ec1202-made for china

7/30/2019 EC1202-Made for China

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


2/4Enterprise China | February 201225

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 >>


3/4


4/4Enterprise China | February 201229

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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