In this and our next two blog posts, we will review topics that were of special interest to us this year as we bid farewell to 2016. We’re starting the series with an excursion to China. In an impressive feat, Chinese manufacturers have mastered the development from once being the production hub of the global electronics industry to becoming world-class innovative brands in their own right.
China acts as a polarizing force in many ways, and yet, it is esteemed for its perpetual drive more than any other country. A small journey through the history of the Chinese electronics industry shows us the impressive development China has undergone in just a short period of time. Since the invention of the iPhone at the latest, previously unknown company names such as Foxconn became well known among expert circles and beyond – although it should be said that with its approximately 1.3 million employees, the tech giant has always been not only one of the largest companies in China and its industry, but one of the largest businesses, globally.
Chinese Brands Capture International Turf
We’ve known for a long time that almost all the major international brands, from Google to Sony, have the majority of their hardware products manufactured in China and that Foxconn is just one of more than 200 so-called contract manufacturers (CM) and original design manufacturers (ODM). However, a rather creeping, almost unnoticed development has taken place in a different dimension. Many Chinese manufacturers are taking advantage of the know-how they’ve gained from the development and production of electronic products to position themselves in the international market with their own brands.
The development of the smartphone industry alone shows how quickly some of the Chinese electronics giants graduated from functioning as an extended workbench to becoming world-class technology brands of their own. While only three Chinese manufacturers – Huawei, Lenovo and ZTE – were among the world’s top ten smartphone brands in 2012, this number had increased to seven Chinese suppliers by the middle of this year. The electronics tycoons Oppo and TCL are among those that have risen to the top 10. And Vivo and Xiaomi, which conquered the market as completely new brands, are now also among the top 10 smartphone brands. Only Samsung and Apple are bigger; LG falls in the midrange.
China’s Service and Quality Offensive Is Highly Competitive
With the introduction of own brands, the business model of all manufacturers changes – and with it their customers’ perception. Brands suddenly have their own image, and with it come new expectations regarding quality and service that Chinese manufacturers are well aware of. We recently met Gao Bohai, General Secretary of the China Association of Quality Promotion (CAQP), a non-governmental organization dedicated to improving the service quality of Chinese brands. One could hardly convey Mr. Bohai’s personal commitment to quality better than by describing his hobbies: Like a sort of Chinese Andy Warhol, he spends his time indulging in classical music, painting, photography and fashion design – not as a consumer, but as an artist.
Gao Bohai most authentically embodies his high demands when it comes to quality of life by serving as an ambassador for China’s quality association. The Chinese government is currently investing heavily in the long-term improvement of China’s quality and service standards with the aim of significantly enhancing the customer experience associated with Chinese products. The initial results can be readily observed: The times when customers had to deal with cheap Chinese product imitations that would stop working shortly after their purchase seem long gone.
Nubia, OnePlus and Xiaomi Aren’t Just Cool – They’re Successful
Young, dynamic smartphone brands, such as Nubia and the innovation leader Xiaomi, are a credible embodiment of the new quality and service requirements as well as the increasing utilization of the mobile Internet in social media, digital marketing, online sales and for a rich user experience overall. OnePlus even states “Never Settle” as its official company philosophy and thereby clearly signals what’s at stake: Standing still isn’t an option – moving forward is imperative. That this motto simultaneously serves as a challenge to established brands is simply part of the business and isn’t cause for concern on our end. With considerable self-confidence, Chinese brands are continuing their global expansion, and we at B2X are very proud to continue to support Chinese brands as a strategic service partner of Nubia, OnePlus and Xiaomi.
Summary: Every year on March 15, China celebrates its Quality Day. That this is more than mere lip service is shown by the impressive market growth of Chinese smartphone manufacturers. Many mobile brands from China are regarded as innovative, cool and affordable – and are particularly popular among young customers all over the world.
Chen Liang is Managing Director and Head of Sales of B2X China.