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

China has no interest groups seeking to influence political decisions for their own economic benefit. Instead, it has a common communist ideology structured around relatively open market policies. Chinese entrepreneurs and business leaders have a strong enthusiasm for building the national brand in all areas, which is seen as the cornerstone of its commercial revival. Whilst parts of the older generation still hold onto some feudalistic tendencies such as a bureaucratic mentality and poor motivation, most Chinese people now have a dynamic vision that’s dedicated to improving living and work standards for them and their fellow citizens. In fact patriotism has become the most important incentive for people to work hard in China – a quality much lacking in the West. The Chinese openly recognize areas where they lack knowledge and technologies, but with such a determined collective will to progress, they’re sure to succeed.

China’s prevailing Confucianism philosophy has proved to be inherently incompatible with the country’s modern economic development outlook. The growing lack of belief in Chinese minds has caused just as many problems as the breakdown of organized religion in the West. What’s more, the concepts of individuality, consumerism and technicism have taken effect in a profound way to transform the Chinese lifestyle and self-image. Western corporations see the Chinese market simply as a golden goose, with huge profit potential from so many new consumers. But Chinese consumers feel torn when faced with foreign brands everywhere, like Adidas, KFC, Starbucks, Dior and so on. These brands have squeezed Chinese pockets considerably by their aggressive marketing tactics and powerful allure, bringing with it some rather new and unwelcome personal finance concerns. This globalization has certainly improved life for many Chinese citizens, but China has actually suffered severe internal damage as the move to a more competitive open market economy brings cut-backs and resource efficiencies. The strong cultural and economic influences from the West have to some degree conquered China. So it’s easy to see why the Chinese are working so hard to change their status in the global community – from made in China to designed in China.

Chinese society traditionally has no class structure, but they do love to be as superior as possible. This gives foreign corporations an easy marketing tactic of emphasizing status and nobleness in all their messaging. If British nobility is one of tradition and etiquette, the Chinese noble tendency would be one of vanity – socially infectious and totally at odds with the established Confucianism moral values such as loyalty for your king and practices of kinship.

Generally speaking, Westerners are liberal and forthright, whereas the Chinese are conservative and humble. But the Chinese are not narrow-minded, for they pursue the values of humanism and harmony, including congeniality between family members and between human beings and mother nature. You could say if oil paintings symbolise Western affluence, then ink paintings symbolise the Chinese pursuit of peace and steadiness.

The Chinese Government and people are mindful of their weaknesses in terms of economic effectiveness, environmental issues and financial stability, but Western history shows that socio-economic development is neither easy nor quick. Mistakes will be made, but these will be tempered with great achievements too. For example the culture of consumerism and profiteering we’ve build in the West has brought huge rewards and problems in equal measure. Indeed some of the social effects in particular are proving a major challenge for most developed nations to resolve. China is certainly adopting some of our capitalist tendencies, but they’re taking full advantage of this rare opportunity to shape their future as they want, and not simply mimic the path taken by the West.

In my opinion our Western media often reports on the ideological transformation in China with a very negative tone – fearful that China is trying to take over the world, steal our jobs and reduce our developed economies to nothing. In fact China has helped us maintain our high profits and lifestyles, and without it we would most certainly sink. The authorities in China are simply trying to focus their resources, policies and attention towards the care and prosperity of their huge population. China’s growing strength and influence has been accompanied by many bitter experiences, but it’s a country where everyone is united in working hard to achieve a better China and a better world.

‘Nothing restricts our ability to innovate more than what we already know, and what we therefore believe not to be possible’ (Geoff Mulgan, founder of think tank Demos)

What is innovation?

Innovation is all about doing things differently, exploiting new ideas and taking risks. It enables businesses to bring new and improved products or services to market, re-energise brands, refine processes and, most importantly, improve profitability.

Innovation should be an on-going process that’s embedded in the company culture at all levels. It’s a team process that thrives when passionate people are encouraged to create ideas that challenge the status quo.

Everything starts from an idea, and the best way to find that magical innovation is to generate a lot of proposals. Success comes from filtering those ideas, identifying ones that the business will focus on and applying resources to exploit them effectively.

Why does innovation matter?

Forward thinking companies see innovation as the fuel for long term business growth. When placed at the heart of an organisation, it adds value to products and services, stimulates sales growth, and exploits new markets.

The innovation process always brings a sense of renewal. Teams and businesses are invigorated from within, and find themselves seeking new trends or ideas that will propel them into the next cycle of innovation and creativity.

What’s design-led innovation?

Design can effectively initiate and manage innovation in products, services, brand communications and processes – and there’s strong evidence that design-led innovation makes good business sense.

A designer’s role is to challenge, experiment, expand boundaries and explore new and different ways of doing things. They are abundant with fresh ideas, and use creative thinking to view problems from a different perspective.

Involving a designer in your company or team is a smart move, but they shouldn’t be left to innovate alone. Success comes from a diverse team of people, perhaps inspired and guided by the designer to help them innovate more effectively.

How do we encourage innovation?

Innovation is not necessarily about spending more money or following a rigid process. It’s fundamentally about changing company attitudes and structures, and allowing a creative culture to develop and light the path ahead.

