Episode 241 - Making Watches in China

Published on Wed, 07 Jun 2023 21:13:07 -0700

Synopsis

The podcast discusses the impact of Chinese manufacturing on the watch industry. It covers topics such as the accessibility of Chinese manufacturing for microbrands and individuals to get watches produced, the rise of "catalog" or white-label watches, and how Chinese manufacturing has driven down costs allowing for more affordability in the market. The hosts also discuss the quality capabilities of Chinese manufacturing and how brands can leverage it to incorporate higher-end Swiss components or finishes while saving costs elsewhere. Overall, Chinese manufacturing has enabled a more robust and accessible watch industry.

The hosts also briefly discuss their experiences with an instant camera from Fujifilm that combines digital photography with instant film printing, as well as Andrew's new slicing knife for carving roasts.

Transcript

Speaker
Andrew Hello, fellow watch lovers, nerds, enthusiasts, or however you identify. You're listening to 40 and 20, the Watch Clicker podcast with your hosts, Andrew and my good friend Everett. Here, we talk about watches, food, drinks, life, and other things we like.
Everett Everett, how are you? I'm good. Andrew, do you know the difference between a fiddle and a violin?
Andrew The way you play it?
Everett No. So a violin has strings, but a fiddle has strangs.
Andrew That's a good way to start the day.
Everett I'm doing all right. I am a little hot because it's warm. It is warm. But that's okay.
Andrew It's nice. This room doesn't get good HVAC. Yeah. I don't know why.
Everett A little cold in the winter, a little hot in the summer. Yeah. That's all right. That's just what it is. That's all right. I'm doing good. I've got a beer. I haven't cracked it yet, but I've got a beer. I had some pizza for dinner tonight. I had tri-tip for dinner. You had delicious tri-tip, which I got to try, which was really well done.
Andrew It's the way to do it. So I had it in the freezer. Sam wasn't going to be home until after dinner and she's not really a big red meat eater. So I was like, Oh, I know what I'm going to do. Thought it out, gave it a little dry rub, vac sealed it, threw it in the sous vide at 134 for like four hours, pulled it out, gave it a rub down of a different spice seasoning and threw it on the grill at like 600 for about four minutes per side. Let it rest. Ooh. Ooh, it's good.
Everett Do they make a sous vide for thawing meat?
Andrew I don't know. When I cook frozen, I just add time.
Everett Yeah. You know, I think that it would be, because instead of heating the water, you'd be cooling the water. So it would be a, that would be a complicated machine. Yeah. Like Freon or something. Yeah. Maybe we need to do that. Maybe we need to market this.
Andrew I don't know if there's value in it because every single food service industry that doesn't have a health inspector on scene just has a bucket of stuff under a faucet.
Everett But for home, like want to thaw that chicken in 20 minutes? You'll love my nuts.
Andrew Yeah.
Everett That's what we'd call it too. We call it you love my nuts. Yeah. Yeah. I dig it. I dig it. You know, if we were to do this, you know where we would get this thing made? I have a couple ideas.
Andrew Okay. All USA. 100% USA materials, manufacturing, assembly, and hand delivered by bicycle messenger.
Everett MSRP $1,173.99. Three easy payments. Yeah, pretty easy. Of $1,173. Yeah. And then, you know, however long it takes our bicycle messenger to get to you.
Andrew Yeah, yeah, that's right.
Everett uh no we'd probably get it we'd probably get it made in in asia somewhere yeah yeah that's probably where we'd get it made it's where things are made now that's where things are made including watches and tonight we're talking about watches specifically chinese made or asian made watches we will probably If you find this appropriate, just forgive us in advance. We will probably interchangeably use Asia and China at times because China's huge and it's the dominant force. Yeah. Um, but we, we may say China when we actually mean Asia occasionally tonight. Yeah. Is that a fair caveat?
Andrew I think so. I didn't think it was an important caveat because there are certainly outliers, but by and large Chinese manufacturing. So my thinking behind this episode, we've kind of teased a little bit and we wanted to do a little bit more work to iron it out. And we talked to Mike DeMartini about this and how kind of China's influencing the Swiss industry. And I wanted to like actually devote some time to China's impact on the watch industry. Not as an aside through the lens of the Swiss industry, but just China's impact. Because if not for Chinese manufacturing and the internet, we don't have the robust watch industry that we have today.
Everett I think that's right.
Andrew Or at least accurate. And without the Chinese manufacturing industry, we don't have the watch industry we have today. Like not just robust. We don't have any accessibility. We don't have any of it. China's manufacturing is what makes it possible.
Everett Yeah. I mean, to, to put a point on, to put a point on this, Siegel, the entity that we refer to as Siegel, which is not perhaps an entity in the way we think about entities in the Western business world. But the entity Siegel makes approximately five times every year the amount of movements that ETA makes. So Siegel's movement manufacturing is five times that of ETA.
Andrew That's significant.
Everett That's right. That's right.
Andrew And I think so since since we have Siegel top of mind, that's a brand and we're air quoting brand right now because it's interesting. It's not a brand, nor is it not a brand. It's kind of like a thing that a bunch of different companies are working toward. Very much the same in the Swiss watch world. But as opposed to one factory just making hands and being the hand specialists, we get a bunch of companies who are churning out the same generally spec'd almost identical product, all under the same label. Or, closer to the Swiss model, one company's churning out cases, one company's churning out dials, and then these manufacturers, who are companies in and of themselves, operating under the umbrella of Siegel, have a centralized assembly plant, and that's where they're coming out.
