Can design inject some creativity into China’s karaoke economy?

China’s products are popular, but rarely original. That must change, says Rhymer Rigby, if it is to prosper in the long run

Walking around Shanghai, with its futuristic buildings and Blade Runner townscape, it is hard to escape the feeling that you are seeing the future. It doesn’t actually feel like a developing world city at all – it’s more like Hong Kong, just bigger, better and more dynamic.

Whether it’s the amazing bullet train from the airport, the boats with three-metre high TV screens displaying adverts on the river or the dramatic skyline of the Pudong district, Shanghai, China’s ‘window to the world’, leaves you with the feeling that London, New York and even Tokyo are very much cities of the past.

'Made in China' clothing labels (Corbis)

But soon you start to notice that all the big brands – from Gucci and Hyatt to Starbucks and Nike – are Western. Local brands seem to be confined to the odd noodle chain and places like the literally-named ‘Shanghai No.1 Department Store’. While China may be the workshop of the world, the design capability – that all-important creative element – is still very much where it has been for a century, in the US and Europe.

But Shanghai has changed out of all recognition over the last 10 years, and it is unlikely that the world’s most populous nation is going to be content to make things which are designed by others for very much longer.

“We do see China increasingly investing to help its industry climb the value chain,” says Jeremy Gordon, chief executive of China Business Services. “It doesn’t want to be the simple low-cost market that it’s currently perceived as. Increasingly in the south east of the country, China’s so-called ‘gold coast’, there’s a good infrastructure, an educated population and a recognition that they are no longer competing solely on price.”

Design in China is a concept that’s coming up. Cheap labour is our core competitive advantage, but in 10 years that may have moved to Africa

Cathy Huang, managing director of Shanghai-based design agency China Bridge International, agrees that design has, until now, been a neglected part of China’s economic growth: “Design in China is very much a concept that’s coming up. A lot of government officials and businessmen are starting to pay attention to it,” she says.

“Cheap labour is our core competitive advantage right now, but we need to look at the long term. In 10 years, perhaps cheap labour will have moved to Africa.” There is already evidence this is happening, ironically with Chinese companies leading the way in investing in Africa.

China’s efforts to move up the value chain have involved massive investments to stimulate and strengthen the country’s creative sector. The government is beginning to allow foreign investment in its film industry, with Warner Bros one of the first to lead the way.

This year represents a massive cultural landmark for the Chinese creative sector with the release of The Secret Of The Magic Gourd, the first Walt Disney movie to be made in China.

On the design front, huge change is afoot. Until 25 years ago there was no such thing as a design course in Chinese colleges and universities; today, estimates suggest there may be as many as 500, and that China will add 1,200 design schools to the 400 it has opened in the last two decades.

So, does this mean China will design everything tomorrow as it makes everything today? Those with a keen sense of history will remember how other Asian nations have successfully climbed up the value chain – and usually far more quickly than the West did. The big question is not if China will do this, but when and how.

Huang is keen to stress that China’s growth is still in its infancy. She believes Chinese companies are only just starting to understand the difference between a design strategy and superficial cosmetic styling. Because of this, it can be an uphill struggle convincing clients that they need design at all.

“Most of our clients are multinationals. They want to understand local culture and business,” she says. “But that takes time and it can be very difficult, so we have to pay a lot of attention and often educate the client. With some clients we have to give up in the end, but more and more are seeing the point and want the strategic part of design.”

Man cycling past a large billboard poster (Corbis)

Although the Chinese domestic market is huge and fast-growing, it is also pretty unsophisticated. If you have never owned a refrigerator or a TV set before, you probably won’t know what constitutes a good one.

While this presents new problems for export-conscious Western companies, for Chinese manufacturers selling to the local market there is little incentive to invest in good design – especially when copying something adequately is just so much easier. Chinese companies that invest in design may even be at a competitive disadvantage in the short term.

