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com/trends/madebetterinchina/
June 2012
Definition
China still faces many potential obstacles in its attempts to foster a deep and lasting culture of innovation and creativity (State economics! Politics! Demographics! The environment! Intellectual property!). However an avalanche of Chinese brands are already catering to an increasingly large and sophisticated internal market, and competing with and even beating established incumbents from all over the world at their own game. Just think what the future will hold when China is truly unleashed.
No wonder then that examples of top quality, innovative Chinese* products and services brands are easier to find than ever. And if Chinese creativity ever gets truly unleashed, well, then we aint seen nothing yet! Hyper competition may need a new definition, as MADE IN CHINA is traded in for MADE BETTER IN CHINA. * In this Trend Briefing, Chinese means mainland Chinese. Weve filtered out many excellent examples from Hong Kong and Taiwan, as well as American Chinese entrepreneurs, powerful Western brands intensely partnering with Chinese ventures, and so on.
DESIGNED BETTER IN CHINA / MADE BETTER BY CHINA FOR ALL / MADE GREENER IN CHINA / MADE ONLINE IN CHINA / MADE STRANGER IN CHINA / MADE TOGETHER IN CHINA / MADE BIGGER IN CHINA / MADE EASIER IN CHINA / MADE FASTER IN CHINA / MADE MORE LUXURIOUS IN CHINA / MADE BETTER IN CHINA FOR A WHILE NOW /
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DRIvERS
Here are just three forces driving the MADE BETTER IN CHINA phenomenon:
1.URBAN BOOM
The lure of rapid riches is drawing Chinese to urban areas in droves. Just two recent stats to illustrate the mind-blowing scale of Chinas urban consumption boom:
Urban household disposable income is expected todoublebetween 2010 and 2020(Source:
2020, this number will be 167 million households. Thats nearly400million people(Source: McKinsey, March 2012). The outcome?A massive, sophisticated urban Chinese class ofCITYSUMERS, with a massive demand for high quality goods and services.
The demand for high quality goods and services has been met (more often than not) by Western brands trading on the status that comes with their heritage. Indeed, Western brands have scrambled to not only sell to Chinese consumers, but to pay homage to them. With special ranges or products that are MADE FOR CHINA, or by rolling out theRED CARPET to Chinese consumers around the world. Both of which have set the expectations of Chinese consumers, andgiven Chinese brands and entrepreneurs the inspiration and confidence to step forward, while still remaining mindful of the need to match or exceed the standards of quality set by the very best of their Western counterparts.
3. GLOBAL BRAIN
The impact of the Great Firewall of China is well-documented, but Chinaisconnected. With over 513 million Internet users (compared to 245 million Americans online)*, Chinese entrepreneurs and consumers are part of the GLOBAL BRAIN:frantically feeding off (and adding to) global consumer culture and creativity.* Source: www.worldinternetstats.com, December 2011
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You know youve truly arrived as an economy when local art, architecture and design move from functional to desirable:
Brand New China Store: A design store for and by modern China
The Brand New China Store, situated in Beijing, is a fashion and lifestyle store that focuses exclusively on Chinese designers. Selling clothes, accessories, furniture, home dcor items and paintings at a wide variety of prices. Its owned by Hong Huang, a major celebrity (media figure, blogger, television host and publisher) in China.
Chinese architect Wang Shu was awarded the2012 Pritzker Architecture Prize in May 2012 in Beijing, the first Chinese architect to win the prize for work on the Chinese mainland.
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MAD Architects
Due to be completed in 2013, the Sinosteel International Plaza in Tianjin, China, was designed by Chinese architect Ma Yansong, ofMAD Architects. The Plazas steel faade ensures that no internal columns are needed within the structure, meaning more space can be used within the building.
Hexagonal windows of various sizes create a pattern across the surface of the Plaza, and also improve energy efficiency. Their strategic positioning will help to preserve heat during the winter, and keep residents cool during the summer. Above: a global selection of designs from Beijingbased MAD Architects. These designs are all under construction or completed.
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Despite Chinas growing economic power, there are still hundreds of millions of Chinese with relatively modest incomes. And alongside this huge domestic market, there are billions of
other emerging market consumers, making the rewards for Chinese brands which bring high quality, yet low cost products to market almost endless.
