OPENING REMARKS BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE AND INDUSTRY AT THE SINGAPORE CLOCK AND WATCH TRADE ASSOCIATION 78th Anniversary DINNER AND DANCE, MERITUS MANDARIN, MANDARIN BALLROOM, SATURDAY, 28 July 2007, 8:00pM.
Mr Tan Soo Koon, Advisor-cum-Honorary President of the Singapore Clock and Watch Trade Association
Mr Anthony Lim, President of the Singapore Clock and Watch Trade Association
Association members
Distinguished guests
Ladies and gentlemen
A very good evening to all of you. I am very happy to be here this evening to join you in celebrating the 78th Anniversary of the Singapore Clock and Watch Trade Association.
The Clock and Watch Industry in Singapore
Singapore has established itself as an important regional center for the clock and watch trade. In 2003, the total trade in clocks and watches reached over $2 billion. Last year, this had increased to $2.6 billion, an increase of nearly 10 per cent in just three years – making it an important component of Singapore’s trade. If we look at the import numbers, last year alone, Singapore imported almost S$1.6 billion worth of clocks and watches.
In spite of Singapore’s small size, we rank high in the global trade in watches. According to the Federation of the Swiss Watch Industry, Singapore is ranked eighth in the global distribution of Swiss watch exports[1], and is one of the top watch markets in Asia, after Hong Kong and Japan. These can possibly be attributed to three factors. Firstly, Singaporeans themselves are increasingly becoming connoisseurs of luxury watches. Secondly, there is high demand from tourists. According to the Singapore Tourism Board (STB), tourist arrivals into Singapore for the first half of this year exceeded 4.9 million. Figures from Global Refund also show that ASEAN tourists contributed close to 50 per cent of total tourist spending in Singapore over the last three years. Tourists from Indonesia, Thailand and Malaysia tend to buy luxury goods in Singapore, watches included.
Thirdly, Singapore’s high trade in watches is due to the high re-export of watches to neighboring countries like Malaysia, Indonesia and Thailand. They accounted for about52 per cent of Singapore's S$733 million worth of clock and watch re-exports last year. With Asia currently experiencing robust economic expansion, led by the growth in China and India, the re-export market is likely to grow even more spreading beyond the Asean market. Let me elaborate.
Opportunities for Growth
Rapid growth of private wealth in Asia. According to the World Wealth Report 2007 by Merrill Lynch Cap Gemini, the Asia Pacific wealth market is estimated to grow at 8.5 per cent per annum to reach US$12.7 trillion in four years’ time, putting it almost on par with Europe. The number of High Net-Worth Individuals has swelled to 2.6 million in Asia-Pacific and these individuals now account for more than a quarter of global high net worth assets.
Singapore stands to benefit from this growth of private wealth in Asia. Singapore’s fund management industry has grown in the past few years. Monetary Authority of Singapore (MAS) figures show that the assets managed by Singapore-based fund managers grew 24 per cent as compared to 2005, to almost US$600 billion in 2006. Add to this the growing interest amongst globe-trotting HNWIs, who are now looking at buying property in Singapore either as investments or as a second home, and we can see that Singapore can benefit from this growing interest in Singapore by HNWIs.
Increase in demand for luxury goods in Asia. Naturally, riding on the back of this growth in private wealth will be the demand for property, consumer durables and luxury goods. Just take a look at some of the luxury houses that have set up boutiques in China and India. Previously, you could only find such signature boutiques in Japan. Take for example luxury brands like Louis Vuitton and Chanel, which have established themselves in cities like Shanghai and Hong Kong, with boutiques that are even larger and have more offerings than their other boutiques in their traditional European markets. And if we look at the luxury watch segment, the projections are rosy too. According to the Federation of the Swiss Watch Industry, the demand for Swiss watches in Asia represents the lion’s share of the demand for Swiss watches, at a growth rate of about 10.4 per cent.
Expected increase in tourists to Singapore. Over the next few years, our tourism sector is set to grow even further. Major tourist developments like the two Integrated Resorts (IRs), the Singapore Flyer and the Formula One race are on the cards. By the year 2010, when both the Marina Bay Sands and Resorts World at Sentosa are operational, we expect an additional 2 to 3 million visitors, bringing our total annual visitor arrivals to about 13 to 14 million. This boost to the Singapore tourism sector promises to bring even greater benefit to the domestic watch and clock industry.
The Challenges Ahead
How should Singapore’s services and retail industry take advantage of the US$12.7bil wealth market? How can we tap into the 2.6mil HNIs in Asia? How do we capture the spending of the 15mil tourists we will soon to have? I think our companies need think out-of-the-box, re-invent their business models to compete in the “the blue ocean” where you decide on the rules of competition. Competing in the red ocean can only lead to bloodshed.