Everett I think it's best understood, well, so first, we'll just, we'll caveat anything else we say tonight with the fact that neither one of us are experts or even really all of that familiar with Chinese business practices. So we're going to say things that are maybe true or sort of true or true-ish. But in any event, I think for the purposes of our conversation, we're going to be close enough. Now, what I was going to say, I think the seagull entity would be sort of best understood as a kind of magnetic, cohesive licensing slash contractor arrangement, wherein the contractors who are actually doing the production, sort of like a franchisee, have the abilities to buy way of their license to market and sell the products that they're making under license. I think that's the easiest way to understand it, but this is happening at a comprehensive scale, you know, sort of like McDonald's. McDonald's owns land and it has a bunch of independent business owners that it uses to sell its products. I think Siegel's kind of a similar scenario, right? I think so.
Andrew So. With that kind of loose understanding of Siegel, kind of loose understanding of how Chinese manufacturing has affected and impacted the Swiss watchmaking world, let's consider what that means at scale, right? So we have The Big Five, who we know, are absolutely using Chinese manufacturing. And sure, they might be using Chinese manufacturing owned by a Swiss company, using Swiss machines, supervised by a Swiss operations manager. But the sort of lack of labor laws, probably environmental protection laws, make it significantly cheaper.
Everett Yeah, less onerous regulatory, a less onerous regulatory scheme.
Andrew This driving down of cost, price driving down, this just cheaper price led to people realizing that they could do it too, right? So within that world of Chinese manufacturing, everything's affordable-ish. with a sliding scale just like Swiss manufacturing. And you get this big wide gap where everything's of varying qualities and somehow people figure out they can go to China and they can hire manufacturers to start producing their own stuff. And we see it in the early days of micro brands where the brands are getting into China somehow Right. There's so much water on your front.
Everett Yeah. I just took a big drink of water and spilled. A lot. About a half a cup down my shirt.
Andrew Individuals are going to China, whether through business connections, whether through industry connections, and they're able to start getting their own stuff manufactured. And this kind of leads manufacturing companies down this new road that hadn't previously existed with catalogs, right? And we're covering a whole lot. So I'm going to slow down a little bit. What do you want to talk about with the affordability of Chinese manufacturing and accessibility of Chinese manufacturing as somebody who has launched a brand, but also somebody who has enjoyed many Chinese made watches?
Everett Maybe I don't understand the question entirely.
Andrew When launching a brand and you're faced with your kind of initial choices of where am I going to get this watch made, I know you looked at a lot of options and there were a lot of selling points for the reason that you went with the organization that you did to get your watch manufactured. Purely monetarily, If you didn't have those business relationships with your, with these OEMs, these manufacturers that you used, where do you go to get your watch manufactured?
Everett Well, yeah, so it's interesting. We talked about this a little bit. We talked about this a little bit with the Barstool Sports fellow, blanking on his name right now, but the Brick Watch Company, right? Oh, Fat Zuckerberg. Fat Zuckerberg, that's right. We talked about this in the context of, you know, he found a place, basically a white label company that is likely making watches primarily through Chinese outlets. And it's sort of like a catalog option, right? You go to a catalog, you look at the options, they have these are the parts we make. Me being in the industry had a different set of contacts. You know, I think we had initially talked to, um, Eric from EMG, longtime friend of the show, good friend of mine and said, Hey, do you have any ideas? He had set me up with a few different people to talk to. Um, you know, at the end of the day, it was a different world for me. And so I didn't really have to try to figure out who to talk to. I was able to just call friends and say, who do I talk to? And they put me in touch with the right people. But I think it's a different, It's a different calculus if you're just a guy sitting on your couch who doesn't know brand owners and is like, well, how do I get started with this? Right. And frankly, I don't know what I would do. What I will say my experience was, is that there was no hesitation from any of the folks I talked to about pricing and really it wasn't even a point of discussion. My gut is, my experience has led me to believe that, I should say, most of these OEMs and most of the factories that the OEMs are working with have a very wide range of qualities they can produce things at, quality of parts that they can procure. I don't gather that there was ever a time where, well, that's not true. There was one time with an OEM that we eventually went a parting ways with where I realized, like, they're not willing to do the hard things. But for that one moment, I've never felt like there was anything that I wanted to achieve that couldn't be achieved for a price. And so at the end of the day, that's what it comes down to. You know, one of the things that we've talked to our OEM about is quality of finishing. So like, for instance, brushing. In order to do brushing at a better rate than your average sort of say $400, $350, $400 microbrand, you've got to have special lapping wheels. Right? You've got to have special wheels and special equipment to run those wheels. And so that sort of thing is a limitation. Either the factory you're working with has it, or it doesn't. Our OEM has just procured nicer equipment to do that stuff with, but it comes at a cost, right? It comes at a cost to us if we want to use it. It comes at a cost to the OEM, certainly, because they had to procure it. It comes at a cost to the factory. The factory has to be trained and has to understand how to use it. So everything can be achieved. You just have to have the right tools around you. And I think this is the perhaps the biggest misconception about Chinese manufacturing is that Chinese manufacturing is not up to some sort of objective standard that could be found elsewhere in perhaps white Europe, right? There is not a limitation to what can be done in China in so much as they're just doing things that are less expensive and thus the techniques and the equipment they use is more suited to less expensive products.
Andrew And they're making fast pennies instead of slow quarters.
Everett That's right. That's right. And so looking at looking at some of these companies, you know, for instance, Peacock or Atelier Wen, you know, we've got. Companies that can do very, very nice things, Chinese companies making watches in China, they can do very, very nice things. There's this misconception that China's incapable of doing the high end shit. It's just not true. China can do high-end shit. That's just not what people go to China for, generally speaking. Why? Yeah, I, it's, it's a sort of an aruberus, Andrew, right? Wow. Yeah, that's right.
Andrew That's right. Yeah. That's the word we went with.
