In 2013, China Labor Watch released a report from an investigation lead by a group of journalists about the poor working conditions in the Apple plant in the outskirts of Shanghai.
The report said that employees work more than 12 hours a day and receive a salary of $318 a month, or $1.85 an hour, then sleep in a crowded room with 14 other people.
This has long been the image of a China that opened its doors to unconstrained capitalism. But now China has started a project to change its image and become an industry benchmark. “Made in China 2025” is an initiative to comprehensively upgrade the Chinese industry, a plan which was adopted in 2013. It focuses on the entire manufacturing process and not just innovation. It promotes the development of not only advanced industries, but traditional industries and modern services.
The plan was drafted by the Ministry of Industry and Information Technology (MIIT) over two and a half years, with input from 150 experts from the China Academy of Engineering.
The plan identifies the goal of raising domestic content of core components and materials to 40% by 2020 and 70% by 2025. And they are on the right path.
The established tech companies like Lenovo, Huawei and ZTE are consolidating an image that denotes quality and innovation. The result is the deep penetration of the western market from the consumer and manufacturer side. Huawei unveiled the world’s first mobile integrating Amazon’s Alexa voice service and Lenovo released a nicer Amazon Echo.
Chinese companies are investing more and more in developing the most advanced drones, artificial intelligence and robots.
China leads the ranking of the best drones companies in the world and of the 10 best companies, six are Chinese.
This means that Chinese companies are not merely working for others anymore, soldering components to put in a plastic box. Nowadays they are creating sophisticated products with attractive design, including advanced software and algorithms, like this modular robot that could have starred in Disney’s Big Hero 6, and would impress even the best robotics research labs.
Asia’s Sillicon Valley
To increase development and capital investment, the Chinese government needed to create a hub where innovation could be nurtured and developed.
Shenzhen, a former fishing village bordering Hong Kong was the China’s answer to Silicon Valley. “It’s the capital for hardware,” said Duncan Turner, managing director for accelerator Hax. “All the suppliers are here, you’ve got an ecosystem of both manufacturers and critically, engineering expertise.”
Shenzhen is home to more than 11 million people and some of China’s most recognizable brands, including Huawei, Tencent, and DJI.
The change of direction of the Chinese market aims to not only polish their image but also to cover the different segments of the market. An example of this is the creation of international events such the Mobile World Congress Shanghai. “Mobile World Congress Shanghai is the largest mobile event in Asia. Though it has a major focus on the Asian market, it attracts exhibitors and attendees from outside the region. Further, Mobile World Congress Shanghai is unique from the GSMA’s other events in that it welcomes both mobile industry professionals and consumers, while all other GSMA events are B2B only,” said Ava Lau, PR agent of GSMA
What Do the Chinese Need?
Understanding the Chinese public is not a simple task. Factors like history, consumer needs and social attitudes play such a critical role that companies like eBay, Walmart and Amazon—all very successful in the western market—are big failures in China.
China is a massive market. Its population of 1.3 billion–and counting–has created a formidable industry, albeit one more recognized for its quantity than its quality. This has resulted in a lack of confidence both abroad and at home. As the Chinese consumer doesn´t trust their own products, what more foreign companies like Amazon, where customers have to pay before seeing the products? Such transactions are not well-received. To compensate, Chinese firm Taobao came up with a third-party payment system, namely AliPay. “Buyers will pay the money to this third-party account owned by Alibaba (Taobao’s holding company), and only after they have confirmed receiving the products will Alipay transfer the money to the seller. This model effectively solved the trust issue, and was immediately successful.” said Rui (Juliet) Zhu in an article
The other key factor is understanding and adaptability to the market. For example: Nike is developing its products and advertising according to the sporting preferences of the Chinese (Ping Pong, Bicyclling, Badminton, etc). And Giorgio Armani said that when he opened his stores in Peking he had the door of the store painted red because the Chinese were partial to this color.
The Asian market is very complex and a key player in the global economy. It is in fact the most important economy in the world, with 60% of the population of the planet, part of the most extensive and populous continent of the earth (about 61% of the world population).
Despite this, the issue about working conditions in China still prevails. Multiple cases of violations of workers’ rights being brought to light, and increasing consumer awareness have made companies take a second look at their policies, and there have been changes, but there are still many workers in deplorable conditions. There is still much to be seen but what it is exceedingly evident is how the Chinese market is growing and proliferating deeper into the western market. Are we prepared for this Asian giant?