I would like to share my views. First, understand the markets. Consumers today are increasingly discerning. We cannot aim to serve all customer segments. Our companies must define their customer segments and design their business processes and human resources to serve the segments well. Otherwise they will not be able to compete. My question is: can you do more to capture the 2.6mil HNI market? Can you reach out to them? Can the association reach out t o them?
My second point is on improving customer service. The retail industry is a $25-billion business, and is one of the main sectors fuelling our economy’s growth. Retail also plays an integral role in enhancing Singapore’s attractiveness as a premier business and tourist destination. To ensure that we meet head-on the challenges of increasing regional competition, we have to enhance our service standards and product offerings. To improve our service standards, the Customer Centric Initiative (CCI) for the Retail Sector was launched in 2005 by SPRING Singapore and NTUC, with support from WDA, SNEF, STB and the Singapore Retailers Association. I am pleased to note that some of your members, such as The Hour Glass and Sincere Watch, are already taking the lead to work with SPRING on the CCI Retail initiative. I hope more members will come forward to join in this initiative to improve our service quality.
Third, I urge the Association to think about how we can grow Singapore’s share of the global market in luxury timepieces. This is no easy feat, what with strong competitors like Hong Kong, Japan and China, with their larger domestic base. But is it possible for Singapore to become a leading Asian center for luxury watches? For example, if someone would like to service or repair a luxury timepiece in Singapore, do we have the craftsmen to do so, and to provide quality service at the same time? Or is possible to develop the auction market for luxury timepieces here? Is there then a possibility of growing these new areas, so that we expand beyond our traditional focus of the buying and selling of watches? I urge the Association to explore these new areas.
The Government encourages industry associations to take the lead to grow their respective industries through the Local Enterprise and Association Development or LEAD Programme, as the industry associations are in the best position to know the current trends and business needs of their industry members. I urge the Singapore Watch and Clock Trade Association to take the first step to develop a robust plan to grow the sector, and subsequently apply for financial support under the LEAD programme to implement your various initiatives.
Conclusion
In conclusion, let me say that we are faced with a golden period to transform our retail industry in the next 3-5 years. There are unprecented wealth creation in Asia, and the number of HNIs will be increasing to record number in Asia.If we are able to tap on them, our watch industry will take off to a new level. To do that, we need to ask ourselves: is our customer strategy clear? Do we understand branding and marketing? Do our staff possess strong product knowledge and excellent service? Let me leave them with you as food for thought as you chart your industry’s future.
Mr Anthony Lim, President of the Singapore Clock and Watch Trade Association
Association members
Distinguished guests
Ladies and gentlemen
A very good evening to all of you. I am very happy to be here this evening to join you in celebrating the 78th Anniversary of the Singapore Clock and Watch Trade Association.
The Clock and Watch Industry in Singapore
Singapore has established itself as an important regional center for the clock and watch trade. In 2003, the total trade in clocks and watches reached over $2 billion. Last year, this had increased to $2.6 billion, an increase of nearly 10 per cent in just three years – making it an important component of Singapore’s trade. If we look at the import numbers, last year alone, Singapore imported almost S$1.6 billion worth of clocks and watches.
In spite of Singapore’s small size, we rank high in the global trade in watches. According to the Federation of the Swiss Watch Industry, Singapore is ranked eighth in the global distribution of Swiss watch exports[1], and is one of the top watch markets in Asia, after Hong Kong and Japan. These can possibly be attributed to three factors. Firstly, Singaporeans themselves are increasingly becoming connoisseurs of luxury watches. Secondly, there is high demand from tourists. According to the Singapore Tourism Board (STB), tourist arrivals into Singapore for the first half of this year exceeded 4.9 million. Figures from Global Refund also show that ASEAN tourists contributed close to 50 per cent of total tourist spending in Singapore over the last three years. Tourists from Indonesia, Thailand and Malaysia tend to buy luxury goods in Singapore, watches included.
Thirdly, Singapore’s high trade in watches is due to the high re-export of watches to neighboring countries like Malaysia, Indonesia and Thailand. They accounted for about52 per cent of Singapore's S$733 million worth of clock and watch re-exports last year. With Asia currently experiencing robust economic expansion, led by the growth in China and India, the re-export market is likely to grow even more spreading beyond the Asean market. Let me elaborate.
Opportunities for Growth
Rapid growth of private wealth in Asia. According to the World Wealth Report 2007 by Merrill Lynch Cap Gemini, the Asia Pacific wealth market is estimated to grow at 8.5 per cent per annum to reach US$12.7 trillion in four years’ time, putting it almost on par with Europe. The number of High Net-Worth Individuals has swelled to 2.6 million in Asia-Pacific and these individuals now account for more than a quarter of global high net worth assets.