But as the Chinese market matures, consumers will become more aware of the products on offer and be able to make more informed choices. If your neighbour has just bought a Siemens fridge, for example, you may suddenly realise how badly designed your own fridge is. But clearly it’s going to take a while – perhaps the lifespan of a TV set or two – before this situation applies to China.

The other restraining factor is that the rapid pace of growth experienced on China’s east coast has not been matched by the rest of the country. Factories around Shanghai are already experiencing labour shortages and wage inflation, but even Beijing is notably less shiny and Westernised.

Head west into the rural interior and you soon realise not all of China is developing at anywhere near the same rate as Shanghai. The prosperity of cities in eastern China has prompted 200 million peasants to move from rural areas, one of the biggest mass migrations in history.

Despite these large geographic disparities, other regions want a piece of the action and many towns and cities are trying to cash in on China’s remarkable growth.

Design has become a fashionable buzzword, says Huang. “Many cities are trying to position themselves as ‘creative cities’, and there are a lot of events and exhibitions full of companies trying to sell themselves as the best, most experienced designers,” she says. “You see a lot of awards schemes, many of which don’t last more than two or three years.”

If people in China want to build global brands they need to recognise they have to increase quality and add value. Design can help them do that

So how can you tell the good from the bad? The short answer is that you can’t. In the same way that hundreds of firms in the UK are now promoting their sometimes flimsy green credentials, much of the Chinese industry is clamouring about its design. “It’s very hard to tell who is really good,” says Huang.

But what may separate the wheat from the chaff in terms of Chinese design is the emergence of global brands from the domestic market.

The Chinese want to emulate the success of South Korea, home of 14 Fortune 500 companies. “If people in China want to build global brands, they need to recognise they have to increase the quality and add value,” says Gordon. “Design can certainly help them do that.”

Design is one method by which the value of Chinese goods could be increased. But there is a pressing need for stricter controls and regulation of manufacturing processes before Western markets in particular have complete confidence in Chinese goods.

The recent international safety recall of millions of children’s toys because of the use of lead paint in their manufacture showed that, though the toy companies themselves are not free from blame, there is still some way to go.

The rise of Chinese global brands may also help to tackle the country’s problem of counterfeiting and piracy. If China’s business community, and the economy in general, has something valuable to lose, it is more likely that the government will face fiercer pressure to crack down – a far more effective control than Western outrage.

“China is aware of the importance of branding. We want products not just to say ‘Made in China’, but ‘Created in China’,” says Huang. “It is the equivalent of just doing karaoke – now we want to write the originals too. China is very ambitious and quite a few companies have real potential in this area, but it will take time.”

A wall being knocked down with a sledge hammer (Corbis)

Estimates for how long it will take for China to become a nation of designers rather than just producers range from four years to 40; some even liken the Chinese consumer market to that of the US in the post-World War II period.

Where China differs from the West is that its government is trying to create a creative sector. While other governments help their creative sectors – with tax breaks, business parks and enterprise zones – they rarely try to make one from scratch. Many wonder if China might not be better left to grow one organically.

So where does this leave UK design companies? Should they be quaking in their boots or rushing in? “The Chinese market offers many opportunities as well as many challenges for British designers,” said a recent UK Trade and Investment (UKTI) report.

The report also notes that although Chinese businesses are becoming aware of what design can offer their products and services, “the process of buying consultancy is undeveloped and nascent”.

Worryingly for British industry, the report states that while other countries are aggressively promoting their design industries there, Chinese awareness of British design is not particularly high.

“China is quite a challenging market to just walk into,” says Christine Losecaat, creative industries adviser to UKTI. “The most important thing to realise with the design and creative industries is that everything is government-driven. The relationship between business and government is very different to the situation here.”

One example of this is that trade missions tend to have embassy receptions – but these make the Chinese assume that the businesses in question are government-approved. “Finding a clear route to market can be very difficult,” she warns.

The size of the country can be overwhelming too. “We’re only focusing on certain industrial sectors where we think the greatest opportunities are,” says Losecaat. “In China there are companies with engineering departments with thousands of staff, but not necessarily anyone with any strategic design capability.”

