American brand pull s out of China production
F oss il , the leading American watch brand , has announced that it will completely stop production in China . With this , Pre c ision Company , a contract manufact urer in Dong guan City , China , which has been contract ing to manufact ure the company ' s products for many years , is fac ing a crisis of business sur vival .
Last month , the company announced a " th ree - mon th factory clos ure and tempor ary layo ffs " for employees . For employees w ishing to retire during this period , the Department has shown an un usual response , such as providing a special allo wan ce in addition to the normal retir ement benefit .
Stru ct ural changes in the watch industry brought about by the pand emic
The global COVID - 19 pand emic has had a serious impact on many industries , including the watch making industry . Es peci ally international brand s with major production bases in China are fac ing the following challenges :
- Dis rup tion in supply cha ins
- Inc re ase in staff costs
- Inc reas ing ge opoli tical risks
- Chang es in the consumer market (s low ing growth in the Chinese market)
F oss il ' s decision is seen as part of a response to these struct ural changes . The company has been dec entra liz ing its production sites since 2020, and this with dra wal from China can be said to be the final stage of that process .
The Present Situation of Dong guan Fact ory and Its Impact on Emplo yees
At its pe ak , Pre c ision Company was one of Dong guan ' s leading watch making fact ories , emplo ying more than 5,000 employees , but now it has significant ly reduced its size . With the dec re ase in order vol umes from F oss il , we continued to reduce our staff gradu ally from 2021 on wards .
In this anno unc ement , the company says it will take the following steps :
- 3 months of complete shut down
- Temp or ary Dis miss al of All Emplo yees (L im ited Peri od)
- Special compens ation for volunt ary retire es (equ ival ent to 3 months of basic sa lary)
- S etting a priority rec ru it ment frame when res um ing
A local trade union official noted that " th is measure is likely to be a prelimin ary step towards a permanent clos ure . "
Future pros pe cts for the watch industry
Exper ts say F oss il ' s move refle cts the trend of the watch industry as a whole . In recent years , many watch mak ers have :
- Esc ape from China De pend ence
- Produc tion shift to So uthe ast Asia and India
- Promo tion of autom ation and robo tics
- Review of manufact uring processes with emph asis on susta ina bility
We are making such a strateg ic shift . The pand emic has been a factor in acceler ating these mov ements .
Es peci ally in the product Whatsapp from entry - level models to the mid r ange , the company is moving at a rapid pace to lower - cost production sites to maintain price competiti veness .
Con cl usion
The with dra wal of F oss il brand ' s Chinese production and the crisis of the clos ure of the Dong guan plant are ex amples that symbo lize the ed ge of global supply chain restruct uring after the pand emic . In the watch industry , such a review of the production system is expected to continue in the future .
On the other hand , these changes are not just cost - cut ting , they are also a manifest ation of the industry - wide effort to build a sustainable business model . I can ' t take my eyes off future tr ends .