20th century. The Great Kanto Earthquake in 1923 claimed over 100,000 lives and completely destroyed everything that Hattori had built so far. Seikosha crumbled but underneath the rubble, like a Phoenix from the Ashes, Seiko emerged.

Great Kanto Earthquake

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Hattori took the business which was shattered into pieces and completely rebuilt it to become stronger, more efficient, and forward thinking. Two years following his death in 1934, with his son Genzo taking over the reigns, they managed to produce two million timepieces annually. That is more than double the output that Rolex has today.

Even World War 2 could not prevent the growth of Seiko. In 1953 they had rebuilt themselves, just like 30 years prior, to grow stronger than before boasting an annual production of 2.4 million units. At this time every second watch leaving Japan would bear their name on the Dial.

Seiko goes to the Olympics

While Seiko’s domestic growth and achievements were certainly impressive they had not yet captivated the minds of global customers. This was about to change in 1964. Following the announcement that Japan was to host the Olympics in Tokyo the heads at Seiko knew this was their golden opportunity. This was their chance to show the world what they were truly capable of.

Seiko at the olympics

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While on travels in Europe Shoji Hattori, now leading the company in the third generation, was asked the question ‘is there a watch industry in Japan?’. Having to beat the likes of Omega and Longines, Seiko became the official timekeeper of the Tokyo summer Olympics. Their approach was to deviate from their predecessors and at the same time prophetic for the future of the entire watch industry. 

Seiko had no prior experience in measuring sports activities but they would dedicate all their resources into the research and development required to do so. Their approach was one of a highly scientific nature. In total they would create 36 different models, and dedicate a total of 1,278 timepieces, and 172 personnel to time the different sports. 

Seiko research and development team for Olympic games

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This was the Olympics that would become equal parts japan-made Olympics as it was the scientific Olympics. Notably for the history of watchmaking it would be the first Olympics to successfully use quartz technology.

Seiko was successful in both creating the first portable quartz watch as well as this being the first company to successfully use quartz to measure all the different events.

Seiko set’s off the Quartz revolution

Seiko needed to prove to the world that they were at the forefront of innovation in watchmaking. In the boiler room of their research and development they created the technology that would completely shake up the Swiss watchmaking landscape.

Quartz had proven itself to be the next evolutionary step in watchmaking and the days of mechanical watches were counted. The battle was on. Who would be the first brand to produce a quartz wrist watch and be the watchmaker of the modern world?

Japanese Dragon vs Swiss Monopoly

The battle was between the two behemoths of watchmaking. On the one side you had Seiko, and on the other you had none other than the joint forces of Swiss watchmaking.

An avengers-esque team including Rolex, Patek Philippe, Omega, IWC, Longines, Bulova, Rado, and Piaget set aside their differences in recognition of the threat that posed them. 

Deck was stacked against Seiko but they fought the odds and were victorious when on December 25th 1969 they released the Seiko Astron.

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Less than 7 months later at the 1970 Basel Fair the Swiss consortium would release the Beta 21 movement. Seven months later would prove too late and this would lead to a boom in Japanese watchmaking on a global scale.

Beta 21 movement

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The Quartz Crisis

What followed was the quartz crisis. Seiko was able to develop their technology offering an objectively better product, with the Japanese quartz watch beating the Swiss mechanical in every aspect.

Ranging from accuracy to cost. In the wake of this innovation many Swiss watch brands failed to adapt to this market shift. A country that used to control 95% of the global market was almost completely wiped out.

While this is a great story, reality deviates from it a little. In reality the quartz crisis should be named the quartz revolution.

The real danger to the Swiss was not the inevitable progress of technology, but instead antiquated manufacturing processes. Sure, the technology Seiko innovated was impressive, but being able to deliver it at scale was the true ace up their sleeve.

Seiko had managed to do the impossible. They had dethroned the mighty Swiss who had controlled the market since its inception.

Learning from the mistakes of the Swiss they did not rest on their laurels and instead continued to innovate. Among those innovations were the first ever LCD watch, the ref. 06LC in 1973, as well the first Solar watch, the ref. A156-5000 in 1978.

