Leung Wai Ho, Eddie

Leung Wai Ho’s family background. A native of Shunde, Leung Wai Ho was born in Hong Kong in 1949 to parents who moved to Hong Kong in 1947. His father received primary education in China and worked in the engine room of a Yau Ma Tei Ferry Company boat after coming to the Territory. The ferry company operated a 24-hour shift system with employees working on alternate days. His parents gave birth to three boys and three girls with Leung Wai Ho the third eldest of the six. His mother could not read and stayed at home to take care of the children in the Mong Kok cubicle apartment in which they all lived. In 1953, Leung Wai Ho’s uncle founded Leung Lung Kee and also rented a large room in Mong Kok to which Leung Wai Ho’s family eventually moved.

Educational experience. While Leung Wai Ho attended both primary and junior secondary schools, he was aware that he would never be a great student and dropped out at 14 after competing Form One. He subsequently worked as an apprentice in his uncle’s Leung Lung Kee Watch Case Factory. The standard working hours at that time were from 8:00 am to 9:30 pm. After serving a two to three year apprenticeship, Leung Wai Ho understood the importance of acquiring knowledge. It was around about this time that the 1967 riots began affecting the local market. As there was then less work at night, Leung Wai Ho began attending evening classes at the Hong Kong Technical College (later the Hong Kong Polytechnic). While there, he learned drawing and engineering technology. As Leung Wai Ho knew he had a poor educational foundation, he was determined to make up the difference by self-learning.

Summary of Leung Wai Ho’s childhood. Leung Wai Ho admitted that he was naive when he was young. Always hanging around in the streets after school, his academic results were poor. Later on in life, he continued to be appalled at the material deprivation of times when children could only play with picture card games and bottle caps. Because of this, people of his generation tended to develop a hard working and industrious spirit.

A review of Leung Wai Ho’s early career. Leung Wai Ho’s uncle Leung Yat Lung named the watch case factory he founded in 1953 as Leung Lung Kee. It was only the third factory of its kind in post-war Hong Kong. During his early time here, Leung Wai Ho learned machine repair and watch case production processes such as cutting and grinding. The young watchmaker believed that his apprenticeship experience laid a good foundation for his future career and thanked his uncle for giving him such a valuable opportunity. Leung Lung Kee developed its business overseas after the 1967 riots and opened a watch case factory in Singapore in 1969 in a joint venture with a Swiss watch manufacturer. Between 1969 and 1972, Leung Lung Kee assigned some of its staff to this overseas plant. This gave Leung Wai Ho even more opportunities for development especially in terms of building contacts within the market.

Building contacts within the watch market. While he was an apprentice, Leung Wai Ho earned a monthly salary of $0. In order to earn an extra $1, at 9:30 pm every night he got on his bike. He then rode from the factory at No. 60 Tong Mi Road at Tai Kok Tsui and delivered goods to watch fitting workshops in Tsim Sha Tsui and Wan Chai. Leung Wai Ho returned home around 11:30 pm after having night snack. As his father worked in the ferry company, he did not have to pay ferry fares each time he crossed the harbour. Leung Wai Ho used this privilege to become acquainted with watch fitting workshops’ personnel. He then began learning how to improve quality from their complaints about finished products. From 1969 to 1972, Leung Wai Ho formally established contact with customers by answering their enquiries or referring their problems to the factory for follow-up.

Leung Lung Kee’s customers. In the 1960s, Leung Lung Kee’s buyers included both local and overseas customers. Among the locals were Wah Kiu Watch Case Factory Limited, some big Ningbonese companies and also some Indian companies. US importers W.M.R. Watch Case Corp. and Pilamontrex Inc. were among its main overseas customers at this time. After Leung Wai Ho came into contact with buyers, he began to learn English, relying on teaching from contacts, reading customer documents, sending telegrams and looking up words in dictionaries. During his early days at Leung Lung Kee, Leung Wai Ho learned about production, while in the later stages he learned about marketing and customer service. In 1974, Leung Lung Kee’s manager left the company to start his own business and Leung Wai Ho took his place, becoming Leung Lung Kee’s second in command.

