June 2012 Trend Briefing:
MADE BETTER IN CHINA
Brands and innovations from China are going global. You ain't seen nothing yet!
MADE BETTER IN CHINA

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.

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 China's urban consumption boom:

  • Urban household disposable income is expected to double between 2010 and 2020 (Source: McKinsey, March 2012).
  • In 2010, China had 18 million households with an annual income above USD 16,000. By 2020, this number will be 167 million households. That's nearly 400 million people (Source: McKinsey, March 2012).

The outcome? A massive, sophisticated urban Chinese class of CITYSUMERS, with a massive demand for high quality goods and services.


2. BEST OF THE WEST
IN THE EAST

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 the RED CARPET to Chinese consumers around the world.

Both of which have set the expectations of Chinese consumers, and given 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 China is connected. 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




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 ain’t seen nothing yet! Hyper competition may need a new definition, as MADE IN CHINA is traded in for MADE BETTER IN CHINA. Now, on to the examples...

* In this Trend Briefing, Chinese means mainland Chinese. We’ve 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.



Examples

DESIGNED BETTER IN CHINA

You know you've 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 décor items and paintings at a wide variety of prices. It's owned by Hong Huang, a major celebrity (media figure, blogger, television host and publisher) in China.

Wang Shu: Wins 2012 Pritzker Architecture Prize

Chinese architect Wang Shu was awarded the 2012 Pritzker Architecture Prize in May 2012 in Beijing, the first Chinese architect to win the prize for work on the Chinese mainland.

MAD Architects

Due to be completed in 2013, the Sinosteel International Plaza in Tianjin, China, was designed by Chinese architect Ma Yansong, of MAD Architects. The Plaza’s steel façade 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 Beijing-based MAD Architects. These designs are all under construction or completed.



MADE BETTER BY CHINA FOR ALL

Despite China's 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.

China Unicom: Low cost smartphones

In December 2011, China Unicom announced that they would distribute Xiaomi's 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.

JAC Motors: First overseas factory in Brazil

At the end of 2011, China’s state owned JAC Motors announced an investment of USD 500 million in Brazil, the world’s fourth largest car market. The company’s first overseas factory is expected to produce 100,000 cars per year.

Meters/bonwe: Chinese fashion with an international feel

Operating around 1,800 stores across mainland China and catering to the country's increasingly fashion-conscious youth, retailer Meters/bonwe has proved very popular. The brand offers reasonable prices and an international feel; indeed it's often assumed not to be Chinese by consumers.

Warrior Shoes: The everyman's shoe everywhere

The sneaker brand Warrior ('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 everyman's 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.



MADE GREENER IN CHINA

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:

BYD: Electric taxis take to the streets of Shenzhen

The city of Shenzhen boasts a fleet of electric taxis. The fleet was supplied by Chinese automobile manufacturer BYD, 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.

ENFI: World's largest solar tracking station

At the end of 2011, China ENFI Engineering Corp completed work on the world’s largest solar tracking station in Ningxia. The plant’s solar tracking systems deliver a 25% increase in capacity over traditional solar power stations.


Tianjin: Eco-city experiments with practical solutions for greener living

The Tianjin 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 China’s huge cities.

Suntech Power leads global solar panel market

Chinese Suntech Power is the world’s 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 world’s 50 most innovative companies by MIT, partly due to its Pluto cell processing technology, which has since achieved a world record 20.3% efficiency.



MADE ONLINE IN CHINA

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.cn: Maps China's cities in illustrated 3D

O.cn is a stylized online mapping service that covers 38 of China’s largest cities. The 3D maps interface with social networks, and users can click on individual buildings and areas to access user-created and curated content.

WeiLingDi: Check-in and review local businesses

In 2011, Sina, the Chinese web portal, launched a check-in service called WeiLingDi via 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.


Renren: Networking site launches social travel app

In early 2012, Chinese social network Renren launched a travel journal service, available online or as an app. The Fengche service allows users to create image-rich ‘sets’ detailing their travels, ready to share with friends and family.

Yikuair: Daily deals site offers micro group buying

Chinese group buying site Yikuair is 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 Weibo’s own virtual currency.


Tencent: Weixin app offers QQ instant messaging and more

In April 2012, the latest version of Tencent’s Weixin instant 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’.

Buykee: Pinboards and purchasing power

Pinterest–inspired Buykee launched 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.



MADE STRANGER IN CHINA

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 Post: Letters routed via spacecraft with 'galactic postmark'

China Post offers 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.

Learn Mandarin the sexy way

Offering a memorable learning experience, the conspicuously named Sexy Mandarin is an online service that teaches users to speak Mandarin via YouTube and YouKu (the former's Chinese equivalent) videos, for free. The twist? All the teachers are attractive, sexily dressed women.

Tao Girls deliver

Chinese online shopping platform Taobao (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.



MADE TOGETHER IN CHINA

As the most populous country in the world, and one with a strong collectivist culture, it's no surprise to see a wave of innovative Chinese products and services that bring consumers together.

Handsup.cn: Hands stock and pricing suggestions over to customers

Handsup.cn aims 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.

CreditEase: P2P lending

In late 2011, Chinese P2P lending site CreditEase secured 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 country’s largest independent financial service providers, with more than 5,000 workers.



MADE BIGGER IN CHINA

Whether it’s the size of the population, the cities, or the economy, China means ‘big’, if not ‘biggest’. Just three consumer-focused examples to illustrate:

Beijing & Hangzhou: 'World's largest bus'

The Youngman JNP6250G is 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.