An organisation must be fertile for the seeds of ideas and solutions to grow. An inclusive environment that is empowering, flexible, welcomes ideas, tolerates risk, celebrates success, fosters synergy and encourages fun is crucial.

Creating this kind of climate is the biggest challenge facing companies wanting to be more innovative. It needs leadership from the top, but participation by all. Here are some essential steps that will help promote the innovative spirit:

• Commission some market research to better understand the changing needs of your customers, industry trends and what your rivals are doing. It could reveal new opportunities, and it will give you the evidence around which to focus your efforts.
• Make sure you have processes and events to capture ideas. For example you could setup suggestion boxes around the workplace, hold regular brainstorming workshops or even plan company outings to stimulate new thinking.
• Create a supportive atmosphere in which everyone can freely express their ideas without the risk of criticism or ridicule. Often there’s something good hidden inside those silly or bold suggestions!
• Encourage risk taking and experimentation, and certainly don’t penalise those who try new ideas that fail. Exploration is nothing without perseverance.
• Promote openness between individuals and teams. Good ideas and knowledge in one part of your business should be shared with others. Teamworking, newsletters and intranets can all help your people share information and build an ideas culture.
• Stress that people at all levels of the business share responsibility for innovation, so everyone feels involved in taking the business forward. The fewer the layers of management or decision making in your organisation, the more people feel their ideas matter.
• Reward innovation and celebrate success. Appropriate incentives can play a role in encouraging staff to think creatively, and to keep them engaged.
• Look for imagination and creativity when recruiting new employees. Innovative thinkers are not just those with impressive qualifications, and often employees new to your industry can bring a totally fresh approach to the way you do things.
• Form a consortium or discussion group with other companies or bodies. Collaboration can bring huge benefits in terms of shared resources, spreading risk and utilising knowledge that is not available in-house.
• Involve a designer in your project team, or even invite one to become a non-executive director in the company. Professional product and graphic designers are trained to challenge assumptions and traditions, and can rapidly enhance your innovative capability.
• Try to develop and secure some intellectual property from your efforts. Patents, registered designs and trade marks add value to your ideas, and can protect against competitors who chose to innovate by copying.
• Organisations do not become more innovative over night. Commitment and patience is required from everyone during the innovative journey, especially if outcomes do not match initial expectations.

Examples of successful design-led innovation

These short case studies deliberately focus on particular designer-business relationships, as it’s essential to understand that the key to success is to put design and innovation at the core of company strategy.

Category: Product and brand innovation

Project: Swatch watches

Client: Swatch

Year: Early 1980s to present day

Swatch is an example of what design combined with an innovative concept can achieve. The Swiss watch making industry was very weak in the early 1980s, faced with competition from Japanese digital watches. Swatch’s revolutionary business concept reversed the decline by redefining the watch market. It transformed a watch from a time measuring instrument into a fashion statement and a collector’s item.

Nicholas G Hayek, the consultant who had been brought in to wind down the Swiss watch making industry had the idea of marrying Swiss watch making skills with Italian fashion design. To add to the mix he borrowed plastic engineering skills from Lego to produce watches that were dramatically different from the feature laden watches offered by the Japanese.

As a consequence, people started collecting these relatively cheap watches – choosing a different one, depending on their mood and the occasion. Design and innovation here not only led to the successful establishment of a new company, but to the turnaround for an entire industry.

Category: Product innovation

Project: Quattro

Client: Black & Decker

Year: 1998

Black and Decker realised that there might be a market for a multi-purpose tool. So the company decided to develop a tool that would allow four different operations: sanding, sawing, drilling and screwing.

After an initial design was developed externally, the project champion felt that the concept offered far greater degrees of innovation and differentiation than realised by the initial design and gave it to an in-house designer for review. In-depth understanding of Black and Decker’s vision and ambition combined with a passion for improving ease of use and user comfort resulted in a distinctive, innovative design that took the market by storm. When the product was introduced in late 1998 demand was far higher than anticipated.

Instead of starting from the existing design of battery operated tools, the young designer questioned what had been taken as a given and, by doing so, was able to create a superior design in terms of the function and visual appeal. Here, design and innovation have been used to create a new product category.

Category: Product and brand innovation

Project: iMac G4

Client: Apple Computers

Year: 2003

After Apple’s initial success with introducing the Mac in 1984, the company had become complacent. In the mid/late 1990s it became clear that something drastic had to happen if the company was to survive. Remembering its roots – user friendliness and imaginative design – Apple hired Jonathan Ive, a young British product designer.

Ive turned the boring, uninspiring grey box that housed the average personal computer into the iMac, launched in 1998. With this example of the benefits of innovation and design, Apple continued to stretch the boundaries of computer design. In early 2003 the company launched it’s most innovative and imaginative computer yet. The iMac G4 features a 15″ or 17″ LCD screen and a hard drive that’s hidden in the hemispherical base that supports the screen. Here design and innovation were used to revitalise a brand, give it back its credibility, and effectively save a company.

Credits

Supporting material was kindly supplied by the Design Council (www.designcouncil.org.uk), Business Link (www.businesslink.gov.uk) and Innovation Network (www.thinksmart.com). All owner’s rights and marks are duly acknowledged.