The Business of Watches [025] Seiko Watch Corporation President Akio Naito

0:00Welcome to the Business of Watches, the Hodinkee podcast where horology meets high finance and we go behind the scenes to talk to the executives driving the global watch industry. This week in Geneva, we sit down with Akio Naito, the president of Seiko Watch Corporation. We talk about Seiko's ultra high-end brand, Credor, its international launch and its debut at Watches and Wonders. But first, I'm joined by my colleague, senior Hodinkee editor, Mark Koslerich, to talk about the spring auction sales that are actually still going on here in Geneva. Mark, thanks for joining us. Great to speak with you.

0:39How are you?

0:40Akio Naito:I'm great. Thanks for having me. It's an exciting auction season, so I'm excited to be here and chat about it. Great. Yeah, no, it's been quite interesting. I was at some of the auctions on the weekend, and yeah, some really compelling results. I mean, I think certainly we can say things are strong, Yeah, what's standing out for you so far? I mean, you know, just to be clear, we're on Monday here, Monday evening in Geneva. And so Christie's just wrapped up its first day. We've had Phillips, we've had Antiquorum, and we had Sotheby's on Sunday. But yeah, tell me what's standing out for you, Mark.

1:16Akio Naito:Yeah, I think we're seeing a pretty significant market shift, which frankly started a little while ago and it's slowly been ramping up. But I think back to the sort of neo-vintage sale that happened a couple of years ago at Philips and the interest in things like the Derek Pratt, Urban Jurgensen oval pocket watch. And that was a massive result. And I started to pay attention. There were more and more really strange, rare pocket watches coming to market, which is, you know, everybody says I have this pocket watch agenda. But I was watching the market shift there. And then the Indies, the FP Journe shift, we're seeing a little bit of fall off from four digit Rolex, which used to be a blue chip.

1:59Akio Naito:And so there is, I think, a massive market shift with some truly incredible results, stuff that's hard to understand. But I'm curious to see how long this lasts. I actually do think that this is going to be a long term shift in what we're seeing in the market. Yeah, no, it's interesting. I mean, you know, we talked to Earl Bax and saw Dr. Helmut Krott, who's obviously, this is his kind of market, and just, you know, some regular dealers as well. And certainly, yeah, everyone's noting that there has been a shift to more interest. And we've certainly seen some of the big houses start putting up a lot more significant and important pocket watches.

2:39and indeed, yeah, we saw sort of not things fall apart, but certainly not the level of enthusiasm or interest in some of the, you know, the classic Rolex pieces. I mean, among those pocket watches, anything for you that you think's really important to highlight that we saw? I mean -

2:59Akio Naito:I'll say this. I think, you know, I'm working on a story right now that'll be out by the time this podcast comes out. So you can check out our recap. But the first thing that happened was in a group chat that I was in, Ben sent a screenshot of the result of an Acrivia AK-06, which was three million Swiss francs all in, which was truly incredible. But then maybe 70 lots later, there was a pocket watch from a watchmaker that probably I would say 99.9 % of our audience had never heard of, Louis Richard, that went for almost four million Swiss francs. And that is, I mean, that's truly incredible and it's an important watch.

3:41Akio Naito:We'll dig into that later. But you have the Louis Richard watch you had at a small auction house. There was a jump hour tourbillon pocket watch made, I believe in the eighties by a watchmaker who didn't do that many watches. His name was Miklos and it sold for 900 ,000 euro. I mean, I think the estimate on that was maybe 20 ,000 to 40 ,000 euro. You had things from Fraudsham and other brands that really were way outstripping even the expectations of the people that were collecting these watches. And I spoke to a lot of them over the weekend who shared with me what was going on with the battles in between them.

4:24Akio Naito:But the general consensus is these have always been important. You did have an era of some of the big collectors who unfortunately passed away. Their families are slowly getting rid of their watches, et cetera. But these were always important. Now they're coming back to the market and prices are going crazy because a handful of people understood how important they are and they have pockets that are deep enough to bid on them. Interesting. Yeah. And we also obviously saw the Patek Philippe 2523. I mean, that basically hit a record for the reference. I think you'd agree that, you know, certainly on the Patek side, things remain solid.