Everett I said it. You know, we want nice things. Nice things come from Switzerland. And so if we want nice things, we better buy Swiss made things and And but if we're looking for nice things, we're looking in Switzerland, right? Like it's this perpetuating cycle, right? Which has not stopped, for instance, Peacock from making these wonderful guilloche dials. It's not stopped Hanju watch company from making very, very adequate mechanical movements. It's not actually stopping the Chinese companies from doing the things But people aren't going to China to look for those things because you don't go to China to look for those things. If you want nice, you go Swiss. If you want less nice, you go to China.
Andrew What about, what other countries are getting missed? Because I think of, I think of Seiko. Oh sure. Who's doing just phenomenal stuff. How is like, I'm wondering why there was no, there's been no booming OEM industry in Japan seeking after that grand Seiko-esque finish in non-Grand Seiko brands?
Everett I think Japan faces the same problem that countries like Germany or the United States, for instance, face, which is that labor is expensive in Japan, relatively. Japan's got inexpensive mechanical movements, not necessarily because of Japan's capabilities, but because of the incredible scale that Japan has been able to, the incredible market share and thus scale that Japan's able to make these things in. So anybody listening to this podcast, I wager every single person listening to this podcast right now has worn or owned, probably owned a watch with the Japanese movement in it, right? I'd be shocked if they didn't. Period. Yeah. And that is a testament to what that industry has done and how pervasive it is. With that said, I don't think it makes sense for the average micro brand, for instance, to go seek out case finishing in Japan because it is going to be outrageously expensive. And it's maybe not something that's going to be all that much better than things you can get done in other places.
Andrew Switzerland is the first place it comes to mind where fine case finishing is kind of the expectation. I mean, I brought a pile of watches. I brought two Chinese made watches, a Japanese and two Swiss. That thing fell. Uh, and barring one. And I think, I think there's actually, we see a really interesting, uh,
Everett So you're holding up right now a Traska commuter and an EMG Nemo. Yeah. I think there's an interesting growth. Both almost certainly cases made in China. Yes.
Andrew In the probably four or five year Delta in finishing. And it's hard to say if that's just a development of technology or an actual price difference because there is a slight price difference in these watches. But I think about like The Seiko. And this is just a Saab, right? This is not an expensive watch. The finishing on it is phenomenal. Yeah. Scale. And I'm wondering why Japan can produce only their own stuff. I mean, they're producing an enormous scale in Seiko. Well, let's talk about this.
Everett You've brought up a really interesting point. So, and I think I have some insight here. So I have been in touch. I have talked, had conversations with the people behind the factories behind both the Traska and the EMG. So I have talked to the OEMs behind both of those brands. And without giving away anything private or confidential, I can say that those are two institutions with drastically different capabilities. So when I talked about our OEM, who's not the OEM for either of those companies, having just produced or just procured lapping equipment that is of a higher grade, when you look at a company like Traska and the OEMs they're using, and a company like EMG and the OEMs they were using at the time the NEMA was made, the capabilities are different, right? Now, EMG is a company that gets to make choices, and they went with that company for any number of probably very good reasons, right? And Traska, you know, Traska is known for their pretty decent case finishing and, you know, certainly their hardening. These are things that are variable, right? And then you look at a company like Seiko, which is culturally a very different company, much more internal, much more keep it in house, generally speaking, not doing a ton of white labeling, although Seiko is such a giant company. There's so much Seiko white labeling. That they actually do a fair number of white label projects.
Andrew I'm sure they white label their own shit on accident. Yeah, that's perhaps true.
Everett But, you know, that's not really a resource for that sort of thing. They are able to make, you know, so probably the Saab in 2009, say, they probably made about 80,000 Saabs, which are all the Saabs that were ever made. And they were able to do it so inexpensively because they just did it all at once. And so they have access to this humongous manufacturing operation natively, internally, that they can get finishing like that. That's why Seiko is still today such a tremendous value when you compare Seiko watches at $300 to, say, a Traska at $500. I think you get a better watch with Traska at $500 than a Seiko at $300, but the differences are teeny.
Andrew Are they $200 differences?
Everett That's right. Seiko is still, at $300, the best value in watches, right? It's no doubt about it. People lament the death of the affordable Seiko, and as we've talked about on the show ad nauseum, including our very good Seiko episode, which I can't remember, that Will came in and talked with us. That's a myth. Seiko is still the entry-level affordable king today, right now.
Andrew And will continue to be.
Everett And will continue to be because of the scale in which they were able to produce watches. Yeah. And you look at a company like EMG making these tiny little orders, versus, well, actually relatively big orders, but then you look at a company like Traska making slightly bigger orders, right? It's all about scale. It's all about scale, Andrew.
Andrew So, oh, shoot, what'd you say? I had a thought about OEMs.
Everett Well, we talked about the different OEMs and the different capabilities, How is the OEMs get bigger?
Andrew We're talking about OEMs and you're really in the OEMs relationship to a manufacturer because the OEM is essentially like a broker who works with these manufacturers with these manufacturing facilities to fill an order. How much say does that OEM have in like, hey, this is technology that you can get to be able to fill this order. And then as a result, you can fill this order for everyone else. Is that just a manufacturer's desire to meet the need?
Everett You know, Andrew, I think this really depends. OEMs are a little bit like, um, I don't know. I'm trying to, I'm trying to come up with an option. It is, it is not like a custom or it's not like a one size fits all operation, right? One of the things that we discovered pretty quickly when we were talking with OEMs, when Foster was talking with OEMs, is that these companies have, and I'll just say, our OEM has communicated to us that they prefer not to refer to themselves as OEMs because they're thinking they're doing something different. And whether that's true or not doesn't matter. The point being there's an idea about what an OEM is and that can vary drastically based on who you're working with. So what we found in talking to these different companies is that the thing that you want more than anything is an OEM that's willing to say to you, if we don't know how to do this, We're committed to figuring it out. And, you know, again, one of the things we've talked about with Foster a lot is requesting a 48 click bezel, getting pushback, getting pushback, and then having our OEM work with us to procure tech to make that work. The people have joked with us about this. both to our faces and behind our back on the internets, which we can still see you guys.