Opportunities resulting from Leung Lung Kee’s expansion. Leung Lung Kee opened in 1953, moving to Tai Kok Tsui in 1956 and then to Kwai Chung in 1974. Between 1969 and 1974, Leung Wai Ho was responsible for operational matters and planed the plant relocation to Kwai Chung together with his uncle. Thereafter, Leung Lung Kee’s business developed continuously from this base in Hong Kong. In the 1950s, the company began to handle US business, with customers coming to Hong Kong once every year to place orders. After Leung Lung Kee relocated its factory, it began to further develop this overseas business. Leung Wai Ho was among the first personnel in the local watch case industry to seek overseas opportunities. He went to Chicago and New York in 1974 for the first time in search of customers and received satisfactory orders. Leung Wai Ho regretted his limited English proficiency at that time. Around 1974 and 1975, mechanical watches began to give way to electronic digital watches. Leung Wai Ho then went to Silicon Valley in California four times in 1975 alone. While there, he sold Leung Lung Kee’s products to Intel who only produced electronic movements and had no desire to move into watch case manufacture. Leung Wai Ho successfully marketed Leung Lung Kee’s watch cases, generating huge profits for Leung Lung Kee between 1975 and 1977.

Leung Lung Kee founder Leung Yat Lung's background. Leung Yat Lung, proprietor of Leung Lung Kee, received junior secondary education and went to Guangzhou to work in a locomotive factory as an apprentice when just 16. While there, he engaged in mechanical and engineering technical work. Leung Yat Lung later came to Hong Kong from the mainland in 1946 at the age of 20, working as a master at Sun Kee Watch Case Factory. While machines in the locomotive factory were mainly heavy machinery, their operation principles were similar to lighter equipment such as lathes or planers. After working at Sun Kee for four years, Leung Yat Lung established the joint venture Kwok Kwong Watch Case Factory. A year later, in around 1950, he started his own business.

Leung Lung Kee’s plant changes. In the years from 1950 to 1953, Leung Lung Kee relocated its small plant four times. The company’s first facilities were located in Shek Kip Mei’s squatter area. The second factory was based in a shop at the junction of Canton Road and Public Square Street, close to the Yau Ma Tei Police Station. The third site was located in a ground floor shop of an old building near Tin Kwong Road and Kau Pui Lung Road at To Kwa Wan. This plant was primitive and small and measured less than 500 square feet. While it only had space for lathes and drills, it employed around 20 workers. The fourth and final move was to an old building at No. 66 Tong Mi Road in Tai Kok Tsui in 1955. This last building was a mixed use one, with the upper floors housing families while the factory and its 70 to 80 workers occupied the lower two to three floors.

Leung Lung Kee’s production processes and division of labour. Leung Lung Kee mainly produced watch cases. Including the plastic cover and crown, there were about 12 kinds of accessories in a watch case and some 40 processes were needed to complete its manufacture. First of all, a bronze cast mold base had to be ordered from a metalware factory. In those days, technology was poor and the size of the delivered mold base could sometimes be 40% larger than that actually ordered. Such oversized molds needed to be cut and grinded by a milling machine before they could be used. As cutting copper materials required high temperatures, workers’ hands frequently bore many painful looking red burns. Male employees mostly handled lathing, milling and other machines responsible for cutting and polishing, while female staff took charge of assembly and packaging. The Tong Mi Road factory had more than 80 workers, of whom about 55 were male and 25 were female.

Leung Lung Kee’s apprenticeships. Leung Lung Kee’s mold department was equipped with large-scale production machinery. During his early days with the company, Leung Wai Ho initially worked in the machinery department where he learned about all the machines used to produce different types of watch case. The master taught and guided him earnestly and Leung Wai Ho listened diligently, mastering each of the many techniques used in making machines and equipment. Leung Wai Ho stressed that apprentices needed to be attentive, hard working and willing to climb under dirty machine tools to carry out repairs. Apprentices also had to be prepared to work extra hours and had to comply with the master’s every command – even when it came to buying breakfast! In the first two years of his career, Leung Wai Ho mainly learned in the machinery department. In the next two years, he learned watch case production processes such as cutting, grinding and drilling. Leung Lung Kee did not have a formal three-year graduation requirement for apprentices. Younger workers who had mastered all techniques could graduate at almost any time.

