Stories - David South Consulting

Entries in Made in China (2)

Thursday

Jun252015

Better by Design in China

Thursday, June 25, 2015 at 9:29AM

In recent decades, China has been known more for its inexpensive manufactured goods than as a producer of high quality products. But this is changing as the country seeks to move up the economic chain.

China’s long-established design traditions were largely overlooked as the country made its breakneck push to become the world’s manufacturing powerhouse. But now Chinese manufacturers want to be known for high-quality designs and products rather than just for cheap-and-cheerful merchandise.

China is a critical lesson for the rest of the global South, and offers much inspiration to any country trying to develop, modernize and eradicate poverty.

The country is the main reason for the dramatic reductions in global extreme poverty rates, and it can be proud of using its average yearly economic growth rate of 10 per cent to lift 440 million Chinese out of poverty – the biggest reduction of poverty in history (The Economist). The strategy of exporting manufactured goods into Western markets at competitive prices has dominated the past 20 years.

But China faces a dilemma as other nations in the global South are moving into this niche. It needs to quickly become a high-value nation, with unique products and designs generated in the country.

Luckily, a renaissance in Chinese design in the last five years has been gradually grabbing the attention of the world’s creative community.

Innovative Chinese designers are creating home furnishings and interiors that are being snapped up by European companies.

The Italian kitchen utensil design company Alessi turned to eight Chinese architects – including Ma Yansong and Yung Ho Chang – to design a range of trays called (Un) Forbidden City. The architects’ designs were manufactured in Italy – a reversal of the pattern that has dominated for the past 20 years.

The architects drew on Chinese traditions and 21st century technologies to design the trays. One was made using a 3D scanner which captured images used to make a mould.

The drive to change and transform China’s global economic role was promoted in 2011’s Beijing International Design Week (http://www.bjdw.org/en/), with its theme of transforming “Made in China to Designed in China.”

“When you have so much of a manufacturing base in one place, it’s natural that people start thinking about how to climb the value chain,” Philip Tinari, director of Beijing’s Ullens Centre for Contemporary Art (UCCA) (http://ucca.org.cn/) – a champion of new artists and designers – told howtospendit.com.

“Chinese design has become something to rally around and, unlike art, enjoys great official support because it’s a way of improving China’s long-term economic position, as opposed to expressing thoughts about what’s been going on.”

Other Chinese designers grabbing attention include Chen Xuan, who makes tables; chair-maker Gui Yang; Li Bowen, a maker of wicker chairs; and Ge Wei, a maker of jewellery boxes.

Designer Huo Yijin makes contemporary tea trays, using heat-reactive lacquer coating to create dazzling effects.

“Users can see the wonderful effect of water and temperature reacting on the tea trays when they drink Kungfu tea in the traditional way,” Huo explained.

Jingdezhen, Jiangxi province – a city that has been making ceramics since the Ming Dynasty (1368–1644) – is now attracting craftspeople from around the world looking to tap into its expertise and skill. One attraction is Mr Yu’s Big Ware Factory. Its unparalleled ability to create giant-size pottery is a design niche with much potential.

Many foreign creatives are being drawn to China for its can-do attitude and the ability to break with conventions stifling creativity in the West. The next five years could see the world’s design centre of gravity shift eastwards again.

By David South, Development Challenges, South-South Solutions

Published: November 2012

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=D_A1VeiJWycC&dq=development+challenges+november+2012&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challenges-november-2012-issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

Creative Commons License
This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

David South |

Designed in China to Rival ‘Made in China’

Thursday, June 25, 2015 at 7:56AM

Harnessing the power of design to improve products and the way they are manufactured is a critical component of successful economic development. And the high export value of designing and making “computer equipment, office equipment, telecommunication equipment, electric circuit equipment, and valves and transistors” was flagged up as a priority for developing nations back in 2005 at a meeting looking for “New and Dynamic Sectors of World Trade” (UNCTAD).

One country taking up this challenge is China. It now boasts twice as many Internet users as the United States, and is the main global maker of computers and consumer electronics, from toys to games consoles to digital everything.

China is also on course to become the world’s largest market for Internet commerce and computing.

The centre of gravity is very much moving China’s way: One study of 769 firms investing in 2,203 Chinese companies by Stanford University in California, found “the same firms that were successful in Silicon Valley … have transplanted their expertise to China,” according to Marguerite Gong Hancock in The New York Times.

