Seiko Corporation
Address:
1-2-1, Shibaura
Minato-ku
Tokyo 105-8459
Japan
Telephone: (03) 6401-2111
Fax: (03) 6401-2216
http://www.seiko.co.jp
Statistics:
Public Company
Incorporated:1881 as K. Hattori & Co., Ltd.
Employees: 9,245
Sales:$1.98 billion (2004)
Stock Exchanges:Tokyo
Ticker Symbol:8050
NAIC:334518 Watch, Clock, and Part Manufacturing; 42194 Jewelry, Watch, Precious Stone, and Precious Metal Wholesalers
Company Perspectives:
We believe that "reliable quality" is an essential standard for the recognition of our products and services and a point of true communication. "There is nothing to worry about because it's SEIKO." "I'm glad I chose SEIKO." "SEIKO is truly reliable." It is this kind of praise from customers that motivates us to move on to the next step.
Key Dates:
1881: Kintaro Hattori, a jeweler, establishes K. Hattori & Co., Ltd.
1913: Hattori opens the company's first overseas branch in Shanghai.
1924: The Seikosha plant introduces the first Seiko brand wristwatch.
1955: The company markets its first self-winding wristwatch.
1969: Hattori markets the world's first quartz watch under the Seiko name.
1973: The firm introduces the first Seiko liquid-crystal display (LCD) digital quartz watch.
1983: K. Hattori & Co. Ltd. changes its name to Hattori Seiko Co., Ltd.
1990: The company adopts the Seiko Corporation moniker.
1996: Seiko restructures to create a vertically-integrated company.
2001: Watch operations are spun off as Seiko Watch Corporation; Seiko Corporation becomes a holding company.
Company History:
Seiko Corporation acts as a holding company for subsidiaries that develop and manufacture watches, clocks, camera components, electronic devices, eyeglasses, jewelry, and sports products. Some of its popular watch brands include Sportura, Rivoli, Vivace, and Arctura. Watches and clocks secured 70 percent of company revenues in 2005, while optical, sports, and other products were responsible for the remainder of sales. Over 60 percent of sales stem from operations in Japan. Seiko products are also found in the Americas, Asia, and Europe.
Late 19th and Early 20th Centuries
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-hour 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, which, at that time, was 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 that stood more than 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 percent of Japan's total export of timepieces. In 1913, Hattori opened its first overseas branch, in Shanghai.
To satisfy in part 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 timepiece.
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 percent 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. Also at this time, Hattori launched its first ladies' wristwatch, the smallest ever produced in Japan.
Using the microengineering 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.
Marketing Other Companies' Products in the 1930s
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. 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 percent 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 wristwatch in 1955. Utilizing conveyor-belt production technology, by 1959, production of watches reached three million per year.
Expanding Overseas in the 1960s
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.
Seiko Brand Soars in Popularity in the 1970s
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." About that same time, the company scored a publicity coup when it once again served as official timer of an Olympics, this time the 1972 winter games in Sapporo. Also 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.
Difficult Times in the 1980s
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 $3.50), barely half their top price in 1978," reported Business Week in 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 wristwatches, 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.
Posting Losses in the 1990s
Seiko continued to introduce innovative products in the 1990s. In 1990 the Seiko Scubamaster hit the market, incorporating a dive table into a computerized diver's watch. In the following year came the Seiko "Perpetual Calendar," the world's first quartz watch with a full automatic 1,100-year calendar. Also introduced in the early 1990s were the Seiko Kinetic series of battery-free quartz watches and the Seiko MessageWatch.
The Kinetic watches used wrist motion to power what Seiko called the world's smallest and most powerful microgenerator. Prices started at $495 retail. The MessageWatch was more than a decade in the making and was originated by a small San Francisco firm, AT&E Corp. When this company ran into financial difficulties in 1991, Seiko and Seiko Epson (both of which were already backers of AT&E) bought the start-up's assets for $19 million. Seiko then developed a new version of the watch, which it test-marketed in Los Angeles in 1994. The MessageWatch was a digital watch designed to receive messages through FM radio waves. The customer had to buy the watch for $80, plus sign on for additional services at monthly rates. The services included paging, weather reports, voice mail alerts, stock market prices, lottery numbers, ski conditions, and sports scores. Under development were enhanced offerings such as traffic information and vehicle navigation systems.
Seiko also kept its name in the international spotlight with frequent participation in major sporting events as official timer. Most significant of these were the 1992 Barcelona and 1994 Lillehammer Olympics. Although the company lost out in the bidding for the 1996 Atlanta games to rival SMH, maker of Swatch watches, Seiko returned as the official Olympic timer for the 1998 Nagano Olympics. Other major sporting events timed by Seiko during this period included the 1990 FIFA World Cup (of soccer) held in Italy; the 1990 and 1994 Commonwealth Games in New Zealand and Canada, respectively; and the 1994 Asian Games in Japan.
While the company garnered those achievements, it was simultaneously hit extremely hard by the deep Japanese recession that started in late 1991 and by economic difficulties in its export markets, notably Europe. Sales stagnated early in the decade (¥422 billion in 1990, ¥428 billion in both 1991 and 1992) and then fell to a lower plateau (¥378 billion in 1993, ¥335 billion in 1994, ¥331 billion in 1995, and ¥342 billion in 1996). Profitability disappeared as Seiko posted five consecutive full-year net losses, culminating in a ¥11.15 billion loss in 1996. The losses stemmed in part from restructuring efforts and other adjustments made by Seiko's subsidiaries, which resulted in extraordinary losses, such as the ¥5.6 billion loss in 1996.