From 1964 to 1968, Leung Wai Ho learned all of these necessary production processes. Apprentices in the factory generally learned either machinery or watch case production. Under the wing of his uncle, Leung Wai Ho was able to learn all about several different departments. In the 1950s to the 1960s, workers mostly entered a trade through apprenticeships. In the 1970s, piece-work-based wages that boosted production output became more popular although they were limited to master-level employees only. In the early years, most male workers could complete their apprenticeships and eventually become masters while female workers oversaw non-technical processes such as packaging and assembly. Female apprentices only started to appear in more recent years when Leung Wai Ho set up production facilities in Dongguan.

Labour relations at Leung Lung Kee. While he was the proprietor’s nephew, Leung Wai Ho never used his status to take advantage of his colleagues. As his family was living near the factory, he moved, ate his meals and lodged there between 1964 and 1967. His aim in doing so was to mix with the masters so that he could ask and learn from them at any time. Leung Lung Kee’s masters and apprentices slept on bed planks in the factory each night. In the 1960s, Leung Lung Kee provided its employees with daily lunches and dinners. After Leung Lung Kee began taking US orders, Leung Wai Ho often worked overnight with the masters and female workers in order to meet shipment delivery schedules. In the early 1960s, the Labour Department stepped up inspections of unauthorised overtime work and legislated that younger and female workers could not work after 11:00 pm. When the Labour Department’s inspections were frequent, Leung Lung Kee would allow female workers to take packaging work home. Leung Lung Kee’s staff received overtime pay for their overnight shifts and its kitchen also served them chicken congee while they worked. Leung Wai Ho felt that in those days both employer and employees were of one mind and one heart and that later labour relation never again achieved such closeness.

Leung Wai Ho’s career at Leung Lung Kee. Leung Wai Ho believed that his uncle intended to share the running of the business with him. He did not really understand his uncle’s expectations when he joined Leung Lung Kee and disappointed the older man when he later started his own business. That said, Leung Wai Ho was very hard working in his uncle’s watch case factory. Unafraid to accept extra shifts, he often put in overtime, receiving guidance and appreciation from everyone in the factory. Leung Wai Ho was keen to learn by observing and grasped every opportunity to do so. For example, he tried to understand the operation of various departments in the process of transporting goods. Between 1969 and 1971, Leung Lung Kee ran a branch factory in Singapore. At the same time, the company suffered from manpower shortages in the Hong Kong factory. Leung Wai Ho was able to assume part of the management burden during this time and went outside to meet customers and provide quotations. He received recognition from everyone in the factory and also began to better appreciate his uncle's expectations.

The origins and setting up of Dailywin. Leung Wai Ho thanked his uncle for giving him the opportunity to develop and learn about overseas marketing. When Leung Wai Ho later got married and had his own family to support, he was not content with his remuneration at Leung Lung Kee. Cheered by his customers’ encouragement, he conceived the idea of starting his own business and founded Dailywin in 1978. When he opened his first factory, Leung Wai Ho’s savings only numbered a few tens of thousands of dollars. He borrowed a further $200,000 from friends as capital and rented a 5,000-square foot half-floor plant from Join-In Shirt on Kwai Ting Road in Kwai Chung. He later admitted that the start up was a bold attempt. In the early days, Leung Wai Ho hired relatives as workers. As Dailywin’s customers were willing to pay quickly for their orders and suppliers generously allowed credit payments, business got off to a smooth start.

How Dailywin resolved its early capital problems. Half a year after Dailywin opened its factory, funding problems arose and the company constantly needed to borrow to meet its business expansion needs. Leung Wai Ho went to Panama in early 1980 asking a customer there to lend him US$50,000 repayable within one year in return for a 5% discount on orders. He finally succeeded in obtaining the funds needed to ride out these early difficulties. In those years, profits were high enough for Leung Wai Ho to make the necessary repayments. For the next year or two, Dailywin borrowed small sums from banks. When these bank loans proved insufficient, Leung Wai Ho would borrow from moneylenders via short-term loans. Leung Wai Ho emphasised his integrity and never owed wages to employees or ran up outstanding accounts with suppliers. By always fulfilling his promises, he succeeded in establishing a sound reputation that helped him sail through choppy seas during times of future difficulties.

