China has long been a global leader in taking existing technology and making it its own by developing more cost-effective, efficient versions with a speed to market that is second to none. Recently, however, the tide has turned and China is rapidly establishing itself as a hub for innovation and smart new ways to drive mobile tech forward.
This is thanks in no small part to a significant increase in investment in research and development – a report by the U.S.-based Battelle Memorial Institute predicts that spending in this area will reach $284 billion this year, overtaking Europe by 2018 and the U.S. by 2022. But it is also fueled by an underlying energy and a desire to create, both of which have driven major technical advances in the territory.
Huawei is the world’s second-largest telecoms hardware company, second only to Ericsson. Based in Shenzen, it now has a research and development center in Shanghai with more than 10,000 engineers grounded in computer science. While most of the world is looking at 4G implementation, Huawei is already working on fifth-generation technology for launch in the next decade or so. It’s no surprise that U.K. Chancellor of the Exchequer George Osborne specifically asked to visit Huawei on his last trade visit to China.
Xiaomi is another example of homegrown tech development. Fast becoming a viable competitor to Apple, its Mi smartphones currently outsell the iPhone and the recent launch of a Mi tablet is bound to increase revenue, which was in excess of $5 billion at the end of last year. Last year Xiaomi hired Hugo Barra, Google’s ex-vice president of product development for Android, demonstrating to the world how serious it is about global business expansion.
Key to the success of businesses such as Xiaomi is the local availability of low-cost mobile components including processor chips. China’s Allwinner and Fuzhou Rockchip are part of this fast-growing market – until recently almost entirely based on overseas development – for chips used in low-end smartphones and tablets. The Chinese government plans to spend almost $5 billion investing in the microchip industry.
China’s passion for mobile in general and apps in particular has led to the development of some of the world’s most innovative, widely used services, imitated by the West in a neat reversal of the norm.
Didi Dache, for example, is a local taxi calling app with more than 100 million users in 178 Chinese cities, which has been developed from an entirely territorial perspective. It has a built-in messaging service to help locate remote, off-the-map addresses, a haggling option to satisfy the user’s desire to get the best possible price, and a real-time taxi location service.
Momo is a free, location-based instant messaging app for connecting with nearby strangers. It predates the hugely successful Tinder by more than a year and currently has more than 100 million registered users.
Chinese social networks give a real indication of truly localized innovation, built specifically to appeal to cultural sensibilities and community requirements. Here are a couple of examples of networks that have found – and exploited – a specific niche:
Taomee offers virtual communities for children, divided into character-based franchises tailored to their interests (including martial arts, fairies, and Seer, China’s most popular virtual world for children). Playing to the parents’ desire for a safe, monitored, educational online space for their children, Taomee has proved to be hugely successful, with more than 20 million community members aged 6 to 14. And, in a move to rival Disney, it has expanded to produce animated movies and to set up its own TV channel.
iPartment is a dating social network with a difference. Rather than simply posting profiles of themselves, users enter into a fully realized world, based on virtual apartments complete with flowers that need watering and dogs that need feeding, at a price. Committed users can sign up for VIP membership, and, in an attempt to cash in on the largely young, affluent female demographic, brands such as L’Oreal, Dior, Estée Lauder, and Starbucks have all set up virtual stores on the network. iPartment is in the process of expanding its presence across the Far East, and is looking to further its e-commerce activities to capitalize on an enthusiastic audience of potential shoppers.
What’s in It for Brands?
This surge in innovation, based on a desire to meet territory-specific needs, only reinforces how important it is for brands to align themselves with local thinking, behavior, and culture. Overall, it’s a good news story – it’s no longer essential to piggyback Western developments to promote your brand in China – homegrown talent, with its inherent knowledge of the market and cultural differences, is beginning to prove itself to be more than capable of leading the way.