The most important restructuring move, and a possible harbinger of future restructurings, came in 1996 when Seiko and the affiliated Seikosha Co. Ltd. created a vertically integrated company, Seiko Clock Inc., that would manufacture and market Seiko clocks. At the same time, another vertically integrated subsidiary, Seiko Precision, Inc., was created to manufacture and market such products as camera shutters, printers, and system equipment, all previously made by Seikosha. As a result of these changes, Seikosha was dissolved. More important, Seiko would now be able to exercise greater control over all aspects of these business lines, a development of critical importance in such a difficult operating environment.
Through the difficult early and mid-1990s, Seiko had continued its history of innovation; there was no reason to believe the future would be any different. The company looked forward to more prosperous times ahead as economies recovered from their downturns and people once again clamored for the unique products Seiko offered. The 1998 Nagano Olympics provided an ideal platform for Seiko to reestablish its preeminent position in the timekeeping industry.
Changes in the Late 1990s and Beyond
Seiko continued to look for ways to remain competitive in the late 1990s and into the new millennium. In 1999, the company teamed up with Fossil to create SII Marketing International. The venture was designed to sell inexpensive watches in discount department stores including Wal-Mart. In 2000, Seiko launched a new line of titanium wristwatches suitable for outdoor use. That year it also established Seiko S-Yard Co. Ltd. to oversee its sports and electronics business.
Seiko's most significant change of this time period came in 2001, when it spun off its watch operations as Seiko Watch Corporation. This final move in its restructuring plan positioned Seiko Corporation as a holding company with wholly-owned subsidiaries overseeing watch, clock, electronic device, lens, and sport operations. The restructuring proved costly however, and lead to a loss of approximately $132.9 million in 2001.
Competition remained fierce at this time and watch makers from China and Switzerland were cutting into Seiko's market share. Domestic demand was declining and Japan-based companies saw sales slide by as much as 20 percent in 2000. In response to market conditions, Seiko and Citizen Watch agreed to combine their sales and distribution efforts in order to cut costs. The company also began to license the Seiko brand name in an attempt to shore up watch sales. In 2002, Seiko acted as the official timer for the Salt Lake City Winter Olympic Games. It served as the official timer for the IAAF World Championships in Athletics in Paris, France, the following year.
Sales fell slightly in 2003, down 1.9 percent from the previous year, however the company returned to profitability. While personal consumption in Japan remained weak through 2005, sales of Seiko watches in Europe and Southeast Asia were growing at a steady clip. At this time, Seiko launched a campaign entitled, "Innovation & Refinement" in an attempt to strengthen Seiko's brand image. The feature product, a kinetic chronograph watch called the Sportura, experienced success in Europe, the United States, and Southeast Asia. The company's Spring Drive, a combination of a mechanical watch and a quartz, was in high demand as well. Seiko's Brightz and Spirit watches, each with a solar radio wave function, were also popular.
Seiko responded to fluctuating market conditions by focusing on a three-year business strategy that promoted new product and new technology development while at the same time reducing costs. Having undergone a major restructuring effort from 1996 to 2001, Seiko Corp. stood well positioned for success. The company's divisions--watches, clocks, precision products, and optical products--were able to respond to market changes and update their business plans accordingly. While only time would tell how Seiko would fare in the years to come, its long-standing history and solid strategy left chairman Katsumi Yamamura and president Koichi Murano confident that Seiko's products would remain around the wrists of consumers well into future.
Principal Subsidiaries: Wako Co. Ltd.; Seiko Watch Corporation; Seiko Clock Inc.; Seiko Precision Inc.; Seiko Precision Inc.; Seiko Optical Products Inc.; Seiko S-Yard Co. Ltd.; Seiko Jewelry Co. Ltd.; Seiko Time Systems Inc.; Seiko Service Co. Ltd.; Seiko Business Services Inc.; Ohara Inc.
Principal Competitors: Casio Computer Co. Ltd.; Citizen Watch Co. Ltd.; The Swatch Group Ltd.
Further Reading:
- Armstrong, Larry, "It's 10 PM. Do You Know What Your Bank Balance Is?," Business Week, December 26, 1994.
- Boyer, Edward, "A Family Rift Roils Seiko," Fortune, November 12, 1984.
- Kachi, Hiroyuki, and Kanji Ishibashi, "Seiko Group Net Profit Drops as Watch Sales in Japan Slump," Asian Wall Street Journal, May 11, 2005.
- Karimzadeh, Marc, "Sieko's Five-Year Planned Crowned by Spinoff," Women's Wear Daily, May 18, 2001.
- Minard, Lawrence, and Willoughby, Jack, "Japan's Dark Horse Computer Company," Forbes, October 22, 1984.
- "Seiko to Become Holding Company," Japan Weekly Monitor, March 19, 2001.
- "Seiko, Citizen Link Up Distribution, Sales," Reuters News, July 9, 2001.
- "Seiko Profit Recovers on Group-Wide Changes," Asian Wall Street Journal, May 14, 2003.
- Shuster, William George, "Seiko Corp. Sets Record with "Olympic' Campaign," Jewelers Circular Keystone, November 1991, p. 112.
- ------, "Seiko Works To Improve Image, Gain Market Share," Jewelers Circular Keystone, February 1991, p. 170.
- Takahashi, Yoshio, "Seiko Forecasts Wider Loss for Year," Asian Wall Street Journal, March 14, 2001.
Source: International Directory of Company Histories, Vol.72. St. James Press, 2005.