Dailywin’s 1980s move to complete watch production. Between 1981 and 1982, Dailywin’s business volume constantly increased. Leung Wai Ho worked 12 hours a day in the 1960s and often worked from 8:00 am to 9:00 pm after starting his company. During the day, he looked after the factory operation. At night, he liaised with North American customers via telex. Dailywin initially produced the cases which dictated each watch’s appearance. This work had a high profit margin and most of the company’s customers were in North America. In 1983, a US customer commissioned Leung Wai Ho to assemble complete watches with movements provided by the customer himself. As a result, Dailywin’s business model began moving towards one-stop production. In the late 1970s, Dailywin co-operated with top US watch manufacturer Timex and began producing specialty cases for Timex. The company also looked for other manufacturers, acting as intermediary for referring orders to local watch factories such as Nam Keen and Rainbow. In 1983, Leung Wai Ho eventually bought shares in both of these companies despite their being much larger than Dailywin. The three parties then set up an electroplating factory in 1984 so as to better control quality. The fact that the electroplating factory was located immediately above Dailywin’s plant saved a lot of processing costs.

Relocation of production lines to Dongguan in the late 1980s. In the mid-1980s, there was a shortage of industrial factories and workers in Hong Kong. As a result, Dailywin had to move its operations to China in order to expand. In 1987, Nam Keen, in which Leung Wai Ho was a shareholder, moved to Dongguan. The following year, Dailywin also set up a factory there. By 1992, Dailywin had closed all production lines in Hong Kong, retaining only its design and sales operations here. In 2001, both of these departments were also relocated to the company’s Dongguan HQ. Subsequently, the company had just one office and 10 or so staff in the Territory. As a result, Dailywin had transited from being a "Made in Hong Kong" to a "Made by Hong Kong” manufacturer. Leung Wai Ho deeply believed that customers had confidence in, and would pay higher prices for products made by locally-overseen factories as such products had better quality.

Leung Wai Ho’s failure to make a mark with North American watch buyers. With the issue of the UK’s 1997 handover of Hong Kong to China still to be resolved, 1983 was a year of political instability for the Territory. Leung Wai Ho’s family emigrated to Montreal in Canada in 1984. As Montreal was close to New York, it was a convenient base from which to contact Dailywin’s US customers. The fact that the city was located in Canada’s French-speaking zone also helped Leung Wai Ho’s children learn French. Leung Wai Ho bought the SAGA brand in Canada and given it a Chinese name. From 1986, he focused on promoting the brand’s sales in Canada. As he could not oversee the business on the spot and North America’s vast population and landmass made advertising and marketing very expensive, the venture eventually came to an end. Leung Wai Ho retained his faith that Hong Kong was the ideal place for developing a retail business. Learning from his failure in North America, Dailywin began expanding its retail operations in mainland China with effect from 1992 onwards.

Developing China retailing on a consignment basis. In 1992, Leung Wai Ho accompanied a party from the Hong Kong Trade Development Council to the mainland to promote retailing. While there, he secured sales space in Guangzhou’s Nan Fang Building which had roughly the same status as Hong Kong’s Shui Hing and Sincere department stores. Leung Wai Ho subsequently rented a shop in Guangzhou’s Shangxiajiu Road, opening a flagship store to promote SAGA watches. Having many years of production and sales experience, believing there was a huge potential market in China, and serving as Vice President of the CHA, Leung Wai Ho had every confidence he would be successful in applying for his sales quotas. As a result, he worked hard to promote his mainland retailing activities.

Dailywin’s 1995 listing on the London stock market. Dailywin spent a full year trying to raise funds to develop its domestic sales in China and listed itself on the London Stock Exchange in 1995. It subsequently used all funds raised to expand the Dongguan factory operation. In those days, the UK market had a lower listing threshold, while the Hong Kong Stock Exchange did not welcome small companies capable of earning less than $50,000,000 within three years.