5:03Akio Naito:I would say that, you know, everybody was looking at things like Paul Newman Daytonas and stuff for a long time because they were flashy, recognizable. You know, I think the general population after the sale of Paul Newman's Paul Newman was more likely to know what a Paul Newman was. And so if you wanted to flex, for lack of a better word, you could wear that. But there were hundreds, if not thousands of these things made, whereas Patek actually continues to be and has always been the blue chip that will, I think, largely not fall off. Right. Like you're not getting immediate returns of, you know, a market that's growing by 100 percent, 200 percent every year.

5:44Akio Naito:But the value of these things, the truly extraordinary Patek references will continue to slowly tick up. and I don't see that falling off. Whereas I think it was time for things like Paul Newman Daytona's and mill subs to go by the wayside. I think the other big question mark is Cartier. There was sort of an, I would say, abnormal auction in Hong Kong with Sotheby's where some of the prices just were astronomical beyond anybody's belief, even Cartier collectors and sort of not seemingly grounded in reality. They were grounded in someone's reality or at least two people who drove the price up. And so I'm curious to see how Cartier will either be on a roller coaster or will it kind of take after Patek in the long run and just be a slow increase from here.

6:33Yeah, no, it's interesting. I mean, we certainly still saw some strength in Cartier crash. Sotheby's with more of its shapes of Cartier collection coming out less than was in Hong Kong, but still generally doing well over low estimates. Yeah, I mean, you know, there still was some strength there, not the level of enthusiasm, exuberance that we saw in Hong Kong. And the last thing, I mean, at Christie's today, there was that Audemars Piguet, Tortue from the 1930s, you know, one of, you know, three that are known. It did very well, I believe, all in something around 2.3 million francs, certainly a record by some measures.

7:17You know, this was a watch with a great story and in the same collection since the 1940s, but obviously had been restored by Audemars Piguet. I mean, you know, should we take much away from that result, Mark?

7:31Akio Naito:I think there's a couple of things that you could try to draw conclusions on, but I think it's hard, right? This is something that there's one example in AP's museum. So you don't really have a choice if you want to buy this. I don't think the other one is known. I don't think it's been seen by anybody that I've heard from. So, you know, you either buy this or you don't. From a respiration standpoint, there's not another option. the price is certainly really impressive for an AP wristwatch what I am kind of curious is I don't think you can draw a lot of conclusion on the market because if you go back and look at what happened with Philips they they had this incredibly rare calendar chronograph as well and that only went for only 1 million Swiss.

8:22Akio Naito:I think it's all. It was a beautiful watch. It was a beautiful watch, really interesting. But the problem with any of these from AP, when you compare them to something like a Patek, even the 2523, which is really rare, is there is enough of a lineage and scholarship that you have data points that you can compare against. You understand what is on the market, what your options are. You can see trends. You can see what other people were willing to pay. you can study them fall in love with them hunt for them ap they just in that era they did not make as many serially produced watches and so you can't really get yourself super excited you can't hunt for something you can't say oh i found this really great two five two three but there's one that i want more it's either you you take it or you leave it and and the market is then just not going to be as robust.

9:14Akio Naito:It's not going to have as many examples of what you can find on the market or other examples that can reassure you that spending two or three or$10 million on a watch is worthwhile. It's you alone in a sea of nothingness around you and you have to really love it. And I think that support, that scholarship really does make a difference in terms of pushing the prices up. So to me, I can't draw any market trends from a massive result like that for an AP because unless somebody sells it again next year, there's no trend. Right. Yeah. And I would certainly, when we're talking, especially from that era, we're talking much, much less volume and examples, a much more bespoke watchmaker at the time.

10:00So, yeah, we're going to throw it to our chat with Akio Naito from Seiko. But you saw what both Grand Seiko and then Kridor we saw at Watches and Wonders for the first time this year. I mean, any thoughts on what Seiko as a corporation is doing with that brand? I guess trying to sort of, you know, do something similar to what they did with Grand Seiko back in, I think it's 2017, sort of, you know, making a distinction for that and bringing that brand more international.