Singapore stands to benefit from this growth of private wealth in Asia. Singapore’s fund management industry has grown in the past few years. Monetary Authority of Singapore (MAS) figures show that the assets managed by Singapore-based fund managers grew 24 per cent as compared to 2005, to almost US$600 billion in 2006. Add to this the growing interest amongst globe-trotting HNWIs, who are now looking at buying property in Singapore either as investments or as a second home, and we can see that Singapore can benefit from this growing interest in Singapore by HNWIs.
Increase in demand for luxury goods in Asia. Naturally, riding on the back of this growth in private wealth will be the demand for property, consumer durables and luxury goods. Just take a look at some of the luxury houses that have set up boutiques in China and India. Previously, you could only find such signature boutiques in Japan. Take for example luxury brands like Louis Vuitton and Chanel, which have established themselves in cities like Shanghai and Hong Kong, with boutiques that are even larger and have more offerings than their other boutiques in their traditional European markets. And if we look at the luxury watch segment, the projections are rosy too. According to the Federation of the Swiss Watch Industry, the demand for Swiss watches in Asia represents the lion’s share of the demand for Swiss watches, at a growth rate of about 10.4 per cent.
Expected increase in tourists to Singapore. Over the next few years, our tourism sector is set to grow even further. Major tourist developments like the two Integrated Resorts (IRs), the Singapore Flyer and the Formula One race are on the cards. By the year 2010, when both the Marina Bay Sands and Resorts World at Sentosa are operational, we expect an additional 2 to 3 million visitors, bringing our total annual visitor arrivals to about 13 to 14 million. This boost to the Singapore tourism sector promises to bring even greater benefit to the domestic watch and clock industry.
The Challenges Ahead
How should Singapore’s services and retail industry take advantage of the US$12.7bil wealth market? How can we tap into the 2.6mil HNIs in Asia? How do we capture the spending of the 15mil tourists we will soon to have? I think our companies need think out-of-the-box, re-invent their business models to compete in the “the blue ocean” where you decide on the rules of competition. Competing in the red ocean can only lead to bloodshed.
I would like to share my views. First, understand the markets. Consumers today are increasingly discerning. We cannot aim to serve all customer segments. Our companies must define their customer segments and design their business processes and human resources to serve the segments well. Otherwise they will not be able to compete. My question is: can you do more to capture the 2.6mil HNI market? Can you reach out to them? Can the association reach out t o them?
My second point is on improving customer service. The retail industry is a $25-billion business, and is one of the main sectors fuelling our economy’s growth. Retail also plays an integral role in enhancing Singapore’s attractiveness as a premier business and tourist destination. To ensure that we meet head-on the challenges of increasing regional competition, we have to enhance our service standards and product offerings. To improve our service standards, the Customer Centric Initiative (CCI) for the Retail Sector was launched in 2005 by SPRING Singapore and NTUC, with support from WDA, SNEF, STB and the Singapore Retailers Association. I am pleased to note that some of your members, such as The Hour Glass and Sincere Watch, are already taking the lead to work with SPRING on the CCI Retail initiative. I hope more members will come forward to join in this initiative to improve our service quality.
Third, I urge the Association to think about how we can grow Singapore’s share of the global market in luxury timepieces. This is no easy feat, what with strong competitors like Hong Kong, Japan and China, with their larger domestic base. But is it possible for Singapore to become a leading Asian center for luxury watches? For example, if someone would like to service or repair a luxury timepiece in Singapore, do we have the craftsmen to do so, and to provide quality service at the same time? Or is possible to develop the auction market for luxury timepieces here? Is there then a possibility of growing these new areas, so that we expand beyond our traditional focus of the buying and selling of watches? I urge the Association to explore these new areas.
The Government encourages industry associations to take the lead to grow their respective industries through the Local Enterprise and Association Development or LEAD Programme, as the industry associations are in the best position to know the current trends and business needs of their industry members. I urge the Singapore Watch and Clock Trade Association to take the first step to develop a robust plan to grow the sector, and subsequently apply for financial support under the LEAD programme to implement your various initiatives.
Conclusion
In conclusion, let me say that we are faced with a golden period to transform our retail industry in the next 3-5 years. There are unprecented wealth creation in Asia, and the number of HNIs will be increasing to record number in Asia.If we are able to tap on them, our watch industry will take off to a new level. To do that, we need to ask ourselves: is our customer strategy clear? Do we understand branding and marketing? Do our staff possess strong product knowledge and excellent service? Let me leave them with you as food for thought as you chart your industry’s future.