Seiko World's first 6-digit LCD Quartz Watch Cal. 0614
 1973 – World’s first 6-digit LCD Quartz Watch Cal. 0614

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Seiko had also learned that marketing had to work in tandem with their innovation to secure their success. They continued to sponsor sports events to this day, but also integrated themselves into pop culture. Sharing the screen with top stars immortalising themselves in movies like James Bond, Ghostbusters, Aliens, Apocalypse Now, and Back to the future. They became not only the logical choice when you want a watch, but also the cool choice. The next decades would belong to Seiko.

The Seiko M516 Voice Note in Ghostbusters

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Y2K and the dawn of Spring drive

Seiko’s transformation into modernity began shortly before the turn of the millennium. The market was about to change again but in a completely different direction. The battle shifted from what watch should be on your wrist to whether there should be one at all.

The ready availability of cheap quartz watches had already called into question the need for high-end watches. Since mobile tech found its way into everyone’s pocket in the form of iPods and mobile phones what did you need a watch for anyway?

In an ironic twist of fate it would actually be a reversal to traditional watchmaking that would breathe some new life into an industry that was onto its last leg. In the omnipresence and inescapability of the digital world a simple tool like a mechanical watch was a welcome escape.

Having dominated the budget segment in the last decades with their quartz technology they now wanted to prove that they were just as able to create a luxury mechanical market. This required a lot of research and development as Seiko had to “re-learn” from their old mechanical movements.

Fusing their new knowledge from Quartz and old from their mechanical movements led to a mechanical marvel that to this day is unrivalled in terms of accuracy. In 1998 the world witnessed the birth of spring drive technology.

Spring drive

Spring drive deserves an entire blog of its own but a short overview is required to appreciate just how Seiko this is. While many other brands tend to shy away from new technology, Seiko successfully combined the accuracy from quartz watches with the beauty of a mechanical watch. 

Seiko Credor first Spring Drive

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28 years of development were required to create this totally unique movement that is accurate to +/- 15 seconds a month. But how does one brand manage to be so innovative for so long?

While new technology has the tendency to elevate brands they tend to fall into a slumber afterwards resting on their laurels. How has Seiko evaded this fate and remained relevant during all market shifts?

Understanding Japanese watchmaking

In order to understand Seiko we have had the pleasure of interviewing Professor Pierre-Yves Donzé. The Swiss native moved to Japan following his PhD in Neuchâtel to work at the business school of Osaka University. He specialises in business history, with one of his focuses being on the watch industry. The perfect man to help us understand the brand.

Professor Pierre-Yves Donzé

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Grand Seiko, he said, was the pure expression of Japanese manufacturing. The company operates down to a molecular level completely in tune with its Japanese roots and as such totally different from most western brands.

The company has a slow multi-layered decision process that is a result of its corporate structure. Seiko has a big board of directors, most of which are former employees.

Even the current President is somebody that, in a traditionally Japanese manner, has been at the company for decades and slowly climbed up the ranks.

 

Seiko President at SEIKO Watch Corporation Akio Naito San
President at SEIKO Watch Corporation Akio Naito San

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There is no Japanese Jean-Claude Biver who makes all the decisions and acts as a revolutionary leader making wild and risky choices. “It is not Japanese to move fast and take risks”, or simply put, think of the absolute opposite of silicon valley.

The result is a company that is much more the sum of its parts than the decisions of a singular mind. The company almost has a life of its own.

Seiko slogan

You don’t simply work at Seiko, you are part of the company. That mentality introduces a different kind of respect and pride in their work that you can see carried through in a fantastic quality of finishing in their products. Ask anyone, a Grand Seiko always manages to have the highest quality of finishing in whatever price bracket it considers its home.

This cultural difference also gets reflected in their attempts to grow the business. Whereas we are used to huge advertisement budgets in the west, from a Japanese perspective advertisement feels like a “waste of money”. Instead they like to focus on innovation, something you can touch and feel.

Talking with a Seiko Veteran

To experience this level of thinking we had to talk with Seiko themselves. Because it is hard to interview a corporate spirit we chose to do so with one of the people that closest represents the company. This person is Fumio Tanaka who has been working within the company for over 30 years and is the President of Seiko Panama.

