To many in the West, ‘Made in China’ used to mean cheap labor, low-cost production and bad quality. Those days are over, as ‘Made in China’ shifts to ‘Made for China’ and to ‘Designed in China’”, says Sebastian Mueller, COO of MING Labs, that helps companies build digital businesses in China and worldwide, from offices in Berlin, Munich, New York City, Shanghai and Singapore.
With the rise of China’s large middle class, with real consumer desires and money to spend, businesses have moved on to ‘Made for China’, says Mueller, COO of MING Labs. “From F&B, to fashion, to electronics, to automobiles, ‘Made for China’ is a reality today, as consumption in the country is still steadily on the rise.” To Mueller, China has shifted from being the world’s workbench to one of the world’s most important economies today. “The next big shift we are about to see will be dubbed ‘Designed in China’.” What is happening? Mueller offers his thoughts to Club China’s readers.
WeChat: adopted widely
“Look at WeChat. Having started its existence as a cross-over of QQ, WhatsApp and similar existing products, many deemed it a copycat. Yet fast release cycles and a strong willingness to solicit, listen to, and react to market response have turned it into Tencent’s likely most valuable property. It has been adopted so widely and is used so frequently by its community that Western companies are watching in awe and are looking to learn from and copy it. Success stories like WeChat are possible in China because of the general willingness, across generations, social groups and geographies, to adopt new technologies quickly.”
“What you need to know about consumers and business in China: If there is benefit, if there is a chance for gain, if there is something interesting to it, people give it a try without hesitation, no matter how small it might be. They will also immediately abandon the product in the case that it does not satisfy. Within such a fast-response live-or-die framework, Chinese products can evolve quicker and adapt to the market better. Hence innovation, both incremental and disruptive, has the right breeding grounds to accelerate at unprecedented levels.”
Catching up to global standards
“Within the frames of such an economic environment, and after copying and catching up to global standards, it is easy to see why China’s companies are at the pole position for creating the next big wave of innovation. And they are already doing it. And they have the products: from ubiquitous mobile payments through WeChat, very affordable high-quality mobile devices from XiaoMi, to well-designed e-scooters from Niu, China is living in the future.
The new products being created in China today are rife with ingenious features, pleasant user experiences and strong value propositions. Design is becoming an important consideration in Chinese fashion, hardware and software; all catered to global modern tastes.”
“However, when conquering the world, Chinese companies and brands face difficulties. The lingering negative perception of Chinese companies as copycats still is a challenge. Another challenge is their general understanding of other markets, or the lack thereof. Many of the first moves in entering new markets have made it quite apparent that their traditional approaches are not working extremely well. Their playbooks that were created, tried and executed many times over are good for conquering a large unified market with 1.3 billion people, but seem to fail when applied to more fragmented geographies outside of China. While they are used to dominating a large unified market, these fragmented small markets, as high-value as they may be, are difficult to conquer.”
Disaster: LeEco launch
“An example: WeChat continues to struggle with global adoption. Its international expansion efforts are now focused on offering the app as a convenient tool for Chinese tourists, rather than on acquiring foreign users. The US launch of consumer electronics company LeEco, ended rather disastrously. In trying to use the same playbook they used in China, LeEco tried to launch its smartphones via flash sales, which are widely accepted in China, but are not popular in Western markets. LeEco failed to capture any significant market share with the same tried-and-true methods it learned in China.”
“Using the failures of the past as important lessons, Chinese companies are getting smarter about their international strategies. Look at Indiegogo, whose main business in China is Chinese companies carrying out crowdfunding activities in Western markets to gauge demand and gather quick feedback on their ideas and offerings. Just as Western companies had to fail and iterate to finally see success in the Chinese market, Chinese companies are now going through the same struggle. Products cannot be simply exported, they need to be designed for their respective target markets.”
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“Chinese companies are out-innovating their Western counterparts. They are now pushing into other markets, as they are learning quickly from their mistakes.”
MING Labs is a leading digital business builder, with offices in Berlin, Munich, New York City, Shanghai and Singapore. Contact: firstname.lastname@example.org.
Photo Credits: Ming Labs