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1/424February 2012 | Enterprise China
COVER STORY MADE FOR CHINA
MADE FORCHINA
The explosion in consumer demand will
change how the world thinks about products
By Brad Steiner
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Chinas rise as the factory of
the world is in some ways a
blessing and a curse.
Through continued invest-
ment in infrastructure and manufac-
turing, China has built a competitive
advantage in sectors from housewares
to heavy equipment. Though wage lev-
els continue to rise, eroding Chinas
once dominant cost advantage, labor
productivity has been growing as well,
as producers move up the value chain.
The market is now able to offer a value
proposition based on more than just
low-cost labor.
But a second factor is at play which
looks to change the way goods are
produced and brought to market. The
prospect of a consumption explosion
from Chinas rising middle class iscausing a shift in strategy for domestic
and global firms alike.
After 20 years of double-digit GDP
growth, Chinas middle-class is starting
to emerge. This new generation is de-
termined to live an affluent consumer
lifestyle. Retail sales in China rose 17%
in 2011, to US$2.86 trillion. This is a
result of not just rising wage levels,
but active policy support to incentivize
consumers.
Industrial policyGovernment leaders recognize the
power of basic research and innova-
tion, and are determined to place China
in a leading role. These ambitions were
laid out in the National Medium- and
Long-Term Plan for the Development
of Science and Technology (2006-
2020), often abbreviated as the MLP.
The document called for China to be a
technology powerhouse by 2020, and a
global leader by 2050.
A significant part of the policy focus
has been on basic science research, and
this has naturally led to support for in-
tellectual property (IP) and patients. In
2008, China spent US$133 billion onscience and technology, or 1.54% of
national GDP.
Leaders certainly recognize the im-
portance of domestic demand in sup-
porting industrial development. In
2009, the government drafted a pub-
lic catalogue of products approved for
government procurement, focused on
Chinese products. The list focused on
OFFERING
The World Scholars Cup (WSC) is
an international academic tourna-
ment founded in 2006 by a former
Academic Decathlon champion and orga-
nized by his company DemiDec. WSC is
comprised of four rounds: the Scholars
Challenge (individual questions), ScholarsBowl (team questions), team debate, and
persuasive essay writing. The tournament,
drawing students from all over the world
and testing their knowledge and applica-
tion of resources released by WSC, cel-
ebrates diversity and teamwork as well as
knowledge. In June 2011, my ISB team-
mates and I traveled to the Malaysian
capital of Kuala Lumpur to take part.
The 2011 theme, A World Transformed,
covered an enormous range of ideas and
disciplines, from the artwork of politically
and socially altered societies to poetry ex-
posing the dangers of consumerism; from
biotechnology to fundamental economic
theories. Preparing for the competition
was almost as memorable as the competi-
tion itself. We were initially overwhelmed
by the sheer amount of information that
we needed to acquire, but we soon dis-
covered how enjoyable it was to soak up
all this learning. Reviewing for the tourna-
ment broadened our view of the world
and revealed the links between art, music,
science, poetry, literature and history.
The competition, while emphasizing
friendship and global citizenship, was in-
tense. There was no doubt that everyone
had come with the idea of winning in
mind. The WSC is a fantastic way to gain
knowledge, further your understanding
of the world, and create priceless memo-
ries.
By Amanda Song, Grade 11, International School of Beijing
high technology areas like telecom-
munications, and required products to
have a commercial trademark initially
registered in China. This effectively
eliminated foreign-designed products,
even if they were manufactured com-
pletely in China through a joint ven-
ture. In many ways, China is learning
from the examples of the US and Japa-
nese paths to industrial innovation.
Basic researchMultinationals are shifting research
and development to China as well. US
based firms like 3M, Caterpillar and
General Electric have invested billions
in expanding their overseas research
activities, including a significant por-
tion in China. Even with blockbuster
products developed in the US, likethe iPhone and microprocessors, pro-
duction will still largely take place in
China.
