A lot of the old perceptions of China as cheap, and Chinese as avid savers, are cliches from the past, tells business analyst Shaun Rein in Arnnet. And while China is catching up with the west, western companies and country should make sure they deal with a fast changing China.
Already some top Chinese companies have seen the holes in the market, such as infant formula, and advertise the fact that they cost 50 per cent more than the competition as a positive, because their supply chain is reliable. Technology is the same.
“The west is no longer light years ahead,” said Rein.
A 3M representative told Rein that 5 years ago, the company would’ve considered itself 10-20 years ahead. Nowadays Chinese firms have caught up, not just in terms of quality and price, but innovation. Its no longer a knock off game.
Lenovo is now the world’s largest PC manufacturer, and continues producing high quality devices. Xiaomi mobiles, which are middle to high end smartphones, are set to be launched in North America, alongside ZTE and Huawei who have made market share in the low end.
Ericsson spends $5bn in R&D, Huawei is just behind on $4.9bn, and has picked up several key contracts in Ericsson’s home turf, such as Deutsche Telekom. Rein said that Cisco executives have told him ‘we’re not that much better than Huawei anymore’.
“We are hearing the same thing in category after category,” he said.
Part of the key to this innovative surge has been the ‘bamboo ceiling’; the perception amongst China’s youthful elite that they can’t be senior executives in western corporations. This leads China’s best and brightest back home to drive growth in their home corporations, and we’re seeing the effects now.
One of the key advantages we still have left is that brand trust, which Australian tech businesses should take advantage of – and quickly, because its an advantage that’s rapidly eroding.
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