From Chinese Watch Industry Wiki
History of Claro-Semag
In 1961, George J. von Burg founded CLARO Watch S.A. in Bienne, Switzerland for the finishing of pin lever mechanical movements and assembly of complete watches under various brands. He then bought SEMAG, a manufacturer of ebauches and movement parts. Complete watches bearing the 'SEMAG' brand have been made with bought-in ebauches, however these probably predate the von Burg takeover.
Von Burg also established Swissebauches Ltd, Hong Kong, for the finishing of Semag movements and possibly other lower-grade Swiss movements for the Asian market. (Swissebauches Ltd should not be confused with Technica Swiss Ebauches). Currently Swissebauches Ltd manufacture 100% Chinese quartz movements.
In the 1980s, Claro-Semag began production of quartz movements. Recently they were bought by international fashion-watch brand Fossil, who also own the Zodiac brand of Swiss watches.
The new calibre CL-888
The following is quoted from 'Isthmus', the Seiko Forum Moderator at Watchuseek.com.
"Claro-Semag is Fossil's Switzerland based in-house mechanical movement 'manufacturer'. They produce a movement called the CL-888 which is used in Fossil's Zodiac Oceanaire divers, several other Fossils and is also sold to other brands. The watches are solid and most have reported nice solid performance from their movements.
"However a few eagle eyed tinkerers have also reported that the movement is the same movement as the Chinese Tianjin ST16. Now Tianjin Sea-Gull is about the most respected Chinese brand at the moment... this particular movement does a good job of integrating some of the better ideas of several movements out there.
"The thing is that the CL-888 only differs from the ST16 in its finishing. Since most likely that finishing is performed in Switzerland, by someone getting paid swiss wages, it is quite likely that that is what pushes the value of the Swiss part of the watch past the magic 50% mark. The end result is that Fossil is able to use a Chinese movement in a (very nice) watch and legally call it Swiss. I have a feeling that much of the case work is probably achieved in similar fashion, thus allowing them to write Swiss Made on the dial."
While the CL-888 is undoubtedly a 'Swiss Movement' under the law, some watch enthusiasts have been concerned by the possibility of a Chinese designed, Chinese built ebauche at the core of their Swiss watch. To counter this there have been some claims that the design and all the parts originate in Switzerland.
One claim is that Claro-Semag, in the 1960s, was building this movement and selling it in Hong Kong, and the Chinese have subsequently copied the design. This begs the question as to why Sea-Gull waited until 1997 to first produce their 'copy'. This story also seems less likely in light of the fact that the distinctive auto-winding mechanism employed in the ST16 and CL-888 was patented by Seiko, and the patent remained in force until the 1980s or 90s. Thus Claro-Semag could only have built this movement if they had a license agreement with Seiko to use the Japanese technology.
Regarding known Semag automatic calibres of that period, there was a 'Semag Autoking' watch made in the 1960s with a 25 jewel automatic movement however this uses a Felsa ebauche, not a Semag original design. Claro at this time were finishing bought-in ebauches, particularly Ronda. No examples from either Semag or Claro are known to match the distinctive features of the CL-888.
More recently, a representative from Zodiac Switzerland responded to inquiries about the origin of its Claro-Semag movements, saying:
"This discussions and rumors we have had already since we have made the style years ago. Fact is that the movement is Swiss made and not china made. Correct is also that some parts of the movement are prefabricated in China (same what other Swiss made movement brands are doing) and then assembled here in Switzerland. Fact is also that the most important parts of the movements are made here in Switzerland and the assembly (one of the most important part) is made exclusively in Switzerland. For example, the balance spring, rotor and other important parts are all made in Switzerland. Now we could talk and talk and talk whatever we like but by Swiss watch federation and law the movement is Swiss made and nothing else. Before you get an ok for a Swiss made movement you need to pass several Swiss watch federations test and only if you pass them you get the Swiss made approval." 
For Zodiac to say that the 888 is "not China made" but "parts of the movement are prefabricated in China" is somewhat misleading, as the 888 is plainly of Chinese origin. However, they are in compliance with Swiss regulations in labeling their movements 'Swiss'. According to Swiss law, a movement is considered to be "Swiss" if: 1) it has been assembled in Switzerland; 2) it has been inspected by the manufacturer in Switzerland; and 3) the components of Swiss manufacture account for at least 50 percent of the total value, without taking into account the cost of assembly.
If Zodiac/Claro-Semag imports Chinese ST16 movements (or their parts), upgrades a few key components with Swiss pieces, refinishes the bridges, and then reassembles the movements including a nicely finished rotor crafted in-house, they have fulfilled the legal requirements to have made them Swiss movements.
In principle, this isn't so different than when TAG, Omega, Cartier, Brietling, Panerai and other established Swiss watch manufacturers take workhorse ETA movements, refinish them in-house, and call them their own calibres. In theory, the resulting movements are improved and more exclusive. This is an accepted practice when the manufacturers involved are all European, but the introduction of Chinese manufacturers into the mix disturbs the late-20th century myth of the 'superior' Swiss Made watch, where European design and labor is assumed to be 'better' and 'more authentic'.
A detailed comparison between the Sea-Gull ST16 and Claro-Semag CL888 can be found on the Watchuseek Chinese Mechanical Watches Forum. It demonstrates that the ebauches are identical, and that Claro have done some genuine 'finishing' that comply with 'Swiss made' regulations:
The following is from Claro's website:
"Customisation and Custom Movements
With over 40 years of expertise in movement manufacturing, CLARO Watch SA also specialises in new module and movement developments, which include creating thorough business plans of parts, services and complete movement developments.
Our specialties range from full mechanical, quartz analogue, digital movements and specialty precision movement parts.
The Mechanical Automatic CL-888
CLARO CL-888, Swiss-Made Gents Automatic
Over four years ago, CLARO Watch SA was commissioned to supply a new alternative low-cost, Swiss-Made Gents Mechanical Automatic Movement in Switzerland. At the time, the only available branded movement manufacturers catering to this market were ETA in Grenchen and Sellita SA in La Chaux de Fauds.
CLARO Watch SA has been operating in Hong Kong and Greater China for over half a century and it has developed a solid network of relationships within the region. In consideration of this, CLARO made a strategic decision to re-engineer an existing calibre that was readily available from the market. After carefully evaluating a number of options, CLARO selected a traditional, long-established calibre from the Far East that was originally developed by a Swiss group.
Starting with raw parts, CLARO Watch SA completely re-works, cleans, measures, sets and tests each part before adding our 100% Swiss-made content. The full assembly is completed, tested and calibrated in CLARO’s wholly-owned factory in Bellinzona, Switzerland. We control each phase of the process, ensuring the delivery of a higher quality product.
Our CL-888 is currently being used by twenty different Swiss and international brands. In 2008, over 100,000 pieces were produced and sold. The movement is 100% Swiss made under the terms of Swiss Federal Law."
It was reported by independent watch projects in October 2010 that Claro was shut dowm. Reference is here:
"It seems that Claro watch is having finacial difficulties. The company based in Bienne, Switzerland, called a staff meeting on Monday in their Bellinzona branch to let all 18 employees know about their immediate dismissal.
The director is reported to have packed his vehicle with watches before leaving, and the whole factory has been put under seal by the local police force. The local union has filed complaint, asking that the factory machines (estimated to be worth CHF 500,000) be seized and sold for cash to provide a severance for the 18 persons who are now unemployed."