Chinese corporations face a huge task in trying to build brands that will gain global acceptance, said two senior officials with Philips Design, a unit of Dutch multinational Royal Philips Electronics NV that has extensive experience in Asia. But, much as Japan succeeded, they said, so might China - eventually.
Large Chinese firms, such as electronics maker TCL Corp. and white-goods giant Haier Group, are ``at a crossroads of disaster or success,'' said Murray Camens, vice president of Philips Design.
``The disaster [would spring from] not understanding the complexity of the consumer and appreciating that people out there are going to become picky.
``Up until now, China could produce anything, and it sold,'' he said.
But that is going to change. If Chinese firms want to achieve global success, they will need to learn how to identify consumers' tastes and desires, and then learn how to meet those demands in terms of aesthetics, quality and performance, as well as price.
There appear to be some parallels with Japan, which at one time was associated with cheap, poorly made products, but which today sets the standard for quality.
Marco Bevolo, Eindhoven, Netherlands-based design director for Philips Design, began his career as an automotive designer and closely watches automotive trends. He noted that some Chinese already are taking steps to close the gap.
In a June 20 interview at a Hong Kong Design Education Week conference, Bevolo said he was recently home in Italy. While there, he learned ``two big automotive companies from China are opening offices in Turin and are starting to recruit - very small, maybe two or three people - but they are starting to tap into the Turin base of automotive design, which is possibly one of the finest in the world.''
He continued with the Japanese example: ``Certain products, when you see them, such as Lexus cars, they are Japanese. They started by copying, and they became the essence of Japaneseness. I think it's inevitable - it will happen with China, too.''
But what will be interesting to watch, said Bevolo, is how China's history will affect and shape its future product design.
``If you look at certain prototypes by Nissan for the Tokyo Motor Show, you see that the way they use the lacquering techniques are taken from the ancient Japanese techniques,'' he said.
``In the Chinese culture, there are things that are unique, that are specifically Chinese.'' Those will manifest themselves, he said, ``the moment they start to have their own original-design manufacturing.''
Camens and Bevolo preside over one of the largest design organizations in the world. Bevolo - who refers to Philips Design's 450-person team as 450 ``trend antennas'' - said the firm employs 120 in Asia. Half of those individuals work in what Camens said is the largest design studio in Hong Kong. The balance in Asia work in Singapore; Taipei, Taiwan; and Pune and Bangalore, India.
Philips Group itself, meanwhile, employs nearly 107,000 in 60 countries, and it generated 2004 sales of 30.3 billion euros (US$37.7 billion) from sales of medical systems, consumer products such as televisions and electric shavers, lighting, semiconductors and more.
Philips Design, therefore, has a distinctly global perspective. And it is focusing on the creative, intellectual end of the spectrum, while shifting the making of parts and products to others.
Camens said Philips wants to ``maintain the research, the knowledge, the development, the brand, the design,'' and team with a supplier to handle manufacturing. The company hired anthropologists and sociologists to be part of its design team, and now has complex processes of identifying and analyzing social and consumer trends, in an effort to stay ahead of the market curve.
``The tools we use in business analysis and the tools we use in trend analysis are compatible,'' Bevolo said. ``It's almost overlapping. Here we can find ways in which society and culture are going, in terms of what is desirable, what is appealing.''
So, what of the potential impact of entrepreneur Malcolm Bricklin and his plan to import Chinese-made Chery-brand cars into the U.S. market? It was Bricklin who imported Australian Subaru vehicles to the United States, but who also failed to introduce low-cost, low-quality Yugoslavian-made Yugo-brand cars there. Is it a mistake to bring an unproven brand into the world's biggest car market so soon?
Bevolo said he does not know enough about the Chery vehicle's quality to pass judgment, but he said, ``A phenomenon like Yugo can happen potentially with any new brand from an emerging market. Is it stupid to try to import the Chery now? I don't know. ... But I would go very carefully ... if it's the first level of entry, and if people think it's crap, you're done.''
Conversely, those who wish to sell into China and other emerging markets also had better do their homework, he said, and not assume that cheaper is better.
``The point is, when you're living in an emerging car market and you can afford a car, you don't want to look like the owner of a cheap car,'' Bevolo said, noting that one might achieve more success with a higher-level brand. ``You need to understand what is appealing, what attracts people, what makes people dream.''