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Canton Fair: Design, R&D, and Branding

2014-05-06 17:47:53 Caijing
Strong large- and medium-sized enterprises penetrated both ways along the industrial chain through design and R&D investment, as they sought to upgrade into high-end manufacturers.

  By staff reporter Wang Yanchun

  At this spring’s China Import & Export Fair (Canton Fair) which closed May 5, domestic and foreign designers, including famous Italian designer Stefano Giovannoni, have been much sought after by manufacturing companies.

  The meeting between manufacturers and 90 design companies from 11 countries and regions turned out to be the Fair’s most popular event.

  At the site where seven South Korean design companies teamed up with Chinese companies to set up design centers, Canton Fair Vice Secretary General Xu Bing said that Chinese manufacturers could take a page or two from their Korean counterparts. South Korea, which excels at design, is home to international brands such as Samsung and LG.

  Compared with 10 or so years ago, the Canton Fair held biannually in Guangzhou has exhibited a new trend in recent years: manufacturers have gradually shifted away from churning out low-priced homogeneous products to relying on creative design, technical development, and brand marketing for comprehensive competitiveness. Meanwhile, manufacturers have moved away from “competing for orders” to “competing for eyeballs” at the Canton Fair as they seek to win over new buyers.

  Having spotted the business opportunities brought about by the transformation of China’s manufacturing industry, DeTao Master of Automotive & Industrial Design Mathis Heller opened up a studio in Shanghai last year. Heller, who has met many Chinese manufacturers through design services, said that design-driven enterprises are substantially different from ordinary companies in terms of net profitability. “We found through 10 years of research that the profit margin of design-driven enterprises more than doubles that of ordinary companies.”

  Many small- and medium-sized (SMEs) enterprises have resorted to differentiating themselves from the competition through microdesign.

  Purchasing companies today calculate their suppliers’ material and processing costs so carefully that manufacturers gain little profit. However, some manufacturers have been gaining pricing power by increasing their products’ added value through creative design, says Jin Changbao, co-founder of Hangzhou R&D Design Co. Ltd.

  Still, some enterprises have yet to realize how much creative design matters to their brand value and put brand positioning at the core of a service model featuring brand integration. In addition, some cash-strapped SMEs, confronted by declining export orders, do not have the resources to invest in product design and innovation.

  Moreover, due to inadequate protection of intellectual property rights (IPRs), new designs are frequently copied. Giovannoni argues that in China, creating an institutional environment favorable to creative design is more important than fostering innovation-minded enterprises, because new products, which are the result of extensive survey and research efforts, are often copied by hundreds of small companies as soon as they are unveiled.

  Statistics from this spring’s Canton Fair show that although the first quarter saw a decline in China’s total exports, export orders for indigenous brands have bucked the trend, indicating that brand value is replacing low prices as a source of competitive advantage for domestic manufacturers.

  Strong large- and medium-sized enterprises penetrated both ways along the industrial chain through design and R&D investment, as they sought to upgrade into high-end manufacturers with proprietary brands and design and development capabilities.

  Caijing learned that the Ministry of Commerce is working with other government departments to strengthen promotion and support of China’s export brands. Their measures include continuing to help domestic companies with trademark registration and patent applications overseas, and assisting them in obtaining necessary certificates and deal with IPR disputes abroad. Also, owners of export brands will receive policy support in accordance with WTO rules and will be prompted to acquire proprietary IPRs and master core technologies.

  In addition, competent authorities will step up their crackdown on illegal acts such as patent infringement and counterfeiting, so as to better protect and drive forward export brands.

  Full article in Chinese:http://magazine.caijing.com.cn/2014-05-03/114149460.html

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