In December 2011,China Unicomunveiled the MI-ONE, featuring a 1.5GHz processor, a four inch display, and an 8 megapixel camera. Designed to capitalize on the growing domestic demand for reasonably priced smartphones, the MI-ONE costs CNY 1,999, less than half what comparable smartphones from Apple or Samsung usually cost.
At the end of 2011, Chinas state ownedJAC Motorsannounced an investment of USD 500 million in Brazil, the worlds fourth largest car market. The companys first overseas factory is expected to produce 100,000 cars per year.
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Operating around 1,800 stores across mainland China and catering to the countrys increasingly fashion-conscious youth, retailerMeters/ bonwehas proved very popular. The brand offers reasonable prices and an international feel; indeed its often assumed not to be Chinese by consumers.
The sneaker brandWarrior(Hui Li in Mandarin), originally created for Chinese athletes, has been a household name in the country since the 1950s. The brand keeps its designs simple and unpretentious, maintaining its status as the everymans shoe. While the footwear retails for EUR 50-120 overseas (and features in publications such as GQ and Vogue), it is still affordable in the domestic market.
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With the Chinese government pushing the green agenda hard (for both reasons of economics and national pride), and both urban and rural populations mindful of increasingly visible
environmental degradation, expect to see a steady stream of Chinese planet-saving innovations and initiatives:
The city of Shenzhen boasts a fleet of electric taxis. The fleet was supplied by Chinese automobile manufacturerBYD, and the pilot project has seen 50 electric taxis take to the streets. There are plans to add a further 250 vehicles to the fleet during 2012, as well as 200 electric buses.
At the end of 2011,China ENFI Engineering Corpcompleted work on the worlds largest solar tracking station in Ningxia. The plants solar tracking systems deliver a 25% increase in capacity over traditional solar power stations.
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TheTianjin Eco City, a joint initiative from the Chinese and Singaporean governments, has invited brands from around the world to help solve pressing environmental issues. In the next 10 years, 350,000 people are expected to move to the city, trialing new systems and technologies. The government hopes that many of these will have the potential to solve the environmental issues facing Chinas huge cities.
ChineseSuntech Poweris the worlds largest producer of solar panels, now totalling over 20 million panels in over 80 countries. In early 2012, the company was named one of the worlds 50 most innovative companies by MIT, partly due to its Pluto cell processing technology, which has since achieved a world record 20.3% efficiency.
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Driven by a massive online population and the censorship of key Western online brands, Chinese services are not simply imitating the Googles, Facebooks and Twitters of the
world. Instead they are often showing their better-known counterparts the way forward by integrating, if not adding to and enhancing, popular online services.
O.cnis a stylized online mapping service that covers 38 of Chinas largest cities. The 3D maps interface with social networks, and users can click on individual buildings and areas to access usercreated and curated content.
In 2011, Sina, the Chinese web portal, launched a check-in service called WeiLingDivia their resident Twitter-like website Weibo. Users are able to check-in at locations using WeiLingDi, earn badges, write reviews about local businesses, and connect with 60,000 verified Chinese celebrities.
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In early 2012, Chinese social network Renren launched a travel journal service, available online or as an app. TheFengcheservice allows users to create image-rich sets detailing their travels, ready to share with friends and family.
Chinese group buying siteYikuairis tapping into the microblogging service Sina Weibo. The service carefully curates daily deals, and then lets Weibo users place a small deposit to secure the offer. Deposits can even be made using Weibos own virtual currency.
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IIn April 2012, the latest version of TencentsWeixininstant messaging app introduced users to its English-language name: WeChat. The app offers login via the vast QQ messaging network, which boasts over 700 million users, and a range of additional features. These include recent features familiar to Facebook and Google+ users, such as Timeline and Circles, as well as QR tags, location-based services, voice messaging and a Game Center.
Pinterestinspired Buykeelaunched in China in April 2012. The pinboard-style site differentiates itself from its predecessor, by focusing exclusively on luxury products and offering users the ability to buy what they are seeing.
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The rise of consumer culture in China has inevitably led to the creation of some remarkable products and services. However unusual consumers tastes, they are being met by Chinese brands.
The Kiev: Former Soviet aircraft carrier transformed into luxury hotel
In 2011, former Soviet aircraft carrier,the Kiev, was converted into a luxury hotel by its new Chinese owners. The ship has 137 standard hotel rooms, three VIP guest rooms, two presidential suites, and a luxury restaurant.
