SHENZHEN - For many businesses in Shenzhen, Guangdong province, the past three years have been a hard slog. They have had to cope with the global economic slump, and inflation in China that has brought a sharp drop in orders. Morevoer they have had to contend with and with losses resulting from the appreciation of the yuan and increases in the cost of rent and personnel. However, the fortunes of Tian Wang, a domestic watch brand, could not be more different.

"We have had double-digit sales growth since 2008 and reached the best in our history last year," said Hou Qinghai, Tian Wang's managing director, in his office in Lijincheng Industrial Park in the city's Bao'an district.

Tian Wang, established by its parent company, Hong Kong Winning Group, in Shenzhen in 1988, is regarded as one of the four biggest domestic watch brands.

The brand became famous in the 1990s with an impressive advertising campaign on China Central Television linked to the countdown to the news, that announced: "Tian Wang tells you the time".

The company entered a sluggish period after the millennium, a situation that only began to change from late 2006 onward.

While original equipment manufacturers (OEM) suppliers and manufacturers for smaller Swiss and other European brands suffered hard times, and more than a few went out of business, Hou said his company sold almost 1 million watches in 2010, with annual sales of almost 600 million yuan ($95 million), a rise of more than 30 percent on 2009, and this trend is set to continue.

Hou attributes the success to the central government's policy to stimulate domestic demand and the company's persistence in building its brand and sticking to the Chinese market.

Hou said he and his colleagues put a great deal of effort into researching products and on growing the customer base.

"We have focused on improving the quality and design of our watches, to make them closer to the level of Swiss watches."

There are about 300 employees at the company's headquarters, with more than 50invloved in research and development (R&D). A new R&D base will open soon.

Hou said the company does not want to make copycat products - traditionally a big problem for Chinese watchmakers - and has hired designers from South Korea. It also plans to invite top Swiss designers to help.

It has cooperated with several colleges, including the Harbin Institute of Technology, to set up research institutes.

In the past three years Tian Wang has launched dozens of models annually, and those such as Tourbillon and Round Times have enjoyed great success. Tourbillon and Round Times are mechanical models, the former is classic and deluxe, while the latter is simple and elegant.

"Mechanical watches are coming back, as our customers have shown higher interest in them in the past few years," said Hou.

That seems to accord with the tastes of the brands' target group, white-collar workers. Hou and his team discovered most of their customers are aged between 25 to 50, and value the decorative functions, good quality and collectors' value of a watch.

The prices of Tian Wang watches range from several hundred yuan to 3,000 yuan, and those priced from 1,000 yuan to 2,000 yuan are the best-sellers. In the past two years some of the cheaper models have been eliminated to upgrade the brand's image.

"We are considering setting up subsidiary brands targeting younger people who look for watches with a modern design at a lower price," Hou said.

While most of Tian Wang's outlets are in big cities such as Beijing, Shanghai and Guangzhou, the company has begun to realize the sales potential in second- and third-tier cities.

"We will put more effort into winning in these markets," said Hou, adding that Tian Wang ceased being an OEM in October of last year.

"The OEM business for overseas watch companies used to account for 20 to 30 percent of our production, but provided less than 10 percent of our profits, so we ended it."

Hou, who has been in the industry for nearly 30 years, said a lack of design and management talent is a handicap for Tian Wang and for the industry.

"In our Tourbillon series we used Chinese internal mechanics. That is very rare in high-end watches, because until now the internal mechanics in more than 99 percent of watches have been Swiss and Japanese. It is difficult for the Chinese to catch up.