It is this end-to-end thinking that is largely absent. Design is seen as a series of engineering problems to be solved rather than a holistic process that is part of every aspect of a product. “This is where the opportunities lie for British consultancies,” says Losecaat.

Gordon takes a similar view: “Most of the opportunities for the UK design sector in China are with local companies, especially in areas where our capabilities are held in high regard.

“The Chinese generally do perceive Britain as being quite strong on the creative aspects of business. They bought into MG, for example –there you have British design history with modern Chinese manufacturing.”

But for the time being, the greatest impetus for design is coming from the multinational companies who have set up specific design centres in China. Sony has recently created a design centre in Shanghai, Hewlett-Packard has one of its famous labs in Beijing, Samsung has entered into long-term partnerships and car companies such as General Motors are investing in Chinese design teams.

All these companies are aiming to design for the increasingly affluent and discerning Chinese middle class. While the concept of class may be new to the People’s Republic of China, the Chinese middle class represents a massively expanding and highly lucrative market.

Even if this middle class only constitutes 5% of the population, that’s still around twice the number of consumers in the UK who consider themselves middle class.

The Chinese perceive Britain as being strong on the creative aspects. They bought into MG, for example – there you have British design history with modern Chinese manufacturing

Of course, the real game begins not when multinationals learn to design for increasingly brand-literate people in Shanghai and Beijing, nor when UK consultancies teach Chinese companies strategic design, but when the Chinese learn to design for consumers in London and New York. That day hasn’t arrived just yet.

But if the rise of Japanese and Korean brands such as Sony, Toyota, Samsung and Hyundai have taught us anything, it is that they will probably get there eventually.

Fortunately for Western companies trying to break into the Chinese market, they still hold the competitive edge over their local rivals and they still have the time to establish themselves competitively in a rapidly growing market.

In design terms, China versus the West is likely to be a lot more give and take than the one-sided contest between Japan and the US in the 1980s.

The number of people in China is probably exceeded only by the number of clichés about the place.“It’s a fascinating time for design in China, yet also a confusing one,” says Huang. The best course is to avoid snap judgements and heed the wisdom of the country’s most famous premier, Zhou En Lai, who, when asked how the French Revolution had affected history, replied: “It’s too soon to tell.”

Will Hutton on why the West is goggle-eyed about China

How realistic is the West’s view of China?

There’s far too much goggle-eyed gee-whizzery. It’s true that within 15 years, maybe even 10, it will be the world’s second largest economy. Indeed, by some measures, it already is. To give you one example, we’re always hearing about the vast number of engineers China is training but McKinsey estimate that only 10% of them would be able to work in a multinational.

So you think the threat from China is overrated?

We have to stop demonising them as the big new threatening thing. At the moment, they are a sub-contractor to the world and, judging from the recent recall of toys made there and the row over Chinese pet food which is poisoning cats and dogs in Canada and America, they have some quality control issues.

Rather than just parroting the usual numbers – or blaming China for rising inequality in the West which it is not responsible for – we should recognise that China faces challenges. It is having to spend more to generate each unit of growth; 400,000 people die of lung disease every year because of pollution; it is probably reaching the limit of its ability to maintain export growth of 25% a year; it is more dependent on foreign direct investment, especially in the high-tech industries, than economies like Japan were at this stage in their development; and the average Chinese agricultural worker generates just over 10% of the added value of their counterpart in Malaysia. I’m not saying China will collapse, but to simply extrapolate from the recent past into the future would be a mistake. The question is: can they get from where they are to where they want to be without major convulsions?

China has made great play about investing in technology, science and design. What do you make of that?

I can see why they’re doing it. China’s share of triadic patent families – those filed in the US, Europe and Japan – is 0.3%.There are designers in China who could hold their own in the West but they are probably a generation away from the step-change that would make them a major challenger to design industries in the West.
But for that to happen, the Communist party needs to loosen its grip. Every workplace still has the equivalent of a party commissar and in that context, how easy is it for designers to be creative?

