Domestic brand steers clear of copycat products to boost image and focus on home market

For many businesses in Shenzhen, 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, and with losses from the appreciation of the yuan and increases in costs for rent and personnel. However, the fortunes of Tian Wang, a domestic watch brand, could not be more different.

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

Tian Wang, established by its parent company Hong Kong Winning Group in Shenzhen in 1988, was regarded as one of the four biggest domestic watch brands, with Fiyta and Ebohr in Shenzhen and Rossini in Zhuhai.

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

It entered a sluggish period after the millennium, and started to rise from late 2006.

While OEM suppliers and manufacturers for smaller Swiss and other European brands went through hard times, and more than a few went out of business, Hou says his company sold almost 1 million watches in 2010, and the value of annual sales was almost 600 million yuan ($95 million, 75 million euros), a rise of more than 30 percent on 2009, and this trend continued.

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 says he and his colleagues put a great deal of effort into research on 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 headquarters, and more than 50 do research and development. They will soon start a new R&D base.

Hou says the company does not want to make copycat products, which has been a big problem with Chinese watches, and has hired designers from South Korea, with plans to invite top Swiss designers.

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

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

"Mechanical watches are coming back, as our customers have showed higher interest in mechanical ones in the past few years," Hou says.

That seems to accord with the tastes of the brands' target group, white-collar workers. He and his team discovered most of the customers are aged between 25 to 50, and value the decorative function, quality, and the collection 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 to 2,000 sell the best. In the past two years some of the cheaper models were eliminated to increase 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 says.

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

Urbanization and farmers' increased incomes have also produced opportunities, Hou says.

"We will put more effort winning these markets."

Tian Wang ceased being an OEM service in October, he says.

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

Hou, who has been in the industry for nearly 30 years, says the 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.

"We are very short of internal mechanical design talent. In the 1960s and 70s there were watch departments in vocational schools, but later as the industry went through its lows, the subject disappeared in schools and colleges. As our generation ages, watchmaking, assembly and repair skills will be in increasingly short supply.

"Over many years watch companies have trained their own R&D people. Now we are working with the Harbin Institute of Technology, and the Tianjin watch brand Seagull has similar cooperation with Tianjin University, trying to get this subject reintroduced in these schools."

Tian Wang's parent company, Hong Kong Winning Group, went public in Singapore in 2005.

Hou believes the first inroads that Chinese watch brands make abroad will be in Southeast Asian countries, which have a lot in common with China in culture, making it much easier for people there to take up Chinese brands.

Tian Wang will pursue its global marketing efforts and will keep trying to bolster the brand's image by taking part in international watch exhibitions, Hou says, but he stresses that the brand's focus will always be on China.

"In the past few years, 50 to 60 million watches have been sold in China each year. Given the huge population, there is still great potential for growth."

Chen Hong and Liu Lu contributed to this story.