China Postoffers a service enabling individuals to send letters from space, with a Space City 1 postmark. Users send an email to Tiangong-1, a Chinese spacecraft orbiting the earth, which is then rerouted to a special China Space Post Office branch in Beijing. The emails are printed, placed in space-themed envelopes, stamped with a galactic postmark, and sent in the mail.
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Offering a memorable learning experience, the conspicuously namedSexy Mandarinis an online service that teaches users to speak Mandarin via YouTube and YouKu (the formers Chinese equivalent) videos, for free. The twist? All the teachers are attractive, sexily dressed women.
Chinese online shopping platformTaobao (commonly referred to as the Chinese eBay or Amazon), is reportedly working on an unusual initiative to spice up e-commerce Tao Girls. Customers will be able to choose (at a slightly higher cost) attractive women living in their city, to deliver their web purchases to the door.
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As the most populous country in the world, and one with a strong collectivist culture, its no surprise to see a wave of innovative Chinese products and services that bring consumers together.
Handsup.cnaims to hand power over to the consumer by asking them to recommend products and services they want to buy, as well as the price tag. The more users that want a particular product, the higher the chance of it being available, and the lower the price.
In late 2011, Chinese P2P lending siteCreditEasesecured a round of funding, while founder Tang Ning was honored by the Communist party. Both achievements signal the dramatic impact of P2P lending in China, where there are now over 100 sites offering services. CreditEase has become one of the countrys largest independent financial service providers, with more than 5,000 workers.
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Whether its the size of the population, the cities, or the economy, China means big, if not biggest. Just three consumer-focused examples to illustrate:
TheYoungman JNP6250Gis believed to be the largest bus in the world, capable of transporting up to 300 passengers. The first of the buses will be deployed in Beijing and Hangzhou, using dedicated highway lanes.
Construction ofBeijing Daxing International Airportis due to begin in late 2012. By the time its completed in 2017, the airports planned capacity is 200 million passengers per year. It will be connected to Beijing via a new high-speed rail link.
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Chinese brands are already catering to demanding consumers, both at home and increasingly abroad. Including yours.
2013 will see the opening of the worlds largest freestanding shopping mall in the Chinese city of Tianjin, which is just 30 minutes from Beijing by high-speed train. TheSM Tianjin Shopping Centerwill cover 530,000 square meters, an area larger than 74 football fields.
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All of the pressures that lead global consumers to seek convenience are amplified in Chinese cities. A couple of Chinese innovations leading the way when it comes to ease and convenience:
TheUboxmobile app for Android, iPhone and Java-based phones enables users to select and pay for snacks using their mobile device. It also includes a discount on the cash price for users.
In September 2011, Sichuan hotpot chainHai Di Laoand Chinese technology firm Huawei announced a partnership to install telepresence screens in restaurants across China. Thanks to the screens, customers can enjoy their meal with faraway friends and family via a video link.
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Everything is going, has to be and can be done faster, worldwide. Something Chinese companies are very much aware of.
TheHuaweiAscend D Quad was launched in early 2012, claiming to be the worlds fastest smartphone. The companys first quad-core smartphone features a 720p HD touchscreen and an 8 megapixel camera.
In 15 days at the end of 2011, Chinese manufacturing and construction firm Broad Group built a30-storey hotelin Chinas Hunan Province. The aim of the project was to demonstrate the companys Broad Sustainable Building technology. Needless to say we hope we can file this example under MADE STRONGER IN CHINA too.
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ChinasNational Supercomputing Centerin Tianjin is home to the Tianhe-1A supercomputer, which held the position of the worlds fastest until mid-2011. The country now has 61 machines in theTOP500, second only to the US.
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Of course, luxury is a key part of the China story, and one that could take up many future Trend Briefings ;-). From Chinese subbrands (e.g. HermesShang Xia) to Chinese brands being made in Italy (e.g. China GarmentsSorgere) Chinese consumers
cravings for luxury goods shows no sign of slowing. Relevant here: wealthy Chinese splurging on an increasing number of homegrown Chinese luxury brands and services.
Originally launched in Shanghai in 1898, cosmetics brandShanghai Vivewas recently re-launched to appeal to luxury consumers in China and the West. The brand hopes to tap into its heritage and Chinas growing global cultural identity.
