Asian management for two timepiece giants

GENEVA (JP): The Hour Glass took a daring step when it assumed ownership of watchmakers Gerald Genta and Daniel Roth in 1995 and 1996 respectively.

In fact, it was risky given the fact that both companies were having financial difficulties.

However, Jannie Tay, managing director of The Hour Glass since its formation in 1979, had confidence in both watchmaking specialists.

"We took over both companies because we recognized the two living masters," Tay, who is also president of the ASEAN Business Forum, said.

"We are now restructuring Gerald Genta and Daniel Roth and both are on the road to recovery. Genta will be making profit this year although Daniel Roth will take another two years before doing the same thing."

According to Tay, the problems behind both companies' difficulties were mostly due to inefficiency and a lack of marketing strategy.

Gerald Genta is technologically a lot more advanced than other brands. It is a trendsetter in the watch business because it has its own technology and it is the only manufacturer with its own dial factory.

Despite all these advantages, it was not really making a profit, she said.

Tay, a firm believer in total quality, was responsible for The Hour Glass receiving the ISO 9002 certification in August 1994, making it the first watch retailer in the world to achieve the honor.

To revive both companies, The Hour Glass consolidated the two masters of both houses to prevent duplication along production and assembly lines and reinvested in research and development. Subcontracting is also on the agenda to cut production costs.

"Subcontracting will not sacrifice quality and service," she insisted.

The company is also encouraging both masters to be more market-driven.

"They were used to selling watches noncommercially. They are artists, not businessmen."

Other top brands that have been successful on the market have been market-driven.

Tay cites Rolex as a highly marketable brand.

"Rolex is an institution, thanks to its advertising, and now it sells by itself."

"Genta and Daniel Roth used to be product-oriented and we wanted to change them to become more market-driven because, after all, business is about marketing."

To become market-oriented also means to be more sensitive to market demands. Both brands previously catered to billionaire customers only. They are now expanding to embrace a bigger market to make both brands more affordable to a wider range of clients because, as Tay put it, watches have become a fashion, not just a collector's item.

"Genta, for example, used to be the 'royalty' watch. Today it is very modern and it can cater to anyone. Daniel Roth, too, used to be very, very exclusive, and when I asked him to produce S$5,000 watches he gave me that strange look. He was shocked, I guess, because his watches were US$100,000 and up."

Tay, said the "second line" would maintain the characteristics and quality that are associated with both brands.

Gerald Genta and Daniel Roth themselves viewed the takeover as a necessary step.

"It's a necessary revolution. Daniel Roth knew that to be able to continue making high-quality watches would be impossible without expanding distribution," Gerald Roden, Daniel Roth's new managing director, said.

Actually, there was more than one company interested in taking over Daniel Roth, but The Hour Glass was chosen because the Singapore-based company already had an established retail network, Roden said.

Both Genta and Daniel Roth's real market is in Asia, including Indonesia. Indeed, when The Hour Glass introduced Genta for the first time 20 years ago, Indonesians were among the first to buy the watches.

In 1996, Asia accounted for 80 percent of business but, due to the current monetary crisis, the Asian market has dropped to 50 percent, with the remainder being picked up by the Middle East, Europe and America.

"We think we will recover the Asian market within three years," said Tay, who sits on the Women's Leadership Initiative Board, at the John F. Kennedy School of Government, Harvard University.

Tay foresees a falling market in Asia and The Hour Glass has taken steps to survive by cutting down on the number of outlets in the region to reduce marketing costs while, at the same time, increasing productivity.

"There are a number of factors behind the falling market," she said.

"Because of the haze there is hardly any tourism. Also, Japan is having problems and is going to be a major problem. Hong Kong is going down fast and Singaporeans are beginning to feel very poor. Taiwan is the only one doing well."

Despite the gloom, Tay is optimistic about other markets.

"Our agents from Russia, Italy, the Middle East, North and South America, Germany, Spain and London came and they were all excited about the prospects." (lem)