It's no secret that China offers manufacturers, designers, marketers and brand owners head-spinning market potential. But some significant challenges lie in the path to unlocking that potential, according to William Yau, Asia-Pacific design manager for Nokia Design, a unit of the Finnish mobile telephone giant.
Yau, in a recent presentation to a gathering of designers and design educators at Hong Kong Polytechnic University, said China needs to improve not only in design, but also in engineering, marketing and its ability to understand consumers. He cited Austin Lally, general manager of Procter & Gamble Co.'s cosmetics business in China, who said: ``The strategy guaranteed to fail in China is `one size fits all.'
``The Chinese love brands,'' Yau said. ``No-name products are bound to lose.'' He said brand and design will become differentiating factors, but stressed that success is not just about brand awareness. Product makers ``need to become brand champions.''
The country currently has a manufacturing focus, what Yau called ``an [original equipment manufacturer] mind-set,'' that's going to need to change. But it's an uphill struggle. One of the biggest challenges he sees is educating business leaders about the benefits of design so that they will direct funds into that area.
``Investing in brands makes bankers nervous,'' he said, ``because there's no immediately apparent payback.''
Yau is hardly alone in his thinking. He quoted University of Cincinnati design professor Craig Vogel, who said: ``China must shift from being the world's biggest OEM supplier to an OID, or original innovation developer.''
To get a sense of what's at stake in one market sector alone, consider this: Stores in China offer 300 models of mobile phones, and in 2003 the number of cellular-service subscribers in the country hit 238 million, exceeding that of the United States. China expects its subscriber base to more than double during the next five years. Nokia estimates that the total global mobile subscriber base, which hit 1.7 billion at the end of last year, will reach 3 billion by 2010. Of those new subscriptions, nearly one-quarter are expected to be in China.
Jorma Ollila, Nokia chairman and chief executive officer, noted earlier this year that China is the company's second-largest market. He said Nokia's 2004 sales in the country jumped 44 percent to $3.6 billion, and its telecom export sales in 2004 soared 56 percent from the previous year to a record $3.3 billion. Nokia has said it plans to add capacity to its manufacturing facilities in China and expand its research and development activities there.
Nokia's 6108-model cell phone offers an interesting example of how the company is catering to the local market. Yau said it is designed to facilitate the popular SMS (short message service) text messaging, and targets Chinese users. The firm developed a ``text warrior'' image for the phone, inspired by China's famous terra-cotta warriors. It added a stylus for handwriting recognition, and modeled the stylus as a sword, with the phone body serving as the scabbard. The result is a modern cell phone that draws on China's historical roots and connects emotionally with many customers.
So, how will China achieve the leap from manufacturer to innovator? It will take time, for sure. Yau said young Chinese designers have excellent computer skills, but they need to develop their depth of thinking and reasoning.
``We interviewed many Chinese design students,'' he said. In many cases, ``graduates who had been working for only one year already had technical skills as good as many senior designers in the United States and Europe.'' He attributed their skills to the students' dedication and work ethic. But they showed real weaknesses in their design thinking. He said when asked why they chose a certain shape, few had any good answers.
A related challenge will involve infusing China's designers with confidence, so that they begin to understand design language, user interface, user experience and the like.
But such change will come, according to Yau, who quoted yet another expert to make his point. Michael Schrage, consultant co-director of MIT MediaLab, has said: ``Tomorrow's best brands ... won't just be made in China; they'll be designed in China, as well.''