The Rising Power of Chinese Design
Business Week magazine recently wrote a piece about how American high-tech corporations have lead the way in R&D and new product development for decades, whilst happily relinquishing the manufacturing side to foreign suppliers. But now it’s becoming very clear that the prosperity of their economy cannot solely depend upon their own R&D knowledge base to keep pace with fast developing global markets. Therefore to reduce costs and speed up the route to manufacture, US companies have now begun outsourcing their cherished R&D and design work to overseas experts.
According to the production statistics, 70% of PDAs, 65% of PCs, 30% of digital cameras and 20% of mobile phones now sold in America have been designed by foreign companies. It’s proving that many foreign companies now have enough capability to design and manufacture for even the most high profile US brands. So this sea-change is bringing with it some fierce competition between Chinese and other foreign designers, all seeking to play a role in the wider NPD process and profit from higher value activities.
PER Design is not only one of China’s leading product design consultancies, but also one with a growing worldwide footprint. We’ve now designed new products for companies in the US, Canada, UK, Europe and the Middle East – and are a perfect example of the story Business Week talked about. So from our vantage point, here’s where we see Chinese design positioned in the now global creative industries market:
1. Production
China has come to dominate global manufacturing due to a high degree of industrial integration, and its considerably lower production process costs. China’s status as a ‘world factory’ will persist for some time yet, mainly because it’s now developing the areas that feed into manufacturing – specialist industry clusters, highly qualified people, integrated infrastructure, plus R&D and design capabilities. Moreover, the Chinese market has huge potential to make lucrative profits for all these players, and it’s not necessarily cost-effective for corporations to move their production bases outside China if all they offer is lower labour costs. With product design so closely allied to manufacturing, the rapid development of the Chinese design sector will almost certainly help develop and even strengthen the domestic manufacturing sector as well. It will just progressively shift towards higher value higher tech activity.
2. Manpower
Chinese designers are hardworking, disciplined and eager to learn. As skilled professionals in an increasingly knowledge based economy, their prospects are good – but still their pay lags well behind those in more developed countries. China’s cost-effective design and manufacturing environment has naturally become rather compelling to foreign businesses needing to lower their cost base to maintain margins. But this action fuels unemployment in their home country, and pressures people to constantly change or up-skill. Chinese workers see many of these pressures too, but right now those in the design sector are enjoying the growing opportunities to work with major overseas brands, and are very keen to prove their capabilities.
3. Brands & Innovation
Chinese corporations know about the positive impact industrial design can have upon product branding. Chinese design consultancies work hard to integrate brand identity into their work, and profoundly understand the importance of market-orientation in the design process, with the aim of best representing the product and corporate image, plus also adding value to the brand. Here’s a good example to illustrate this point:
Haier Group in China has seen a phenomenal sales performance, despite being in a hugely competitive consumer market with tight profit margins. Rather than taking time to develop radical new innovations from scratch, their R&D methodology during their early years was simply to refine existing technologies and combine them with good design. This brought them a quick route to market, quick success, and the funds to them reinvest in their own original R&D and design-lead innovations. In fact their latest washing machine has even set new standards that their European and US rivals are now following.
To sum up – China’s design industry has been making full use of their low cost industrial environment, quickly learning new capabilities and increasingly able to compete with established designers from other countries. The creative talent pool is truly going east, and competition is surely set to intensify