Andrew Not if it's on Reddit.
Everett But you know, the issue is the bigger the clicks are, so the fewer the clicks are, the bigger the mechanical parts are, which means a variance has a bigger effect. So we talk about Seiko's aligned bezel alignment issues. All the time. And that's on a hundred, oftentimes on 120 click bezel. If you can see a tiny little difference on 120 click bezel, imagine how much bigger that difference is with a 48 click, right? We're talking about fewer than half, like a third of the amount of clicks. You're introducing an incredibly. 15 degrees. That's right. You're introducing this incredible margin of error. And so when, When they pushed back on us and said, we really can't do this. We said, well, we understand we can do an insert, but we'd really like you guys to try to see if this can happen. And they did at the end of the day, they did. We got to want, we got our one piece bezel, we got 48 clicks and we have had, I think of the 300 watches, we've had like four that didn't work and we were able to get new bezels and get them back out. So, and we can eat that, right?
Andrew Yeah.
Everett That's something that could be... That's a small rate. That's right. We were talking about, like, without this technology, like maybe a 35 to 40% rejection rate, which is just not manageable. And we're gonna have to eat it, right? All that to say, that's what you want. You want the fact... You want the OEM that's saying, we don't know how to do this, but we will figure it out.
Andrew And this is pioneering technology in Chinese manufacturing. I don't think you've been shy about the fact that your watch has been manufactured in China. Yeah, no, it's a real thing, right?
Everett Are there any Swiss parts? I don't know. I don't think so. I don't think so.
Andrew You didn't even get like Swiss sapphire or something just to bougie it up? No, it's an acrylic crystal. I would like Swiss sapphire.
Everett And actually they make all acrylic crystals in the peat fields of Scotland. something you might not know. So we actually have Scottish acrylic crystals.
Andrew That's where they grow? Yeah, that's right. Cool. Okay. So, well let's, so, so we've talked a little bit about your experience with Chinese manufacturing, which is something that by and large wasn't accessible to the normal person
Everett 15 years ago. Or to the extent it was, it maybe didn't seem that way as someone unfamiliar with the... 15 years ago, there were people doing this.
Andrew Yeah. Like five of them. Now, everyone's doing it. Yeah. And I want to talk about catalog washes. Because as you talked about earlier, Re-brick. Yeah. Brick or take your pick. There's, there are many out there. Uh, Dave Portnoy. Yeah, that's his name. Fat Mark Zuckerberg.
Everett Yeah. Look, if you haven't, if you haven't looked at a picture of Portnoy next to a picture of Zuckerberg, you'll know what Andrew's talking about.
Andrew The first time I saw him, I really, I like, I didn't get it. And I was like, when did he get so fat? He was doing one of those pizza review videos. And I was like, this is what he's doing with his time now. When did Zuckerberg get so fat and why is he reviewing pizzas? Yeah, that's what he does now. Turns out he's actually a BJJ practitioner and just had a pretty successful showing at a tournament. Portnoy did? Not Portnoy. Oh, Zuckerberg. Portnoy eats whole pizzas and has a shitty watch brand. And is Fat Mark Zuckerberg. Catalog watches. So over the last 15 years, there's been an explosion of people who are having or choosing to have watches manufactured whether it's a single run, whether it's a catalog of like a brand catalog, which has given this Chinese watch manufacturing industry, this huge breadth of knowledge. You know, we see R and D and true tech development in, in watches through these OEMs. Like this is, this is a competitive cutting edge manufacturing world. Yeah. It's just cheaper. Yeah. But catalog watches, so, you know, and I think really Kickstarter is probably, not necessarily to blame, but really the driving force behind this. We get people who can invest a little bit of capital, go to China, whether they go personally, whether they know somebody, whether they go through the grapevine, whether they use one of the two or three OEMs that was available. They got a watch made and they were like, man, I really like this. I made the watch that I want. Now I want to sell it because I'd like to make some money. And suddenly these manufacturers have these enormous catalogs of watches they've made, things that they use, because it's, I mean, I imagine that they retain the IP and the ability to produce. And if they don't retain the IP, they retain the molds and the specs and who gives a shit. And that changed the, whole landscape of the watch world. 50 years ago, a brand might show up and they might fold. Not nearly at the same rate of the last decade. How many watches can you come watch brands? Do you think you can come up with the top of your head that did either not a run or just a single run and are gone? Yeah, a lot. Dozens. Yeah, a lot. And some were great. Some were totally unique. And others, it's like, well, I'm glad that died.
Everett Yeah, you know, and watches that seemed like they were going to happen then didn't happen. Yeah, it's not uncommon. You know, I think I'd like you to clarify a little bit because you've brought up this term catalog watches. And I think I know what you're talking about. I think what you're talking about is the brick watch
Andrew I'm talking about somebody who wants to build a watch. They contact an OEM and they build a bear, a watch. They've got choices. Hey, here's your 150 spec sheets for cases. And if you choose that case, here's your 150 options for bezels, dials, movements, crystals, bracelets.
Everett You know, I actually don't think in 2023 we're seeing a lot of this. We're not now, but we were. In 2015, 2016. Five, seven years ago, yeah. That's right. I think we're seeing more of this. One of the things Christian and I have talked about a lot as we've moved through this process is how educated this niche consumer base is. And it's undeniably educated. You know, you've got people like us Andrew and Everett and will the watch clicker, you know, we've got all of these folks who have dedicated such a tremendous percentage of their daily allotment of time to becoming educated in sharing that information. And it's not just us, right? There are, I think since we started doing this, what we're at episode two 40. So almost five years ago now, When we started doing this, there were a handful of podcasts. In that time, I would say maybe 40 podcasts have come and perhaps gone. The point being, there is this incredible community of folks that are dedicated to educating themselves and by osmosis, perhaps those around them. about this stuff. This consumer base is like knives or like any other... Or cars or any other obsession, hobby. We're just too smart for a catalog watch to really survive. So in order for catalog watches to survive, they have to do that by other channels, perhaps QVC or whatever. Barstool Sports.