President for SEIKO Panama Fumio Tanaka San
President for SEIKO Panama Fumio Tanaka San

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Tanaka is an interesting character. He started his career developing products for Credor in 1989. Credor are some of the highest end products that are more on the level usually found on independent products, and have a great appreciation for the finer details.

He has a wide range of interests ranging from shoes, Italian food, all the way to golf. But if you really want to see a twinkle in his eyes you have to talk about his favourite topic: Seiko!

Tanaka is a more quiet character who lets his actions do the talking. You may have already felt his impact as he was in part responsible for the partnership with PADI that has produced some all time fan favourites.

Seiko PADI

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He also played a part in Grand Seiko becoming an independent brand in 2017, something we will touch on later, and then opening more boutiques under their own name as we have seen for example both in New York and London recently.

Seiko and Grand Seiko new 2022 Boutique in New Bond Street London
NEW BOND STREET BOUTIQUE

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He sees the unique character of Grand Seiko watches in their roots to the Japanese culture, circumstances, and location in which their products are born. Their products provide equal parts precision timekeeping as well as aesthetic detail that leaves their customers longing for more. A desire I can personally attest to.

He would like to see Seiko and Grand Seiko in every major city.

Grand Seiko spreads its wings

To understand the future of Seiko we have to go back a few years. For us the year of reference is 2017. That was the year that Grand Seiko decided to leave the bird’s nest and became an independent brand for the first time since its creation in 1960. Why did the heads at Seiko Corporate feel the need to further push Grand Seiko to be separate from its family?

Grand Seiko Logo

Seiko saw a shift in the market and felt the need to react. CEO Shinji Hattori stated that “Grand Seiko had always been distinct”. In order to make that point even clearer the decision was made that now the GS logo would be centerfront at the 12 o’Clock position. These watches were a Grand Seiko first, Seiko second.

Grand Seiko SBGJ249 (Shōsho)

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In our last blog we talked about how in 2016 the entire market shifted. You can check that out here but for now an easy summary was that there is a renewed demand for high end luxury watches.

Seiko had so far dominated both the low-end and middle market, but those segments were slowing down and Seiko had to refocus to not lose their step.

There was one big issue though. The naming.

It is nothing new that watch brands are big conglomerates having multiple brands dedicated to multiple sectors of the market. This was for a long time one of the biggest strengths of Seiko that had now turned into a downside. 

The Swiss had made it very clear that these products were different. As Professor Donzé pointed out in our interview Omega isn’t called Grand Swatch for a reason even though the Moonswatch would like to disagree.

Education for and from the west

While Japanese customers like to educate themselves on the products they purchase, you can’t say the same for their western counterparts. Whereas the Japanese tend to know more details than the store managers, westerners see “Seiko” on the dial and are unwilling to spend more than three digits on a watch even if it was made out of platinum.

Seiko has an uphill battle, needing not only to provide great products but also needing to educate customers on what makes Grand Seiko so great. Most people aren’t aware of their existence, after all their top watches had not even been offered anywhere outside of their domestic market until 2010.

Seiko HQ

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The new strategy can be found reflected in the words of the new President Akio Naito. He took the reins of the mega company in 2021 and has himself admitted that the 140 year old brand has grown to become a bit bland at first sight, stating that “Seiko has become a brand of no clear identity”. The President of the brand known for being the master of all market segments said that “‘Everything for everybody’ ended up being ‘everything for nobody”. Let that sink in.

This change includes a renewed focus on Grand Seiko and what makes them special. He said he is serious about building a separate identity for Grand Seiko”, and to communicate differences between them clearly. The two of them being so closely connected did not allow for Grand Seiko to develop a strong and unique characteristic of its own, something he reckoned a Richard Mille or Hublot has.

Another issue to compact was customer knowledge. As we have mentioned before, the Japanese customers tended to largely inform themselves. In order to become a global powerhouse though it had to also enter the minds as a luxury watch for the global customers. That included first of all an education on the western market, and an education for them.

New talents joins the team

Akio Naito has spent a lot of time in the US and Australia and become familiar with the executives from there. Some of these have since decided to join his efforts and of course had an impact on the brand inside and out. “He hired people who felt strongly about the product’s history and quality of the brand”, and these have given a new light on their markets.