Will Hutton is chief executive of The Work Foundation and author of The Writing On The Wall.

Quidditch in Qingdao

With intellectual property still a low priority, in China piracy flourishes

Harry Potter fans might have found the wait for the final novel interminable, but would they have welcomed the Chinese vendors who offered the book for sale 10 days before its official release date?

The only problem was, despite sharing the same title as J.K. Rowling’s work, it wasn’t her novel they were selling. It was the latest in a long line of Harry Potter knock-offs, available on street corners around China alongside cheap copies of the originals.

It’s not a trade confined to back-alley entrepreneurs either: Chinese publishers have been keen to get in on the action. China Braille Publishing released Harry Potter And The Chinese Porcelain Doll in 2002. Editor Wang Lili says: “We published the book out of a very common incentive.Harry Potter was so popular that we wanted to enjoy the fruits of its publicity in China.” It’s going to require more than a magic wand to change this mentality. 

Bogus bestsellers

• Harry Potter And The Half-Blooded Relative Prince
• Harry Potter And The Hiking Dragon
• Harry Potter And The Chinese Empire
• Harry Potter And The Big Funnel
• Harry Potter And Leopard-Walk-Up-To-Dragon

Trouble in Toyland

Is China the scapegoat for design flaws that stem from far closer to home?

Chinese manufacturers have been under fire lately, as a range of product recalls, especially in the US, have hit everything from toothpaste to pet food to toys.

The latter is of particular concern. Mattel’s recall of 20 million Chinese-made toys in August 2007 did nothing for consumer confidence. But is it right to scapegoat the Chinese? A report by Canadian researchers Hari Bapuji and Paul W. Beamish suggests not. They analysed every recall of Chinese-made toys by the US Consumer Product Safety Commission from 1988 to August 2007, and uncovered startling results.

China now manufactures 90% of the toys exported to North America. Since 1988, 550 toys from China have been recalled, but 76.4% of those recalls were due to design flaws not manufacturing flaws. Small parts such as magnets or glued-on eyes, rather than the stitched-on variety, were potential choking hazards, but all had been incorporated at the design stage – so potentially the blame lies at home rather than in China.

“Companies like Mattel,” say the report’s authors, “have a responsibility to ensure that the products they bring to China to be manufactured are safe. They cannot simply escape the blame by saying, ‘It’s manufactured in China.’”

Peter Luff on Britain’s challenge

Let’s put things in context: British manufacturing is doing rather well. In a fiercely competitive world, our manufacturing output is on the rise: last year it grew by 16%. The challenge we face is how to maintain this competitive edge. Are we doing enough to take on the rise of countries such as India and China?

The production statistics are staggering: 80% of the world’s photocopiers; 60% of its digital cameras; 50% of its computers; and about half its textiles are made in China. Forty per cent of microwave ovens are made in one factory in Guangdong.

But China is not content with being the world’s workshop: it has ambitions to repeat the success of neighbouring South Korea and Taiwan. It wants to develop international brands and increase their importance in key markets where we enjoy considerable success, including pharmaceuticals and biotechnology. Recent scandals surrounding the use of toxic chemicals in consumer products will be handled with characteristic Chinese efficiency and should be nothing more than a hiccup in the country’s global plans.

There are obstacles to China’s rise, but I expect it to overcome them. And even if China slows, there are many others nearby, such as Vietnam and Thailand, that pose their own challenges to British business.

We need to make sure our businesses export aggressively and continue to move up the value chain in response. We have been doing these things since the Industrial Revolution began, but we need to do so with ever greater determination to play on a wider stage.

Adding value demands more creativity and innovation than ever. That’s why my committee has launched an inquiry into the public policy environment needed to maximise our chances of being as successful in the new century as we were in the last.

Peter Luff MP is chairman of the Commons Trade and Industry Select Committee.

Article first published in Design Council Magazine, Issue 3, Winter 2007