China Railways Group has created the worlds longesthigh-speed rail network with about 7055 km of routes in China, and trains topping speeds of 350 km/h. The Beijing Shanghai route was opened in 2011 with business class travelers being waited on by uniformed stewardesses, and enjoying LCD TVs.
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Spending on personal luxury goods on the Chinese mainland rose from EUR 7.1 billion in 2009 to EUR 12.9 billion in 2011
ChinasNE-TIGERis a leading luxury brand that has found global success. The brand hosted the opening show of China International Fashion Week in late 2011, showcasing designs reflecting Chinese tradition and heritage.
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P1.cnis an invitation-only social network for wellconnected or fashionable Chinese, that claims to have over 1.2 million members. Invitations can only be obtained by knowing five existing members, or by being approached by one of the sites staff.
In early 2012, Chinese travel website Ctrip launched their new site,HHtravel. The site is designed to offer packages to Chinese tycoons with disposable assets of more than RMB 10 million. A typical trip includes business class travel, Michelin-starred dining, and award winning hotels and attractions.
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Personal care brandBa Yan Kaoffers Chinese consumers totally natural skin, body and hair care products. Formulas are free of chemicals, not tested on animals, and all packing is biodegradable.
Swiss watch brand Swatch invited Chinese fashion designer Uma Wang to create two limited editionwristwatches. One is plastic and branded with Uma Wangs name, while the other uses traditional Yunnan Province embroidered print and coloring. Both designs retail for GBP 44.50.
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While many of the brands in this Trend Briefing have only relatively recently made waves, there are of course plenty of established Chinese brands already operating comfortably on a global scale:
Sportswear brandLi Ninglaunched its US retail site in March 2012, heavily branded with the slogan Straight Out of New China and featuring a number of high-profile endorsements. A promotion at the end of the month for special-edition Year of the Dragon shoes caused the site to crash due to demand.
In January 2012, Chinese consumer electronics giantHaierdemonstrated their Brain Wave TV, which allows users to control the action on their TV sets using their minds. The experimental technology was showcased alongside consumerready innovations such as 3D TVs with 2D to 3D conversion.
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Personal care brandHerboristincorporates traditional Chinese medicine with contemporary cosmetic science to create its range of products. The brand has been expanding global distribution, and is now available in Paris, and across a range of European retailers.
In February 2012, French luxury giant LVMH purchased a 10% stake in one of Chinas top luxury fashion brands,Ochirly. The deal values the brand at over USD 2 billion, as it considers an IPO.
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FollowingLi Ningscreation of a US headquarters and retail operation, fellow Chinese sports brandPEAKopened a US headquarters in 2011, and its first US store in Los Angeles in early 2012. The brand ranks third in NBA endorsements, and has over 6,000 authorized retailers globally.
In early 2012, Chinese computer manufacturerLenovoannounced the Yoga. The device is a hybrid laptop/tablet which uses a 360 degree dual hinge design to allow for use in four different configurations. Meanwhile, the companys shipments grew by 43.7% over the first quarter of 2011, extending Lenovos lead over Dell as the worlds second-largest PC manufacturer.
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IMPLICATIONS
Forget the Made in China stigma. It should be clear by now that ambitious and confident Chinese brands arealreadycatering to demanding consumers, both at home and increasingly abroad. Including yours. And if youre a non-Chinese entrepreneur, why not get in touch with some of these brands to see if you can help them roll out globally even faster? Again, these brands and innovations are just the start. Fuelled by constantly improving technologies, a higher quality workforce and booming domestic consumption, Chinese brands are just warming up. Which is whyallbrands need to keep both eyes firmly on China, a market that willincreasingly define consumer culture. With Chinese brands exporting goods and services to the rest of the world (not to mention Western brands rolling out the RED CARPET for Chinese consumers around the world),expect to see Chinese tastes and preferences exert evergreater influence on consumer products and services,and on a global scale too (yes, thats a Trend Briefing in itself!). Of course, weve said it before and well say it again:the rise of Chinese brands does not signal the end for more traditional brands from Western economies. Brilliance and heritage, from whatever corner of the world, will continue to have a global appeal. Things will just get more competitive, meaning you will have to work even harder and smarter. Hey, cest la vie ;-) Oh, and while youre busy preparing for the globally hyper-competitive future, were hard at work on our next Trend Briefing. Make sure youresubscribed!
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