10:31Akio Naito:Yeah, I think it's an interesting time for Credor. I think there's been a lot of interest and it hasn't been completely out of the market. I know that having gone to the Grand Seiko boutique in New York, they had some Credor watches sort of squirreled away in the back for people that ask. I guess you could kind of say it was a shibboleth for people that really cared about Japanese watchmaking. You say the word and then you're led to see some of the cretors, whether it's their complicated watches or the gold feather, the locomotive, the masterpiece collection, the Ichi 2, these things. And they have been slowly rolling out the locomotive.

11:09Akio Naito:I think the one thing that I'll be interested to see for the market is Grand Seiko has core pillars of design that lead it to be something that's easily digestible for a commercial audience, right? You know that a Grand Seiko is going to always operate visually in a certain realm and you know what you're getting when you walk in the door. And if you want to dress your option, there's one that's not too far afield from the sportier options. and and credor doesn't have those same restrictions they can do a lot more which opens up a lot of doors and it could get a lot more people in but at the same time you you just don't know what you're what you're asking for it's like going to a restaurant in some ways without having the sense of what the cuisine is that you're you're going to be looking at so i think it will maybe take some time to pick up steam in the united states in a way that grand seiko was uh did not But it is an interesting opportunity for the brand and a very broad opportunity because it covers a lot of the financial spectrum.

12:15Akio Naito:You can have very, very expensive credores and then you can have much more affordable ones. Yeah, absolutely. No, there's almost limitless possibilities in terms of what they can do with watchmaking and finishing and technique with this brand. And yeah, we will hear from Mr. Naito on that shortly. But Mark, wanted to say thank you. Always a pleasure to hear from you. And we appreciate your insights. Thanks for having me. And now here's our conversation with Akio Naito, the president of Seiko Watch Corporation.

12:57Welcome Akio Naito, the president of Seiko Watch Corporation. We are here at Watches and Wonders 2026. Welcome to the business of watches. Thank you very much for having me. Thank you for being with us. So, I mean, let's start. The news here is that Crador is at Watches and Wonders for the first time. the high-level brand from Seiko. Tell us why Credor has decided to join this year. Okay, if I can start with our history. Credor Brand was born in Japan in 1974 and became an independent of Seiko before Grand Seiko became independent, which was 2017. And when the company was contemplating to go into the global market with the luxury segment of our brand portfolio, the discussion was whether to choose Credo or Grand Seiko.

13:58That was around 2008-2009. And in the end, finally, we decided to choose Grand Seiko as opposed to Credo at that time. The reason being, we thought the name Seiko was well known among all the consumers all around the world. In comparison, Crido name was not known outside of Japan. And also Grand Seiko has a functional value, meaning legibility, accuracy, which we thought could be appealing more compared to Credo, which the aesthetic part of the brand may be cultural or regional and may not have a universal appeal. That was the decision internally within the organization. At the time. Yes. So we started with Grand Seiko for the global luxury segment.

15:00After several years, we had a difficult time in promoting Grand Seiko because the image of Seiko was not that of luxury. And luxury watch distribution was totally different from the main Seiko distribution. So we decided to make Grand Seiko an independent brand in 2017. and established Grand Seiko America in 2018, making Grand Seiko strategy totally different and independent of Seiko strategy. And that point, you know, we started exploding the Grand Seiko business outside of Japan. Actually, in the last 10 years, the Grand Seiko sales outside of Japan have grown more than 15 times. Wow. Very significant growth, and most notably in the U.S.

15:57market. And as the brand has become better known in the luxury segment, we thought the time was right for us to launch Credo in the global market. Because many people associate Credo with Grand Seiko, the high-level watchmaking, and from a totally different identity compared to that of Grand Seiko. And we can meet the demand of different consumers with Grand Seiko. Yes. And it's interesting that the decision was made here with the belief that the launch of Grand Seiko had succeeded, obviously, with the sales that you spoke of. And so that meant it was the time for Credor to have an entry into the global market.