Andrew That's right. That's right. You put a Rolex logo on it's nine grand. Yeah, that's right. I want one. I would like to get one. I just don't want to spend that kind of money for it because I imagine it's just hot trash. Oh no. Yeah.
Everett Don't get one of those. It's, it's well, I'm sure it's a fine watch.
Andrew You know, when, when that they're ugly though, that's the problem is that they're, they're just objectively unattractive. I don't even know how ugly they are,
Everett I mean, when that whole thing happened, one of the things, so there was a lot of stuff that got spread around on social, which was just plain not true, you know, a lot about, you know, oh, well, this is a court's movement. Well, they actually had automatics too. You know, there was just a ton of stuff that just wasn't true. This is a $68 watch. No, it's not. It's maybe a $200 watch, right? You know, there was a lot of stuff that was circulated that really kind of, I don't think added to the conversation, but at the end of the day, people were right, which is that the margins on that watch, based on what it was, pretty transparently so, were just not reasonable, and the market won't sustain that sort of thing. So, sorry to steal your thunder on that, Andrew. I actually just don't know how much of a factor those types of watches are today.
Andrew They're not anymore, but they were at the onset. That's those were a huge driver in the proliferation of this small watch industry. And then we got people who were true designers who suddenly had a place where they could reasonably go and have their designs come into reality. Because prior to the ability to access Chinese manufacturing, a brand like Brew, a brand like Laurier, a brand like Astor and Banks just simply isn't going to be able to drum up the capital to go into the Swiss watchmaking valleys and say, hi guys.
Everett Yeah. Yeah. You know, I actually think a bigger, so I don't think you're wrong, but, but I think maybe a bigger influence on the current micro-brand market was folks like Yabokes and Jake from Dagaz and, um, You know, Bill Yao and... Modding's a huge part of it. I actually think that's the more important part of it. Because when you look at... So Yaboki's is this very successful business, I think at this point, that spent the first 10 years of its existence with a photo bucket catalog that was a nightmare to navigate. You know, it's clearly this guy with very little like, like modern business acumen, who's just found a channel by which he's making these very custom parts and selling them. Dave Murphy, you know, uh, not a business. Well, he is a businessman, but not running his watch products like, uh, a real business, but running it like an Etsy shop. That's right. That's right. Jake from Dagaz, maybe a little bit more cutting edge, but it's kind of the same deal, right? So I think. Uncle Scraps. That's right. I think by way, yes, Uncle Saco, right? By way of seeing these folks doing this thing in this like not highly polished manner, right? These are obviously just regular people and they're on the fucking forums talking about this stuff. I think that is for a lot of folks. the real beginning. When you see someone like, you know, Dave Murphy's obviously making his own parts, and he's a professional screw machinist, which is a different deal. But when you see Jake from Dagazz making watches, it's like, oh, well, this is just a dude. Like, if he can do that, there's a way for it to be done. He's just a dude. Yeah. This can, this could, somebody could do this. I could do this. I could do this, right? More so than the catalog watches. I think that is the genesis of this industry.
Andrew Catalog watches open the door though. Perhaps. Yeah. And catalogs and modding all kind of come to, they come to the surface at the same time where people are modding watches and they're like, well, why mod it when I can just have it made to look the way that I want it to. Right. Right? Because those things are happening contemporarily, contemporaneously. Yeah. That's the one. And suddenly then people are like, well, I have an idea. I know how to make a watch look good. Let's put a bird on it. Let's put a bird on it and send it off to China. And then they're going to send me back some watches. None of it's possible without both Chinese manufacturing and access to those supply lines. Yeah, that's right. It is a game changer. One more thing, one more thing that I have to talk about.
Everett He's referencing his notes, you guys. I am. This is exciting when this happens for me. With that.
Andrew So we're going to move away from small brands. And we're going to go to slightly bigger brands. Let's say like Christopher Ward and above. I don't know if Christopher Ward is having any manufacturing done in China. My assumption is that they probably are.
Everett Yeah, probably.
Andrew Because of laws that regulate what you can put on your dial, USA made, Swiss made, What's the German? Six o'clock badge. Doesn't matter. It creates this really interesting opportunity to use, and almost a necessity, to use more expensive and better stuff elsewhere. To drive up your value of what's being made in the necessary country against what's being made outside of that necessary country, which is kind of cool because now you can save a bunch of money on getting your cases made, which before were this huge investment. And now you've got a bunch of money freed up and you want to drive more Swiss stuff into your Swiss made watch. And this is specific to the Swiss industry. That's I think what gives these companies the freedom to do higher level shit in Switzerland and almost a need to for more money spent in Switzerland into that watch. Yeah.
Everett What was the Chris, what was the, the, what did Christopher Ward call it's our chime watch with that beautiful spring?
Andrew The, um, Belcanto. Belcanto. That's right. Yeah.
Everett You know, Belcanto. Belcanto? It was Belcanto. That's a watch that's probably made in very small quantities and probably made pretty hands on directly by Christopher Ward. I think your point is that when a company is getting margins by way of saving labor and production costs in other places, it gives them the ability to be more hands on and more directly involved in the production. And I don't think that's wrong. Um, you know, this, this industry we're in is tough. So we've had Mike France on the show twice now, and he's talked about this both times he's been here, but standard margins, let's say you're making playing cards. Let's say you start a business, you're gonna make playing cards. I think the expectation of a company making playing cards would be something like a six or seven to one margin rate, right? So they would be charging seven times their cost per unit in for every unit out, right? Yes. So if it cost a dollar, to make that deck of cards and get it in their hands, they would be charging the consumer $7, right? And if you can go scale, maybe you go less. So you make, you know.