Dailywin began mainland retailing. Dailywin’s China domestic sales team began by focusing on consignments to shopping malls with all selling conducted through wholesalers. As Leung Wai Ho was not familiar with the mainland market and lacked experience in retailing, wholesalers often took the goods and defaulted on payment. This cost him considerably in terms of both goods and money. Between 1994 and the end of 1996, Leung Wai Ho lost a total of $50,000,000 in this way. After this failure, Dailywin was listed in Hong Kong in 1997 to raise funds for a comeback. From 1997 onwards, Leung Wai Ho directly managed the company’s mainland retail stores, using a “shop-in-shop” mode to open 25 shops in big cities across China. Leung Wai Ho was well aware that as a manufacturer he lacked retailing experience, and therefore hired full-time sales managers to run the shops. One of the managers he employed had previously worked in Giordano. Leung Wai Ho rented spaces of 20 to 40 square metres in each large shopping mall. He also co-operated with foreign brands such as Timex, Casio, Disney, Elle and Esprit to market lifestyle watch brands. Labelled Time Zones, these retail corners collected and analysed sales information on a daily basis. Leung Wai Ho admitted that the Guangzhou flagship store was not suitable for selling brand watches and that he had chosen the wrong location.

Leung Wai Ho quit the China retail market. Leung Wai Ho claimed that his attempt to enter retailing was a “money burning” business that had cost him around $200 million between 1997 and 2003. Sadly, profits earned from overseas’ businesses were insufficient for him to “burn money” in China at such rates. In 2003, Dailywin’s retail stores in China hit a peak of 450, with goods on display having a total value of over $90 million and some 2,000 staff running shop operations and warehousing. Not knowing when returns would materialise and lacking the financial muscle to sustain heavy losses for much longer, Leung Wai Ho finally sold the retail business in 2003. The buyer was a large locally listed watch manufacturer called Peacemark.

The difficulty of building successful own brands. Leung Wai Ho bought into the idea of creating Dailywin’s own brand, agreeing that retail profits were much higher than manufacturing equivalents. However, only producers who lived within their financial means could hope to succeed in such a market. At this time, Leung Wai Ho is no longer willing to take risks as he grew content with earning smaller profits. He continued to believe that brand building is a long-term enterprise involving huge investment capital and with returns only likely to come some 50-60 years later. As success required some understanding of retailing, a novice’s chances of success are ultimately not high. Leung Wai Ho cited Baleno and Jeanswest as enterprises which had successfully developed retail arms. In recent years, Dailywin sold its retail business to Peacemark. Apart from keeping the SAGA brand, the company’s remaining brands’ license and staff were all transferred in this move.

The rise of electronic watches in the mid-1970s. The advent of electronic timepiece marked a major revolution in the watch industry. Electronic watches became popular in the US in the mid-1970s, and were subsequently evolved into electronic quartz analog timepieces. While most watches were equipped with“three keys and one crown”, electronic watches needed four push buttons and also had to be water resistant and dial printed. At this time, watch and clock manufacturers in Hong Kong had not yet developed such technologies. As Leung Lung Kee had mastered the electronic watch category quite early, and Leung Wai Ho was also familiar with the purchase price of complete watches, the electronic watch business generated huge profits for Leung Lung Kee. Back then, each electronic watch button could be sold at US$4 (its value today is just $0.5!), while single electronic watch cases could fetch prices of US$14. Watch crown and silk- screen factories were also making sizeable profits. Other local watch case factories did everything possible to follow Leung Lung Kee’s example in developing the electronic market. Between 1974 and 1977, every local manufacturer producing electronic watch cases made a healthy profit. For this reason, 1974 to 1982/83 were peak years for the local watch industry.

The decline of electronic watches in the early 1980s. The Hong Kong watch industry mainly produced Roskopf movement watches in its early years. From the 1970s onwards, such movements began to decline in popularity as electronic digital watches became readily available across the massive US and Japanese markets. The new generation watches were very fashionable and had many functions. Some manufacturers invested in the electronic movement business and switched to electronic toys after making early profits. Many other local electronics manufacturers rushed to produce silicon chips, importing some chips from Japan and then processing them here in Hong Kong.

Electronic watches’ rise and decline were extraordinarily quick. Sadly, the excessive production of electronic movements and watches in the mid-1980s pushed prices down and eventually made production unprofitable. The fact that manufacturers in the Territory did not attach much importance to quality control also meant many locally produced electronic watches were simply not satisfactory to buyers and wearers. With consumers losing their confidence, electronic watches started to fall out of favour. The main beneficiaries of the electronic watch boom were Casio and ODM. Casio specialised in electronic watches made from high quality chips and cables whose quality was assured and so dominated the market between the 1980s and 1990s. In 1981/82, Japan and Switzerland co-operated in launching quartz analog watches. Such timepieces were popular due to their accuracy and subsequently become very hugely successful mainstream buys. While Dailywin had invested in the production of electronic watch cases, Leung Wai Ho later found that sale of electronic watches was not satisfactory. As a result, he adopted what he felt was a safer strategy and began specialising in quartz analog watches.