For the efforts of educating customers new employees have also joined the forces specifically for that purpose. One of the men responsible for that is Joe Kirk, national training manager at the Grand Seiko Corporation of America.

National Training Manager · Grand Seiko Corporation of America Joe Kirk
National Training Manager · Grand Seiko Corporation of America

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Kirk has, for example, given fantastic lectures at the Horological Society of New York on how a Spring Drive actually works, or just how refined Quartz in the right hands can be. He has visited multiple different youtube channels giving interviews and presenting the new collections. 

Kirk has also been instrumental in the opening of the American GS9 club. The GS9 club, which originated in Japan, is a clever version of a loyalty program. To gain entry you have to have bought a Grand Seiko from an AD since 2016. 

Grand Seiko GS9
11-06-2021 – Grand Seiko GS9 Club member event at Jazz at Lincoln Center. Photo by Jim Anness

Once inside you get invited to events as well as getting offered limited editions exclusive to the club. This not only fosters repeat business but gives an actual tangible incentive to not take your watches from the grey market. How have the Swiss not adopted this yet?

Then there is the final and most important parts to Grand Seiko’s masterplan for globalisation. The watches. To use a reference from a sport the Japanese have revolutionised. They hit home run after home run.

The HI-Beat GMT SBGJ005 won the “Petit Aguille” in 2014. Their Hi-Beat 36000 SLGH005 won the Men’s Watch Prize at the 2021 Grand Prix d’Horlogerie de Genève. And their latest and most notable release was the best watch equivalent of a halo car I have ever seen. The Kodo constant force Tourbillon SLGT003 won not only the Chronometry prize at this years GPHG, but probably also the hearts of fans globally.

Takuma Kawauchiya San receiving GPHG 2022 award with Akio Naito San
Takuma Kawauchiya San receiving GPHG 2022 award with Akio Naito San

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The watch is the product of ten years of labour from Takuma Kawauchiya. Kawauchiya is one of the many colourful and interesting characters at Seiko. The former rockstar turned watchmaker has been creating hits in both of his professions. The aim with his latest masterpiece was to integrate a Tourbillon with a constant force mechanism on the same axis, a world first. Refer to Joe Kirk video in order to fully understand this watch, but it sure looks like magic to me.

Closing words

Seiko stands on a strong foundation but still it seems like they have a lot of untapped potential. A big part of this is their lack of a clear identity.

To combat this they need to start with cleaning up their collections. Excessive analysis can lead to paralysis some of Seiko’s lineup can be sometimes very confusing.

When doing so this would also give them a good opportunity to work on their pricing. A lot of their products feel like they could be sold for more, whereas other watches seem to be grossly overpriced.

There needs to be clear borders and appropriate pricing steps between them. There is no reason why some “normal” Seiko watches cost Grand Seiko prices, and why looks are so similar between them.

Adding to the confusion is their Hublot-esque take on limited editions. Their overabundance is nearly as overbearing as their invicta inspired proportions on their mechanically interesting timepieces. We don’t need 46mm Chronographs and we don’t need a limited edition for every day of the month.

Grand Seiko Limited Edition Case Back

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A cleaner brand image, coupled with a stricter control on who gets to be an AD and how they can do their pricing would allow them to set higher prices. Discounts have been too rampant. Look at Rolex for a perfect execution of this concept. They have a relatively speaking small amount of AD’s but an incredible control about their product and their reputation thanks them for it.

Seiko Discounts

Higher confidence in product means stronger resale values which in turn enable higher retail prices. Those extra funds would be deeply required to be invested into better bracelets, clasps, and presentation boxes. All three are aspects that distract from the otherwise fantastic quality of their products.

Finally I would like to see them get a bit more crazy. Imagine seeing Seiko lean deeper into their strengths, particularly their quartz watches. F.P.Journe has shown with the Élégante that when done right quartz can also melt the heart of collectors. I am thinking split-second chronograph or minute repeaters for the price of a Rolex Datejust.

Seiko has all the tools to take on the world. The next decade is going to be an exciting one for the entire watch industry and we look forward to see how they manage to stay one step ahead of everybody of else. What could be their next “Astron moment”?