The West has iPhone’s, iPad’s, KFC and Range Rover.
China has the Orange phone, KFG and Moon Rover.
Having built a unique reputation for unashamed copying, the Chinese are shifting gears to produce unique innovations that shake the global stereotype handed to a nation more inclined to copy than create.
It started in 1997, when a market economy became prevalent and when China was opened up to the world. Multinational brands flooded in creating “more demand than supply, and we needed more products for consumers than was available which laid the groundwork for copying,” said Bessie Lee from the Advertising Week Asia stage, Tokyo.
Having been at the helm of the Chinese chapter of the largest global media conglomerate, WPP, for 27 years, Bessie Lee has seen the nation develop and flourish from lowly beginnings as a nation renowned for copying Western innovation, to a global powerhouse with a rosy future.
Indeed, the global community has been surprised at China’s progress. No one thought it’d be able to survive an authoritarian capitalist system in a global free market, let alone thrive under it at the pace it has. It is now widely accepted that the Chinese economy is better equipped than the American model, which has dominated since World War II.
The narrative, just 10 years ago, or as recently as 5 years ago, was that Chinese startups all took inspiration from Silicon Valley companies. Now, however, they iterate faster, work harder and make products cheaper and more seamless to use.
Lee attributed much of the progress to Xi Jingping, who fanned the start-up flame by encouraging Chinese Youth to build startups and utilise local government apparatus. Just two years after the startup announcement, several Chinese provinces and municipalities including Hubei, Shanghai, Jiangxi, and Qinghai had invested money, introduced tax incentives, or provided stipends to champion the startup route amongst youthful entrepreneurs.
Local governments have become VC’s and Innovative thinking is now a national exercise. From the stage Lee spoke of three socioeconomic factors that have driven the consumption habits of Chinese citizens.
Growing up in China for half of the population was a lonely experience.
“When you are the only child you have classmates, community and cousins, but for many this is not enough.”
Instead consumers were handed a lifeline by social networking platform QQ in the early noughties.
“When the company QQ first became available to many it was a godsend to a young generation. All of a sudden, a platform became available where people could respond and share…it took them 2 years to hit 100 million users. Fast forward 15 years and the same group (Tencent) replicated history with WeChat and hit 100 million users in less than a year.
Compare this with Facebook, said Lee, which took four years to hit the 100 million user mark and you begin to understand the power this strategy can have in user acquisition.
This same one child generation are now older and welcoming of innovation with social elements at their core.
Railways and leapfrogging
“We have 128,000km of railway in China, 17% of those are high speed rail. Having such high-speed railways system in place means cities have been brought closer together. It used to take 8-10 hours to get from some cities to another which has now been heavily reduced. More people are willing to go on the road.”
Last year the Chinese took 3 billion trips with railways, an increase of 9% year on year. The population hasn’t grown but Chinese citizens are exploring the country more frequently.
Lee went on to say that “When you are on the road people today you want to remain connected. It meant that an entire generation of fixed line consumers were leapfrogged and replaced by mobile.”
The new wealth and ecommerce
20% of global ecommerce transactions occur in China, but what does this have to do with new wealth?
“When you have the money to do so, people want to be able to upgrade the quality of life for themselves and their families. You wanted to buy the product yesterday and many don’t have the patience for brands to take the traditional routes.”
By traditional routes Lee means consumer research, finding locations to place physical stores, spending money on advertising. A process that can take up to 18 months. Alibaba changed this entirely, doing away with physical stores and building a platform enabling people to get what they wanted, when they wanted, on the go. Chinese are so used to this method of purchasing combined with mobile transactions, that “if you do not make it easy for consumers to pay in three steps then you will lose them.”
Mobile payment sits at the core and have created powerful habits.
All of these showcase the societal changes of a nation now looking to promote innovative thinking on an enormous scale. The entire nation is behaving like a startup, and has even coined its own phrase: Startups by most, innovation by all.
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