16:50Am I thinking about that correctly? Well, historically in Japan, Credor was a lot bigger as a brand compared to Grand Seiko. Grand Seiko was filled a very niche space within the Seiko umbrella, Seiko family. And Credor was actually the luxury watch brand in Japan. Yes. And so how are Credor watches produced? How should we think about them in relation to the other marks? And how do they stand out? And what's the message we want to send? So even though we were able to achieve this international debut at Watches Wonders this year, our biggest challenge is to increase the production capacity for Credor.

17:38Because with Credol, there is a lot more hand craftsmanship, even more so than Grand Seiko, and making it very difficult for us to raise the production capacity. So although we are now making this international debut, initially in the first at least few years, the points of sales are very, very limited. And when you say, you know, international launch, what markets are we talking about and what kind of distribution should we expect at this early initial launch stage? So obviously, the same as in the case of Grand Seiko, US market is our most important strategic market. And our success with Grand Seiko, especially our flagship boutique in Madison Avenue, New York, that is a point where we can make use of to communicate to the consumers how Greedo is different from Grand Seiko.

18:44I see. And so will we see the two brands then in the same boutiques? How much physical? Yes. So the details are yet to be determined, but we would like to create a space or area where we can showcase Credo as a different brand. And when we talk about that, when we try and make the point of the differential between these two brands and that, you know, Credor was long considered a more prestigious, more craftsmanship, higher end brand. Yeah. What's the messaging on the difference here, considering that the brands will be side by side in some places? In a simple word, I think that as a brand, Cridol has more freedom compared to Grand Seiko.

19:37Grand Seiko has very unique grammar codes and the designs are inherited from the vintage models. And those representative models are like icons of the brand. And many of our fans associate Grand Seiko with some of these representative designs. And of course, the Japanese craftsmanship and the nature of time brand philosophy, these are the elements from Grand Seiko. In comparison, Credol, what we call the creativity of artisans, has more universal appeal in terms of elegance and beauty, not so much as chasing the ultimate functionality like Grand Seiko. So, you know, of course, we don't ignore the accuracy or legibility for credo.

20:33But from a different angle, we put more emphasis on the universal appeal of elegance and beauty and making use of the talented artisans. That's the key term for credo. Take a locomotive, for example, which was designed in the 1970s by Mr. Gerald Genta. It's not even the Japanese creator, but something in his creation, there is beauty or elegance which appeal to the consumers worldwide. So for Credo, once again, I think there is much more freedom to pursue the elegance and beauty. And obviously you're the president of a massive watch manufacturer. And so should we think about this international debut and launch at all in any kind of response or how does it fit into the trend?

21:37Would you agree that watch consumers are becoming more interested in design forward and more elegant kind of dress watches? So it's been a long time since watch became not just as a utility tool, but expression of one's identity or social prestige. And this has been our long-term strategy as a watch manufacturer to come up with first Grand Seiko. And as the fame of Grand Seiko, the level of brand awareness has increased. Now is the time for us to launch Credor and thereby capturing different needs of luxury consumers. And how should we think about materials used? I mean, is there more precious metals?

22:28How long does it take on average to make a Credor watch? How many people work on it? Can you talk about how big the production is? You say that that is one of the constraints in terms of the international land. Well, we right now have two manufacturing sites for Krido. One in Shizuku-ishi in northern part of Japan. The other is Shiojiri, west of Tokyo. And where these artisans and watchmakers specializing in Krido are working. And each of the representative models, like HE2 or Goldfeather, there is certain hand crafting elements that are very unique to Credo. And it takes, you know, like at least 10 years for watchmakers to be able to create a piece like HE2, the porcelain dial and characteristic handwritten indexes and brand logo.

23:34Yes, I mean, and that's an extraordinary amount of craftsmanship and speciality. Why Watches and Wonders 26, though? I mean, how do you see this venue as the launch pad? Or what role does it play in that international launch? Well, with Seiko, we used to exhibit at the Baselworld. And then Watches and Wonders, I was approached by the organizer back in 2021, I think. And then we started discussing with them how we could exhibit Grand Seiko at Watches and Wonders. And after starting Grand Seiko at Watches and Wonders, we increasingly felt the big success and feedback from all over the world. especially in the European market.