Relationships between different types of watch manufacturers. There was a clear division of labour in Hong Kong’s watch industry in the early days, with watch case and band manufacturers not producing peripheral products. For example, watch case factories would purchase mold bases for their cases from other suppliers. Complete watch manufacturers on the other hand engaged in total assembly and would buy in watch cases, crowns, bands and glass dials. While cross-process production is common nowadays, Dailywin was rare in that it produced watch bands and engaged in electroplating at the same time. There were several other large and small watch accessories factories within the local watch industry.

Among watch case factories, Leung Lung Kee was considered a large production facility, whereas most others in the trade were small concerns. As manufacturers involved in the same process in the 1970s tended not to contact each other, outsourcing and sub-contracting were not common. That said, late in the decade, Leung Lung Kee did once sub-contract processes such as pitting and grinding. In the early years, Dailywin received orders from many of Leung Lung Kee’s customers. Some were subsequently outsourced to “friendly” factories to produce complete watches. In the late 1970s, many wage-earners set up small processing plants in order to improve their living standards, thus creating outsourcing and sub-contracting operational modes. Many small factories started business in this way.

Dominance of quartz analog watches in the 1980s. After the electronic watch boom of the mid-1980s, quartz analog watches gradually became the mainstream and watch case manufacturers’ development once again stabilised. As sales of electronic timepieces declined, many watch case factories were hit with bad debts. After manufacturers turned their attentions towards quartz watches, their equipment grew more advanced and their business more standardised. Local factories learned much from the management modes and technologies of Casio. While the production of quartz analog watches was similar to that of mechanical timepieces, quartz analog products’ waterproof functions and level of accuracy were far superior.

The two associations and Hong Kong Trade and Development Council co-organised watch and clock fairs since 1983. A local exhibition was held every September. The event subsequently went on to become the world’s second largest watch and clock event. Overseas customers came to Hong Kong especially to place orders, with some foreign buyers rushing to capitalise on the upcoming Christmas peak sales period. With the watch and clock fairs gaining popularity, trading firms’ intermediary roles vanished and their operation completely ceased in the early 1990s.

"Doing things that others don’t", "Excelling in things that others do" and "Exploring new things at which others excel". Leung Wai Ho continued to stress the importance of integrity and earnestness in doing things to this day. When developing a new product, he had three principles: "Doing things that others don’t", "Excelling in things that others do" and "Exploring new things at which others excel".

"Doing things that others don’t". The first principle is perhaps best illustrated by two examples. In the 1970s, Leung Wai Ho went to the US for product promotion, bypassing local intermediary trading firms and co-operating with a Silicon Valley company to produce electronic watches. Dailywin also constantly developed new watch making materials such as using glass to make watch dial plates in the early 1980s. The advantages of his policy were superior clarity and durability. The company later switched to sapphire which were 20 times more expensive than glass but never wore out. In 2003, Dailywin became the first company in the world to use plastic glass to make watch cases and watch bands. It also made cases from hard-wearing kitchen countertop material Corian. In the 1980s, cowboy chains were used as watch bands.

"Excelling in things that others do". Leung Wai Ho insisted on maintaining integrity with customers and putting quality first. He ultimately believed that the quality and reputation of Hong Kong and foreign-made goods were better than those of mainland equivalents. While quality was related to technology and machinery, Leung Wai Ho required his employees to achieve “zero returns” by being excellent “goalkeepers”.

"Exploring new things at which others excel". Dailywin stopped producing electronic watches and using textureless zinc alloy materials in the 1980s. In 2003, Leung Wai Ho sold Dailywin’s chain of Time Zones retail stores and instead turned to investing in the production of computer software. He paved the way for his move to the electronics industry with a number of Chinese Americans in developing large-scale project management software such as “8th Manage”. That same year, Leung Wai Ho also transferred Dailywin’s listing status to Wai Yuen Tong Medicine Holdings Limited and served as a non-executive director of the new venture. In doing so, he freed up more time for his DGAEFI activities and community affairs and so was able to get better acquainted with mainland officials.