Andrew Playing cards are pretty easy to scale, I'd imagine.
Everett That's right. So you make 10,000 decks and you sell them to Walgreens. And maybe you only need to do four to one or whatever. But generally speaking, for direct sales, if you're doing the lion's share of distribution and actually getting the product into people's hands, you're going to want to have a fairly high rate of return. And I think certainly we see that with companies like Tag Heuer, we're seeing that with companies like Tissot, you know, we're seeing these pretty big margin rates, right? Like a Tag Heuer is, I'm guessing here, I don't have any data to back this up. I'm guessing like a Tag Heuer Aqua Racer, that you buy for $2,000 probably cost Tag Heuer at scale $200 to make, maybe $250.
Andrew Yeah.
Everett Right? And so they're getting a big rate of return. They've got marketing and other things that go into that.
Andrew But for per unit, right? Without including all of the overhead.
Everett Yes. Uh, probably including overhead. So you think 250 is going to, I think before, before marketing, you're probably looking at an eight or a nine to one guessing now a company before marketing. Okay. I accept Mike France is Ben super transparent about this, that their goal is a three to one rate of return. I will tell you that Foster right now, we would love to be a three to one. But at the end of the day, we're at less than 2 to 1.
Andrew Because people aren't going to buy your watch at 3 to 1.
Everett Exactly. And so what you can see getting into this industry is that you're going to grind. I don't want to share, and I know a lot of companies are pretty closed off about the information. I'm not. And so if you ever have questions, just ask. I'm an open book. I know a lot of companies, big micro-brands, the big micro-brands, the ones you're thinking about right now as I say these words, are selling maybe 2,000 to 4,000 watches a year, which is not very... Now, just do the math, you guys. Just do the fucking math, right? Now hire a couple people and pay somebody to do marketing and pay somebody else to do distribution. And, oh yeah, we got to do returns and we got to do quality control and we have to pay a watchmaker on contract, you know, several thousand dollars per month because you've selling 2000 watches, which is something like 150 watches per month. And some percentage of those are coming back four or five watches. You are spending money there. It is very difficult to make this work. at two to one.
Andrew But Chinese manufacturing made it possible and made it almost an expectation. That's right.
Everett Because we, it's another, this is another Arrobarus, Andrew.
Andrew Yeah. In the last five years, we got really accustomed to good shit at 350 bucks because people who didn't know what they were doing, we're like, Oh, this watch cost me $150 to make. If I make $175 for every watch that I sell. That's a really great return. Yeah. Two to one is awesome. Why wouldn't I want to do that? This is a side hustle. Yeah. And then they're like, Oh, that was, that really worked. Yeah. I'll do it again. And now everyone's doing it. We have these 300 to $500 watches that are really well made. that are great watches. And we as watch consumers really like because they're... A good value.
Everett 40% less. This is a good value. Yeah. There was a company that came out a few years ago, Andrew, called GM Lang Watches. They had a good social media presence. Huge social media presence. They had a pretty killer watch. It wasn't a one-to-one, but it was similar in a lot of ways to the Monta Triumph. It had a similar feel. kind of the way the case flowed. Um, the general aesthetic of the watch felt very Monte and we got a review sample and you and I both remarked at like how good it was because they were going to be like two 95. I think two 75 was their going rate. And at the time I had just sort of started to get into foster and I was like, I don't know how they're doing this. I don't know. I don't know. And things change. Prices change. Deals are different depending on who you're working with. But it just felt like this is too good to be true. And eventually they kind of went away. They weren't able to produce their watches.
Andrew It's the first brand that ever sent us a watch and then ghosted us.
Everett Yeah, they ghosted us. Garrett, if you're listening, we really liked your watch. I'm sorry it didn't work out. If you want it back, it's sitting in a box on my shelf. Please contact me. Yeah. All that to say, you know, these guys were going to do a really cool thing. Yeah, they were. But at the end of the day, because of this market and how hard it is to get into, they were forced to cater to expectations in a way that made it ultimately impossible for them to succeed.
Andrew Yeah, they weren't viable because they were a victim of the value of the Chinese manufacturing process.
Everett That's right. So it makes sense for us as consumers to always want to get the best possible product for the best possible price. And you look at a company like Steel Dive or Merkur, or, you know, any number of these quote unquote mushroom brands.
Andrew I don't love that term, but I think generally people know what we're talking about, but, but these factory brands that are selling, but if we look at Spinnaker aviate, we look at that group, they're doing a similar thing, but because they, they can operate in volume in the same way that Seiko can in the same way that, that any of these other big brands cans, cause they have nine, brands in their catalog.
Everett That's right. And they're making bigger scale and they're using different venues to sell the watches. Yeah. Yeah. That's right.
Andrew But small brands aren't doing that because it's just a couple of dudes in a basement. That's right. That's right. Can't work at scale and are victims of the value of Chinese manufacturing, but it's it. Yeah. We've covered it all. We are, we, we have given you all the information you need about Chinese watch manufacturing. We sure have. It has made all of this possible and has driven down prices in such a way that my man Everett needs to double his margin on his next run.
Everett Yeah. You're going to have to spend more. Someday you at home are going to have to spend a little bit more.
Andrew Which sucks because that, you know, we got really interested in watches and kind of that golden era of Companies not realizing that they weren't charging enough. That people really were selling $1,000 watches for $350, $400. And we got to reap the benefits of that. And now they are paying the price.
