Titan Industries, the countrys biggest watch-maker believes it has little choice but to internationalise sales of its watches - partly to defend its own domestic position. India is being globalised and the whole world is now turning up in India. So the kind of protection weve enjoyed will go. Its going to get very crowded, the companys vice chairman and managing director Xerxes Desai said.
Imports of completed watches are banned in the country, under the restrictions on consumer goods imports. These, though, are subject to negotiations currently taking place at the World Trade Organisation and are likely to be phased out within a few years. Watch components are already freely importable, and several big international watchmakers, including Seiko and Citizen of Japan, are already eyeing manufacturing operations in India.
To take on its Swiss and Japanese rivals, Titan has set itself a goal of producing to world-class standards and of keeping its watches firmly upmarket. It has developed its own Eurowatch designs, which are separately manufactured in a new Euro assembly unit. It has also developed a range of slim watch movements which, at 1.75mm, are among the thinnest mass-produced movements in the industry.
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Titans great advantage is cost. Production costs at Titans labour-intensive plant are highly competitive by Swiss or other European standards. M S Shantharam, vice-president manufacturing, says Titans slim movements can be produced at a tenth of the cost of equivalent Swiss-made movements. Titan is hampered, however, by the relative scale of its marketing costs, particularly as it tries to break into an elite segment of the watch market. The higher the value addition, the greater the competitive advantage for Titan, he says. But the higher the eventual price of the product, the more the marketing muscle needed to sell it at that price.
Titans spending on advertising and sales last year was 37 per cent higher than its total wages bill, at $9.7m. But Titan also believes it is hampered by unethical trading practices from its rivals. Were finding a lot of resistance - people in the sector are hell-bent on stopping us, especially the Swiss, who in this matter are not so neutral, says Vikram Rajaram, vice-president. He says Titan has consistently been refused permission to exhibit at the industrys showpiece trade fairs in Switzerland.
The Swiss, he says, argue that Titan will not be allowed to such fairs until Delhi liberalises its market for watch imports. Theyre afraid of India. We have the technical skills, we have a large domestic market, capital, and people who can run complex businesses. Their opposition might stunt our growth, but it will not break our back, he said.
Yesterday Business Standard had carried a report by Mark Nicholson of the Financial Times on how Titan exported its watches without the `Made in India label. In this concluding part, he explains how the company scores over its European competitors on the costs front.