This shift to Asia is not just due to
changes in consumer demand, but also
in the supply of talent. Over half of the
worlds engineering degrees are award-
ed in Asia each year, compared with
4% in the United States, according >>
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for technology manufacturers, as
those industries are largely driven by
new functionality, or improvements
in production. In the fashion and
lifestyle sectors, however, marketing
and image are key. It is here where
new brands will have to overcome the
stigma attached to the made in China
label.
New imageChinas success with producing low-
cost goods for the world has been cen-
tral to rising GDP and living standards,
but has also brought an association
with sweatshop labor and low quality
when marketing abroad. Even success-
ful Chinese brands have focused on
the value segment in other emerging
markets.This role of image is being felt in
more sectors, from autos to smart-
phones. The success of luxury brands
in China is a further indication of
consumers increasingly sophisticated
tastes. One strategy for brands has
been to distance their identity from
China. Sportswear company Li Ning
focuses on a personality, while luxury
brand Shanghai Tang draws on the im-
age of a cosmopolitan city.
Global design and innovation con-
sultancies like IDEO and Frog have
been in China for several years, hoping
to take advantage of this trend. On one
hand, they are seeking to serve mul-
tinational clients who demand more
global offerings. And on the other,
they are increasingly targeting Chinese
clients. These quickly growing firms
are looking not just for strategies to
go abroad, but also new ways to reach
their customer base in China.
But these design houses face chal-
lenges of their own. Few Chinese
managers understand the design pro-
cess, and so are reluctant to invest in
expensive conceptual work. A second
is sourcing design talent in a countrywhich is still developing design edu-
cation. Doreen Lorenzo, president of
Frog, sees a change happening in the
design talent pool, But its still going to
take several years to get to the very se-
nior level. We have a couple of Chinese
creative directors. but at the executive
senior director level, we're not quite
there yet. but it will happen.
In the fashion and
lifestyle sectors,
however, marketing
and image are key.
It is here where newbrands will have
to overcome the
stigma attached to
the made in China
label
OFFERING
In Shanghai, the popularity of the In-
ternational Baccalaureate (IB) is grow-
ing substantially. It began with many
schools offering the Diploma Programme
for Grade 11 and 12 (Year 12 and 13)
but has also seen more schools offer-
ing the Primary Years Programme (PYP).
The reason for this shift is based on the
growing reputation of the IB programmesas a whole. The IB is a non-profit educa-
tional foundation, which offers three pro-
grammes for students: the PYP for ages
3-11, the MYP (Middle Years Programme)
for 11-16, and the Diploma Programme
for 16-19. All three programmes are de-
signed to help develop the intellectual,
personal, emotional and social skills to
live, learn and work in a rapidly globaliz-
ing world. The International Baccalaureate
aims to develop inquiring, knowledgeable
and caring young people who help to
create a better and more peaceful world
through intercultural understanding and
respect. It was founded in 1968, and
currently works with 3,318 schools in 141
countries with over 985,000 students.
The Western International School of
Shanghai (WISS) is currently the only Inter-
national School in Shanghai to offer the
full continuum of the IB: PYP, MYP and
DP. They share a complementary mission
to the IB, where their aim is to send their
students into the world as well-balanced,
global citizens, with a desire to contribute
to the future as a leader. They achieve this
aim by remaining child-focused, encour-
aging learning in a compassionate com-
munity, offering a future-orientated and
balanced curriculum, and by maintaininga diverse student population. To ensure
that the philosophy and strengths of the
IB are carried through to each student,
they maintain one of the lowest student-
to-teacher ratios in Shanghai and retain
highly-qualified and experienced teachers.
WISS, like many top International
Schools around the world, has recognized
the need for a programme like the IB that
effectively prepares our future leaders for
the world we live in today.
For more information, please visit:
www.wiss.cn and www.ibo.org.
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