Beijing Daxing: 'World's largest airport'

Construction of Beijing Daxing International Airport is due to begin in late 2012. By the time it’s completed in 2017, the airport’s planned capacity is 200 million passengers per year. It will be connected to Beijing via a new high-speed rail link.

SM Tianjin: World's largest shopping mall opening 2013

2013 will see the opening of the world’s largest freestanding shopping mall in the Chinese city of Tianjin, which is just 30 minutes from Beijing by high-speed train. The SM Tianjin Shopping Center will cover 530,000 square meters, an area larger than 74 football fields.

“Chinese brands are already catering to demanding consumers, both at home and increasingly abroad. Including yours.”



MADE EASIER IN CHINA

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:

Ubox: App enables mobile payments at vending machines

The Ubox mobile 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.

Hai Di Lao: Video links for connected dining

In September 2011, Sichuan hotpot chain Hai Di Lao and 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.



MADE FASTER IN CHINA

Everything is going, has to be and can be done faster, worldwide. Something Chinese companies are very much aware of.

Huawei: 'World's fastest smartphone'

The Huawei Ascend D Quad was launched in early 2012, claiming to be the world’s fastest smartphone. The company’s first quad-core smartphone features a 720p HD touchscreen and an 8 megapixel camera.

Broad Group: Builds 30-story building in 15 days

In 15 days at the end of 2011, Chinese manufacturing and construction firm Broad Group built a 30-storey hotel in China’s Hunan Province. The aim of the project was to demonstrate the company’s Broad Sustainable Building technology. Needless to say we hope we can file this example under 'MADE STRONGER IN CHINA' too.

Chinese supercomputing takes on the world

China's National Supercomputing Center in Tianjin is home to the Tianhe-1A supercomputer, which held the position of the world's fastest until mid-2011. The country now has 61 machines in the TOP500, second only to the US.



MADE MORE LUXURIOUS IN CHINA

Of course, luxury is a key part of the China story, and one that could take up many future Trend Briefings ;-). From 'Chinese' sub-brands (e.g. Hermes' Shang Xia) to Chinese brands being made in Italy (e.g. China Garments' Sorgere) Chinese consumers' cravings for luxury goods shows no sign of slowing. Relevant here: wealthy Chinese splurging on an increasing number of home-grown Chinese luxury brands and services.

Shanghai Vive: Heritage, relaunched

Originally launched in Shanghai in 1898, cosmetics brand Shanghai Vive was recently re-launched to appeal to luxury consumers in China and the West. The brand hopes to tap into its heritage and China’s growing global cultural identity.

China Railways: Business class beds on Beijing – Shanghai 'Harmony Express'

China Railways Group has created the world’s longest high-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.

NE-TIGER: Chinese luxury fashion house

China’s NE-TIGER is 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.

“Spending on personal luxury goods on the Chinese mainland rose from EUR 7.1 billion in 2009 to EUR 12.9 billion in 2011”
(Source: Bain, December 2011).

P1.cn: Invitation-only social network

P1.cn is an invitation-only social network for well-connected 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 site’s staff.

Ctrip: Travel service for the very wealthy

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.

Ba Yan Ka: 'Pure water. Natural elements. Chinese Wisdom'

Personal care brand Ba Yan Ka offers Chinese consumers totally natural skin, body and hair care products. Formulas are free of chemicals, not tested on animals, and all packing is biodegradable.

Swatch and Uma Wang

Swiss watch brand Swatch invited Chinese fashion designer Uma Wang to create two limited edition wristwatches. One is plastic and branded with Uma Wang's name, while the other uses traditional Yunnan Province embroidered print and coloring. Both designs retail for GBP 44.50.



MADE BETTER IN CHINA FOR A WHILE NOW

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:

Li Ning: Straight Out of New China

Sportswear brand Li Ning launched 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.

Haier: Brain Wave TV

In January 2012, Chinese consumer electronics giant Haier demonstrated their ‘Brain Wave TV’, which allows users to control the action on their TV sets using their minds. The experimental technology was showcased alongside consumer-ready innovations such as 3D TVs with 2D to 3D conversion.

Herborist: Takes Chinese cosmetics global

Personal care brand Herborist incorporates 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.

Ochirly: LVMH Investment

In February 2012, French luxury giant LVMH purchased a 10% stake in one of China’s top luxury fashion brands, Ochirly. The deal values the brand at over USD 2 billion, as it considers an IPO.

PEAK: Opens first US sports store

Following Li Ning's creation of a US headquarters and retail operation, fellow Chinese sports brand PEAK opened 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.

Lenovo: Yoga laptop/tablet hybrid

In early 2012, Chinese computer manufacturer Lenovo announced 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 company’s shipments grew by 43.7% over the first quarter of 2011, extending Lenovo’s lead over Dell as the world’s second-largest PC manufacturer.

Hi Panda represents Chinese youth, globally

Aspiring to represent the ideals of China's Generation-Y (members born between 1980-89), Hi Panda is a fashionable clothing and accessories brand that has breached the confines of its native country and spread to Japan, Korea and Europe, including retail stores in London and Paris. There is also talk of entering North America later this year.



IMPLICATIONS

Forget the ‘Made in China’ stigma. It should be clear by now that ambitious and confident Chinese brands are already catering to demanding consumers, both at home and increasingly abroad. Including yours. And if you're 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 why all brands need to keep both eyes firmly on China, a market that will increasingly 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 ever-greater influence on consumer products and services, and on a global scale too (yes, that’s a Trend Briefing in itself!).

Of course, we’ve said it before and we’ll 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, c’est la vie ;-)

Oh, and while you’re busy preparing for the globally hyper-competitive future, we’re hard at work on our next Trend Briefing. Make sure you’re subscribed! trendwatching.com logo



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