24:29So this Watches and Wonders as a luxury watch platform has been extremely important for the brand. And how does Credor compare in price range to Grand Seiko? And who do we think, you know, you know who your customers are in Japan. Who do we think they will be internationally? The history of Credor in Japan extends over 50 years. And actually, as a luxury brand, we used to have a very wide range of products under Credo, which we decided to streamline and be focused more on the high end. So that transformation took place last five, six years. And still we are in the process of, in Japan, you know, changing the distribution and changing the product portfolio.

25:21The collections we are showing at Watches and Wonders this year are just a part of the existing collections in Japan. And we carefully chose the collection which we could appeal to the global consumers. So as an average, the unit price is higher for Crido compared to Grand Seiko. Definitely. Can we talk about how much or what kind of different, you know, part of the market? I don't really have the exact figure in mind, but because for Cridol we use a lot of precious metals, platinum, gold, and that, of course, the material price is increasing. Definitely. And I'm sure that the price of precious metals is something that you're paying particular close attention to these days.

26:11Should we also talk about, though, Grand Seiko and how that brand has evolved and, you know, the international presence there? What are we seeing with the product on the Grand Seiko side? We're seeing, you know, different sizes for some of the divers. We're seeing finally some micro adjustment in the class. What kind of more innovation and changes should we look for in Grand Seiko in the future? So Grand Seiko, we decided to go to the global market in 2010. And the first four or five years, the percentage of our overseas sales within the total Grand Seiko sales was roughly 5%, 6%, very, very small.

26:58And the growth each year was like 10%, 15%, you know, gradual increase, but not the significant development. And as the brand became independent of Seiko, we started really drastically increasing the sales for Grand Seiko. first which took place in U.S. market and with the establishment of Grand Seiko America and changing the distribution strategy to penetrate into the high-end retailers. And of course, in partnership with Hodinkee, the communication was totally different, you know, changed. Certainly, yeah. And then last 10 years, the brand has grown, as I said, more than 15 times outside of Japan.

27:50Now, this year, we are launching new Ushio diver watch. And with Seiko brand, we have a very long history with diver watch. We created Japan's first diver watch back in 1965. And Seiko was associated with lots of sport models, especially diver watch. And when we considered how we could create Grand Seiko Diver, which must be different from that of Seiko, with the brand philosophy, Nature of Time, the inspiration of a dial expression taken from Ushio, which is tide in the ocean. And also, as Grand Seiko's DNA is to pursue the accuracy, which is an important functional element of wristwatch, we adopted UFA, ultra-fine accuracy, spring drive movement, which deviates only 20 seconds per year.

28:57So, you know, this is a new release and also it has a compact case size. So it meets a demand of global consumers as a Grand Seiko evolved from the historical Seiko divers watch. The last thing I want to ask you about is a personal interest of mine. I mean, I'm wearing a Grand Seiko Quartz 9F watch here, and Seiko and Grand Seiko are pioneers and leaders in quartz technology. How should we think about the future of the use of quartz, obviously with spring drive as well, which is a different operation, but how should we think about the future of quartz within the brands? So in 1969, Seiko created the world's first quotes watch, Seiko Quotes Astron.

29:49And with an enormous success of our quotes technology, which has become more commoditized in the industry. So lots of low-priced quotes watches with mass production have spread out throughout the world. And the image of quartz has decreased as a result. That I think is a reality. But our 9F movement for Grand Seiko quartz is totally different. We have an in-house capability of developing quartz crystal and then fine adjustment and tuning of quartz oscillator and with the thermocompensated mechanism makes our quotes movement for Grand Seiko very different from a conventional quotes watch at an affordable price range.

30:47So with the consumer's knowledge level increases and many people have become aware of the existence of a Grand Seiko brand, people come to our boutiques and looking for different models and they find our quotes models, which are more affordably priced compared with 9S mechanical movement or 9R spring drive movement. This plays an important entry-level model for the brand, and we are seeing increasingly the popularity of 9S movement in the U.S. market, where we have become able to establish the brand awareness of Grand Seiko. So Japan and U.S. are two markets where we see very popular 9F purchases.