| Philip Stoten (@philipstoten) |
In mid-July, the CEA (Consumer Electronics Association) announced that, for the first time, they would stage a second CES (Consumer Electronics Show), this one happening in Shanghai. The themes of CES Asia will be innovation and connectivity. This speaks volumes about the importance of China, not just as a manufacturing base, but also as a region for innovation and just as important, consumption.
This is unsurprising, given the recent trend of suppliers to the electronics manufacturing industry to switch to product launches in China instead of launches in Europe or North America. For this to happen at the top of the food chain is an indication of the importance of China's consumers, and interestingly China's brands. The list of pre-registrations for CES Asia is impressive, with Intel, Amazon, Ford and Gibson already registered alongside Hisense from China, and over recent years we've seen a greater pressence from brands from Asia including Hisense, Huawei, Haier, Xiaomi, Tencent and Alibaba.
Xiaomi is a great example, hard to pronounce but easy to understand. This company makes inexpensive smartphones and having launched in 2011, sold more than 18 million units in 2013 and expects to hit 40 million this year. The company's CEO, Lei Jun, is certainly a creative thinker and has lately been using social media to ask consumers for product innovations as well as marketing ideas. Xiaomi recently sold 150,000 units in 10 minutes on WeChat, a popular Chinese social media app owned by Tencent, that has more than 300 million users.
The success of these brands seems to come from bravery and a naivete that's refreshing, as well as a genuinely deep understanding of the local market, a market, which is already massive and continues to grow dramatically. With understanding comes focus; many of these brands seem to be largely happy focusing on the domestic market without diverting too much effort elsewhere, which is understandable with so many consumers. Having said that, the brands mentioned were all participants in CES Las Vegas this past January and Xiaomi recently enticed Hugo Barra, a big hitter from Silicon Valley, away from Google Android.
As China becomes a hotspot for consumer electronics, it is also becoming a hotspot for innovation, supported by venture capital, product innovation and fast product introduction. Real market maturity and independence come when innovation, capital and manufacturing all succeed alongside each other and operate close to or within and a solid,growing marketplace. In short, if the people making smartphones can't buy smartphones, create apps for smartphones and even develop the next big thing in smartphones, the market will not prosper by itself.
China is far from the communist market of the past, struggling to cope with capitalism and all that such a struggle brings. It is now a fast-moving consumer market, with a vibrant electronics industry staffed by entrepreneurs as well as engineers, managers and workers. The Chinese are ambitious, they have access to capital, they are becoming more and more innovative in their products and their marketing and they are right in the middle of a huge growth the likes of which the US and Europe has not seen for decades and are unlikely to see again. It is a very exciting time to be in electronics and an equally exciting time to be Chinese.