Everett Andrew, before we wrap up today, I would like to, if you're still here, thank you for being here. I want to give you some context on why we did this episode today. So we had asked somebody to come on the show to have this conversation. And after that conversation, you and I, Andrew, we're both a little bit underwhelmed at where we had gotten. And we wanted to have the conversation a little bit more comprehensive way. We both spent some time thinking about what we wanted to talk about. And, uh, in particular, you, Andrew really kind of dialed down, drilled down on the things that we, we kind of wanted to talk about that we struggled to get out in that conversation. So, um, All that to say, we're not experts and this is a hard conversation to have because the people who know about the industry are reluctant for any number of reasons to really dish. We're always happy to dish, but we only know so much. So if we made any mistakes or if we misrepresented things or if we generalize things in inappropriate ways, apologies. With that said, we did want to revisit this topic, have a little bit more deep, kind of straightforward conversation about it. Yes. Is that fair? Yes. Okay. All that to say, I don't think we've covered, I don't think we've done it. No. With that said, I do think we're done for the day. Yeah. Anything you want to add before we move on? No. Andrew, other things, what do you got?
Andrew I got a new knife recently.
Everett Oh boy. Is that why you were missing your pinky?
Andrew No, that was from a different one. It's not important. So I have always done all of my carving and all of my roast cutting with chef's knife. Cause that's what I had.
Everett And because the chef's knife is like a wonderful tool.
Andrew It's a great tool. I want to get a bigger one. I want, I can want to like a 12. It's not, that's not for this conversation. Um, I really suddenly used a slicer carving a roast and I was like, Oh,
Everett Like a, uh, like a, like a 1980s Clark Griswold, like a, like a bread electric.
Andrew Oh, no, not like a, no, not like I, not one of those, but a scallop slicer, which we usually refer to as a bread knife.
Everett I'm just picturing Tim Curry cutting up Eddie. Okay. Keep going.
Andrew Uh, so I got one. I got a Dexter Russell, Sandy safe, 12 inch scalloped slicer. Dexter Russell, my favorite knife brand. Yeah. They're pretty close to it for me. In the way of utility kitchen knives, I think I will always have Dexter Russell's on my knife block. Same. For like my chef's knives, I want something a little bit different for, but these are money. So I got this 12 inch slicer. I've been using it on bread and all the other normal slicing things over the last couple of weeks. But today when I pulled that tri-tip roast off the grill and I let it rest, And then I hit that slicer to it. It was perfect. I mean, the slice you got was perfect. It was perfect. Was like at the, at the end, right? That those were the lazy slices, like slice us up, put it in the Tupperware, get it in the fridge because we're in like the chaos of Sam was gone for dinner and bedtime tonight. So it was like, it was me trying to wrangle bedtimes, wrangle dogs and get food put away. So dogs didn't eat the rest of my food. Cause if they ate that tri-tip I would have, they would have gone to the farm tonight. Um, This thing is money. We've talked about Dexter Dexter Russell knives before. I have a couple of Dexter Russell's. I have one of their boning knives. I have one of their breaking knives. I'm sure you've got a good handful.
Everett Yeah, I've got I've got a couple of paring knives and I've got my my sort of go to eight inch chef's knife to Russell.
Andrew And these are the white handle utility commercial kitchen knives that don't cost very much.
Everett I think that chef's knife was like 21 bucks.
Andrew So this was 35 bucks for the 12 inch slicer. They have a couple of different lengths. If you do any carving of roasts at any regularity, if you carve your Thanksgiving turkey every year, this is money. This is perfect. It's exactly what I did. We're talking razor thin, not quite deli meat, thin slices on the intentional one. It was killer. I regret not having had this already. Cool. I failed myself, but I have rectified the error.
Everett And I still kind of wish it was one of those electrics.
Andrew You know, uh, when I was a kid, we used to use those on Thanksgiving to carve the Turkey and they are scary. I was allowed to use one as a child. That's like six, seven, eight year old kid, like carve the Turkey up. And I know grandma would be like, have the, the, fork in the top of the turkey. And she's like, here's your chainsaw. Get to work, boy. Yeah. I mean, it's like a hedge trimmer chainsaw. Those are so scary. What a terrible thing. The 80s and 90s were bad.
Everett Andrew, do you know anything about instant photography?
Andrew You mean like digital photography?
Everett No, I mean like a Polaroid camera.
Andrew Do you know what a Polaroid camera is? I'm familiar with Polaroids and I know that they're having a resurgence.
Everett They are. So I was recently requested by a lady who sleeps in my bed and occasionally has sex with me to get an instant camera and was given a set of options that says, I'm looking at this one, this one, or this one. And all of the options were 50 to 60 bucks. Do you know where this story is going? Yeah, I do. Yeah. I do. And so me being me, which is the same as you, and I don't mean you, Andrew, I mean you listening to this podcast, was like, you know, I better just take a minute and make sure we're making the right decision here. So this was about an afternoon. Why does she want Polaroid? You know, so you already mentioned and it's true that these instant instant photography is having a moment, right? It's part of this whole return to analog and there's this it's it's sexy right now. People like it. Kids like it. People like this. And There's a project that is not really important that this thing was going to be incorporated into. I'm judging.
Andrew We talk about watches an hour every week and you guys listen. So judging with me. Yeah. Yeah, exactly.
Everett Exactly. We have no. We're the dummies. We have no room to judge.
Andrew We're not cool. So I was cool because she wants a Polaroid like everyone else.
Everett I get into this thing and I've been given this list of three 60 ish 60 to 80 dollar cameras and I'm like, you know, something about a $60 or an $80 camera just doesn't feel right to me.
Andrew Like Polaroids in their heyday weren't even 60, 80 bucks.
