Seiko, Citizen, and Casio: Japanese Watchmakers' Next Strategies (Part 2)

CITIZEN

Citizen has consistently been an honor student among Japanese manufacturers. The company's two major technologies, Eco-Drive and Duratect, have given Citizen watches exceptional practicality. Their uncompromising focus on design has also led to the huge success of their women's watch, the Cross-C. However, on the other hand, this spectacular success has also placed a constraint on Citizen's direction. After much time, Citizen has finally succeeded in restructuring. So, what will drive their growth going forward?

Citizen has successfully restructured its manufacturing division, but what will its next move be?

　Citizen has consistently advocated making watches for the public. After successfully developing Eco-Drive, the company has replaced all of its main products with Eco-Drive. Citizen has pioneered the trend where radio-controlled solar watches are not popular with consumers.

Two people behind Citizen's watch division. From left, Norio Takeuchi, general manager of the Citizen Brand Division, and Hiroyuki Kihara, general manager of the Watch Development Division. "Reviewing our production system has enabled us to make decisions faster. In addition, we have changed our thinking to look at the finished product, rather than individual parts, to improve quality," says Kihara. "We will refine the mid-price range and stabilize the 5 to 10 yen price range," says Takeuchi.

　Citizen has now completed a major restructuring and is in a state of financial recovery. Specifically, the watch manufacturing divisions of Citizen Heiwa Watch, Citizen Tohoku, Citizen Micro, Citizen Miyota Watch, and Citizen Kawaguchiko Watch were consolidated into one company, Citizen Watch Manufacturing, which was established in October 2013.
"Until now, newly developed calibers involved people from five different companies. Now, only the management and quality control departments are involved. As a result of the integration, decision-making has become much faster," says Hiroyuki Kihara, head of the watch development division.

　So, what will Citizen, which has succeeded in streamlining and speeding up, use to improve its operating profit margin and unit price? The operating profit margin of its watch division is 10.4%, which is excellent for a manufacturing company, but it still falls short of European watchmakers.
"We want to make quality products in the mid-price range rather than the high-price range. Going forward, we will be focusing more on expanding overseas and on the exterior," said Norio Takeuchi, general manager of the Citizen brand division.

　Citizen has a significant market share in Japan and North America. It's also said to be the company benefiting most from inbound tourism. While exact figures aren't available, one insider speculates that it likely accounts for over 20% of sales. However, its market share in China remains high, and its sales ratio in Southeast Asia is still low. Perhaps this is where the company aims to improve. A stronger focus on exteriors is a typical direction for Citizen, a company known for its expertise in exterior processing, particularly Duratect. However, the company's handling of its Swiss and American subsidiaries remains unclear. Currently, Citizen Watch Group owns Prosar, which owns La Joux-Perret and Arnold & Son, and Bulova, which is strong in the American market, is also part of the group. However, these companies are not generating sufficient profits at present. While Bulova, which uses quartz movements, is expected to create synergies with Citizen, some speculate that Prosar, which makes mechanical watches, is losing hundreds of millions of yen annually.
"We are not in a rush to grow Prosur, but will take our time to grow it," says Takeuchi.

Campanola's 15th Anniversary Model, Beniake (Red Light) NZ0000-07W
This model is an attempt at a higher price range. It is a model in which the dial of the Campanola Mechanical Collection has been reworked to a lacquered finish by Tetsuo Gido. Other companies also use lacquered dials, but the effort required to complete the base alone, which takes a month, is rare in this price range. This is a watch that is typical of Citizen, which is committed to exterior design. The basic specifications are the same as the Mechanical Collection on the right page. 750,000 yen.

Campanola's 15th Anniversary Model Juraku NZ0000-07P
Citizen has 13 concept shops across Japan. The Campanola 15th anniversary model "Juraku" is available exclusively there. The movement is the Cal. Y513 made by La Joux-Perret. It features an elegant lacquered dial designed by Tetsuo Gido. The basic specifications are the same as those of the mechanical collection on the right page. Limited to 50 pieces. Priced at 80 yen.

Citizen Series Eight 806 CB1000-51E
Citizen's ambitious Series Eight is a timepiece that has been overshadowed by Campanola and The Citizen, but its three-dimensional case design is a prime example of the company's exceptional exterior processing technology. It features a Direct Flight movement that displays the time in 26 cities around the world. Eco-Drive (Cal. H149). Stainless steel (42.3mm diameter). Water resistant to 10 bar. Priced at 21 yen.

　Citizen also seems reluctant to pursue mechanical movements, which would be a key player in the high-end market. Miyota's automatic caliber 82 is an inexpensive and extremely capable ébauche movement, but it cannot replace ETA. There are persistent rumors that the 90, which improved the performance of the 82, will also be discontinued.
"No, we will not stop manufacturing mecha in the future and plan to expand it," said Kihara.

　Once again, Citizen's potential is greater than those involved realize. In particular, their skill in skillfully combining design and functionality is at a level that even Swiss manufacturers are astonished by.

　Citizen has streamlined and sped up production. It seems they are currently making major adjustments for future developments. We will be keeping a close eye on their continued overseas expansion and how their exterior improvements will progress.

Citizen's proprietary "Duratect" technology

Duratect is Citizen's pride and joy, a hardening technology. However, there are currently three types (nine types in total if further broken down): PVD treatment, DLC processing, and MRK, a gas hardening technology. Its hardness is extremely high, with the latest Duratect α (PVD treatment) coating having a hardness of Hv2000-2500. Even the lowest is said to be over Hv1000. The photo above compares the scratch and abrasion resistance of materials treated with Duratect and those without. You can see that the treated material is completely scratch-free. Duratect's high scratch resistance has given Citizen watches exceptional practicality.