China’s technology sector is reaching a critical mass of expertise, talent and financial firepower...
During much of the 20th century, China served as a manufacturing center for international brands, developing few of its own for export markets. The moniker “Made in China” became synonymous with basic, cheap, mass-produced, low-quality goods, as well as counterfeits. With Fast Company recently proclaiming that “‘Made in China’ is a compliment,” there are signs the tables are turning.
Our 2012 report “Remaking ‘Made in China’” noted that Chinese companies are putting a new focus on developing strong brands that can hold their own both at home and on the world stage. Two years later, a number of tech brands are starting to overcome the traditional roadblocks to successful overseas expansion. The Wall Street Journal points out that “China’s technology sector is reaching a critical mass of expertise, talent and financial firepower that could realign the power structure of the global technology industry in the years ahead.” Innovation, once sorely lacking, is on the rise. Since our report came out, there’s been a 22 percent uptick in research and development spending in China, which has reached $284 billion. Chinese companies are also addressing another weak spot and focusing on global brand building.
Last week, Huawei’s chief executive said at the Mobile World Congress that the company had achieved brand awareness among 52 percent of people globally last year. With a strong presence at the mega-event, both Huawei and ZTE made clear they “want to be a more powerful force in consumer products like smartphones,” notes The New York Times. Meanwhile, Fast Company’s “Most Innovative Companies 2014” list includes smartphone maker Xiaomi at No. 3—the company is also among our 100 Things to Watch in 2014—as well as the Beijing Genomics Institute.
Lenovo, a forerunner in Chinese innovation, became the world’s largest PC maker by units sold in 2013; it also ranks third in smartphone sales. Lenovo’s mobile app Qiezi, which allows phones to exchange photos and videos instantly, gained some 30 million users within four months of launch last year. The company has also made headway in overseas markets over the past two years, introducing its smartphones in India, Russia and Indonesia, where the brand is considered cool.
Another leader is Internet giant Tencent, which has been aggressively expanding into overseas markets with WeChat, a messaging app with roughly 300 million users, about 100 million of whom are outside China. Tencent spent $200 million last year on awareness campaigns abroad featuring soccer star Lionel Messi. The app includes a social network, gaming and mobile payments—the “holy grail of social networks,” as New Republic put it—which were launched late last year. While Facebook’s $19 billion for WhatsApp seemed astonishing, Barclays puts WeChat’s valuation at $30 billion.
Tencent, Lenovo, Xiaomi and others are creating new and novel products that can compete at or above a world-class level, and in some cases even challenge incumbent brands. While the idea of Chinese brands is new to many global consumers, it won’t be for long. For more on this topic, check out our 2012 report.
Image credit: Answers