Everett And so of course I get into this and I start and I, and what I find is that there are really a lot of fairly cool instant cameras that are being produced right now. So there's a company called Lomography that's making stuff. Canon's got some stuff out there. Polaroid, of course, is still a player. Fujifilm is a player. Fujifilm is probably the, right now, biggest player. Attracts. And the differences are film stocks. Yeah, what are cartridges running? Yeah, not cheap, not cheap. You know, you're looking at 50 cents to a dollar per exposure. Okay. That's not too terrible.
Andrew It is what it is, right? I'm thinking like 20 exposures per cartridge.
Everett This whole search led me to a camera called the Fuji Instax Mini Evo. All right. So this is a instant camera that makes prints that are, the popular nomenclature is credit card sized. Which is a different size than the Polaroid of old, right? We all know that two by three, shake it, shake it. Like a Polaroid picture. Correct. These are slightly smaller, so they're credit card size. I found this camera. I love the aesthetics. That was the thing that drew me to it.
Andrew I see this thing and I'm like... Because this is a camera that when she's done with it, you're going to start carrying it. Because her excitement with it will be fleeting. Like, oh, this is sexy. Yeah. And then in like three years, you'll still be dragging this bitch around.
Everett This is not your wife, the camera. And so I started looking into it and I'm looking at, there's a couple of different Fujis. So, and this is, I will say probably the hardest to get and the most expensive instant camera you can buy today. Maybe not the most expensive, but amongst the most expensive. Some top tier shit. I think I, for a reefer, paid $285. Which it's like a basically like new inbox briefer. But it's delightful, Andrew. It is. Oh, it's really cool.
Andrew It is delightful. So has film and light effects built in this?
Everett What it actually is is a digital camera with a printer. So it takes digital images. Stores them and then can be printed with the pull of this lever that is very analog feeling and really sort of simulates a winding and it even ratchets like you're winding, but you use that lever to print. So you select the image you want, you apply the digital effects that you want. Boom, boom, pow. It prints up an image, which you then shake it, shake, shake it. Uh, you actually don't have to do that by the way.
Andrew Because it's printed. It's not an exposure. Golly. You have to put toner in it. Or is it built into the cartridge?
Everett It's an exposure. It's an actual exposure. So the printer exposes onto the film, just like normal film, and you get a print. It's an exposure printer is what it is.
Andrew That is quite a little piece of technology. It's also really nice because then you're not going to get those stupid Polaroids with like everyone's eyes closed. You can be deliberate about what you're printing.
Everett You can take four different versions, review them and print the one you want. Yeah. It is really clever.
Andrew It's a good marriage of the technologies.
Everett Modern feeling and just a lot of fun. And so I, this thing, this turned into like a request from my wife. to take a look at these cameras and pick one to something that I'm now like, bad about it. I'm having so much fun with this thing. It's a big spin. Now I will say there are other options. So it came down to really two different cameras for me. So first I decided we really ought to be buying a Fuji because the Instax film system is the best. I'm not going to bore you with why that is, but versus the Polaroid or the Kodak options, Instax is more widely available, more affordable, and better. So looking at Fuji's now, Fuji has a very, very popular, and in fact, if you see a kid with an instant camera, It's likely to be an instax mini 10 or 11 or perhaps now 12. These things are like under 100 bucks. But they're analog. They are very, very analog. They're simple machines. You're not getting to review. You're not applying effects. So I went with the little bit sexier, juicier option, which, you know, you're you're to do with someone to do. And I'm very happy I did. Although I may have had just as much fun with an $80 Instax 12. You wouldn't have.
Andrew Who knows, right? Because you can push your SD card into this. Yes. And take any photo that you already like taken off of any other platform. Correct. And put it into one of these credit card film options. Correct. Which is far easier than trying to replicate that anywhere else. That's right.
Everett You can take any image. stick it in there and make it into a Polaroid picture.
Andrew I'm going to have so many nudies. I'm going to need to borrow it.
Everett Yeah. They're really cool, man. Uh, I'm, I'm super into it. It's been a lot of fun. Uh, we haven't done all that much shooting with it, but it's like, you know, and the camera is sort of secondary at that point, but the camera on this thing is pretty decent. It's not like we're not taking world-class landscapes with this thing, obviously. You get the lens, the lens is with the lens. You have an optical zoom, which is pretty decent, but I mean, it's, it's a fairly wide angle, which is great. So you've a lot of, you spend a lot of time zoomed in, but it's nice to have that width. Um, yeah, it's cool. It's, this is a pretty cool, pretty cool contraption. I did not expect to be into this at all. Then got into it and now I'm sort of just enamored by it.
Andrew I dig it. That's a cool technology. Let's think of all the credit card portraits you can make now. That's right.
Everett Every Christmas card. That's right. Just a credit card portrait of my nudes. Bathroom selfie. Yeah. Andrew, what else do we need to talk about today, man?
Andrew I think nothing. I think we've done it. We've achieved the goal. Comprehensive look at Chinese manufacturing. Wonderful. We're really good at this. You know, we're professionals.
Everett Hey you guys, thanks for joining us for this episode of 40 in 20, the WatchClicker podcast. You can check us out at WatchClicker.com, which is where we post every single episode of this podcast and articles, reviews. I'm going to tease something. We've got a really cool announcement, which is going to be something you can buy.
Andrew Yeah.
Everett Very soon.
Andrew It's from the Polaroid though.
Everett You can also check us out on our socials at WatchClicker or at 40 and 20 underscore watch clicker on Instagram. If you'd like to support us, and oh boy, we do hope you want to support us. You can do that at patreon.com slash 40 and 20. That's where we get all the money that we need for hosting of the website, the podcast, software, hardware, et cetera. Check us out, patreon.com slash 40 and 20. And yeah, don't forget to tune back in next Thursday for another hour of watches, food, drinks, life, and other things we like.