But the country wants to move from ‘Made in China’ to ‘Designed in China’. This is critical because the majority of the profits to be made are actually in the designing, patenting and marketing of products. Manufacturing, as has been shown in the recent media controversy over the products made by Apple (apple.com), is not the main profit centre.

Apple employs 43,000 people in the United States and 20,000 overseas. But through its network of sub-contractors,the number employed overseas in Asia, Europe and elsewhere is around 700,000 (The New York Times). This includes around 200,000 assembly jobs in China. These workers can make US $17 a day or less.

Apple makes hundreds of dollars in profit for each of its iPhones. Apple can do this because it is the designer of the phones and holds the copyright, and it is the branded company that has built up its reputation and developed a highly sophisticated marketing and distribution network around the world. Through clever use of design, Apple created products that look distinctive in the marketplace. And those are the factors that determine the ability to make this profit. As has been noted, it isn’t just cheap wages that keep Apple’s profits high.

Getting consumers to desire and buy your products is a challenge for any company. Design plays a major part in understanding the unique demands of countries and markets, and what people find appealing or repellent.

A product that has both a successful design and is produced efficiently will generate a good profit.

The classic example from the past is Japan. Devastated during World War II, Japan set about re-building its manufacturing prowess from scratch. It brought in American innovators to introduce new concepts in manufacturing.

Japan’s openness to the new ways enabled it to re-fashion its manufacturing industries to exporting to the developed Western nations, in particular the United States. At first, quality control was an issue and Japan was mocked for making cheap quality trinkets, toys, automobiles and motorcycles. But it quickly changed from this to a reputation for making quality, affordable products and moving quickly into the burgeoning micro-electronics and consumer products markets. It also was a pioneer in computer gaming and entertainment.

The recent achievements in supercomputing in China are pointing to where things can go. China has developed the Sunway Bluelight MPP supercomputer (http://en.wikipedia.org/wiki/ShenWei). It is able to do a quadrillion calculations per second: making the Sunway Bluelight one of the 20 fastest supercomputers in the world. It was built with a Chinese-made microprocessor, and importantly, uses lower amounts of power than other supercomputers.

The clever bit is the ratio of computing power to wattage used. Energy-efficient computing is critical if computers are to make the jump to the next level in processing power.

All these trends coming together hint at big changes in the coming years.

In the past two decades, the electronics sector has enabled a number of developing countries to improve trade performance, in particular East and Southeast Asian nations.

Improving education is critical to the growth strategy. Improving education, like encouraging the pursuit of engineering as a profession, as China has done – it now has more than half a million estimated graduates, the most in the world – means new skills and ideas are coming to the industry (engineeringinchina.net).

But this is not enough. New ideas are essentially a creative process and this needs connections to business and the ability to experiment and play with ideas. Start-up incubators have proven a successful way to do this.

Thailand is a good example: Around US $4.5 billion was invested in the country’s electronics industry between 1986 and 2001. This created 300,000 jobs. The sector became so important it made up a third of the country’s exports.

Realizing that much of the work was assembly manufacturing, the government set up the Thailand IC Design Incubator (http://www.nectec.or.th/rd/electronics/be204-45/be204-45.php) to work on hard disk drive development and move up the value chain.

“In 1978, I saw workers stringing together computer memories with sewing needles,” Patrick J. McGovern explained to The New York Times. McGovern is the founder of the International Data Group, which invests in Chinese enterprises.

“Now innovation is accelerating, and in the future, patents on smartphones and tablets will be originated by the Chinese people.”

In the past, China was not able to make significant progress on this development for two main reasons. The first is copyright piracy and theft of intellectual property rights. During China’s economic rise, this theft was rampant and the country developed a reputation for being home to a vast marketplace of knock-offs of major Western brands. And the second reason was the heavy hand of the government, which scared off many entrepreneurs.

But China is re-structuring its industries to focus on innovation. In 2011, China surpassed South Korea and Europe in total patents and was in a neck and neck race with Japan and the United States. As fuel for the innovation rocket,venture capital is critical. And China is now the world’s second largest venture capital market, with the total jumping from US $2.2 billion in 2005 to US $7.6 billion in 2011.

It is this journey up the manufacturing ‘value chain’ that many countries look to with admiration and jealousy. And the secret to being able to move up this value chain is design – savvy product design combined with savvy design of manufacturing methods to continually drive down costs and drive up quality. How long until China has its own Apple and not just an Apple knock-off (http://www.bbc.co.uk/news/technology-14503724)?