At IUIGA, we are a firm believer in disruption that brings about more good in the world. With our disruptive business model, philosophy and commitment to thoughtfully-designed and premium quality everyday goods at completely transparent prices; we hope to shake things up.
In this vein, we are starting a new series where IUIGA discusses disruptive products, companies, and concepts, in an effort to start a conversation about these things. Our opinion may be partial, so we welcome you to discuss this together in the comments.
The second part of the series will examine products and brands that are Made in China and how the view that China largely produces inferior goods is an outdated one.
Made in Germany & Made in China
What do the labels Made in China and Made in Germany have in common? More than you think. Unlike the glowing reputation the Made in Germany brand has now, this was not always the case. Back in 1887, things were quite different. Made in Germany had a big reputation problem. At this point in time, Great Britain was a manufacturing powerhouse having experienced the Industrial Revolution. Thus, the merchandise mark Made in Britain was the brand synonymous with product reliability and quality. Many manufacturers in Germany were slapping Made in Britain marks on their inferior products and selling them in Britain. This was worsened by the fact that the German government was imposing protectionist policies to protect their own domestic economy.
Trouble for Bismarck
To prevent this from happening, Britain imposed the Merchandise Marks Act 1887, a piece of legislation that prohibited foreign manufacturers such as Germany from claiming that their products were made in Britain and selling them under this ruse. As a result, goods that bore the Made in Germany were seen as inferior even though German mechanical engineering was already more advanced than the British at that time. Although the plan was to put a wrench into German manufacturing, this plan backfired spectacularly.
Made in China
Similarly, the Made in China label is currently facing reputation problems as well. In 1978, Deng Xiaoping became the de facto leader of China and kickstarted a new era of widespread economic reform. Government control over doing business was relaxed, foreign investment was allowed. This, along with other factors paved the way for China’s manufacturing capacity to develop exponentially. It has come to the point that China has become known as the world’s factory. Unfortunately, this has come with some baggage as many people still hold the view that China still largely makes cheap inferior products. This, however, is an outdated view, as Chinese innovation is set to take its place on the world stage with high-quality products manufactured in China and sold by Chinese brands.
From Tech Copycats to Innovators
There’s no denying it. A lot of Chinese brands used to copy their western counterparts blindly and there is still a bit of that going on. However, the China of today is leading the way in innovation when it comes to electronics and technology. Nothing exemplifies this more than Shenzhen, the “Silicon Valley of Hardware.”
Before the 1980s, Shenzhen was just a small unremarkable fishing village with about 300,000 inhabitants. Today, this number has gone up to about 12.53 million. This was largely due to the prime minister at the time Deng Xiaoping, who instituted sweeping reforms to bring improve China’s economy in May 1980. Shenzhen was designated as one of the four economic zones that were designed to create jobs and kickstart the flagging economy. This zone was created with the express purpose of absorbing foreign knowledge, ideas, and technology to develop. These goals were achieved with aplomb. In a short span of 30 odd years, Shenzhen has become one of the leading lights in technology around the world. Renowned companies like Tencent, Huawei, BGI, Vivo and DJI have emerged from there.
On top of pushing the envelope in mobile payments (WeChat & Alipay), Chinese brands like DJI and Vivo have taken the world by storm recently with their best in class products and innovations.
It’s not an exaggeration to say that DJI dominates the Drone industry – it has an estimated 74% market share according to a 2018 report about the drone market. The company initials which stands for Da-Jiang Innovations, is a Chinese technology company that has its headquarters in Shenzhen, Guangdong. DJI was started by Frank Wang in 2006. Wang started the company while he was studying at Hong Kong University of Science and Technology; running the company out of a cramped office in Shenzhen.
DJI Phantom Breakthrough
The breakthrough for DJI happened in 2013 with the launch of the Phantom, their first commercial that saw mass market consumer adaption. The drone itself was sold for less than 1000SGD, but packed incredible hardware that was way better than the flimsy remote controlled helicopters in the market. While their competitors scrambled to keep up with them, DJI worked relentlessly on improving the Phantom, attaching a camera and adding a screen to the remote. DJI continues to innovate at a breakneck pace today, creating products like the Spark; A drone the size of a canned drink which created a new market segment. The drones they make are feats of engineering, and it’s highly likely that most of the drone footage you watch today was shot on a DJI drone.
Similarly, another company that is bent on innovation is Vivo the smartphone company the six largest smartphone manufacturer in the world. Vivo is famous for many phone firsts. the X1 released in 2012 was the first phone to include a Hi-Fi chip for better audio. They followed this up with the X21 UD in March 2018 – the first smartphone to include an under screen fingerprint scanner. More recently, Vivo released the Vivo Nex S, a full-screen display phone with a pop-up camera and improved under display fingerprint scanner. For the other smartphone makers that are just coming up with iterative updates, what Vivo is doing is groundbreaking. In addition, other Chinese phone companies like Huawei and Oppo are innovating and making great products as well.
Chinese Brands Offering Great Quality at Better Prices
On top of innovation, there are other disruptive Chinese brands like Xiaomi and Anta Sports that offer excellent value for money. Although it is good to be skeptical, sometimes brands do really offer good deals for their products. As humans, we are subject to Irrational Value Assessment. Are you more likely to think more of a product if I told you it cost more, research says you will. in Jan of 2008, a study was conducted on members of the Stanford wine club. They were all given 5 nondescript bottles of wine marked only with the price tag and asked to rate them based on their taste. Out of these 5 bottles, only 3 contained different wines. Two exact same bottles of wine were labeled $5 and $45. Surprisingly, the wine club members rated the “$45” wine higher than the “$5,” even though they were the same products.
As the experiment shows, humans will irrationally rate the vale of something higher even when things are the same quality wise. Keep this in mind when we discuss Xiaomi and Anta Sports.
“You shouldn’t think of Xiaomi as a hardware company, or an internet company, or an e-commerce company. We are the rare company that can do hardware, and do internet, and do e-commerce. This sort of company basically has not existed before,”
Aside from their phones, Xiaomi sells a wide range of high-quality products that originate from China. Xiaomi has invested in 200 different companies that sell things like robot vacuums, e-scooters, power banks, wifi routers, air-filters, and even ballpoint pens. These products are largely high quality, offer great value and work well together as well. Closer to home, almost everyone I know owns a Xiaomi powerbank, and the one I bought 3 years ago is still working well.
Similarly, Anta the world’s fourth-largest sportswear company that designs, manufactures and markets sportswear also bears the Made in China label. Based in Jinjiang, Fujian, Anta has grown exponentially since its founding in 1994. They did so well that they were able to acquire Fila and integrate them in their business. Moreover, their apparel, sports footwear and accessories are great alternatives to their competitors at a more fair price.
Speaking of fair price, we partner with Original Design Manufactures based in China that produces for renowned brands and sells the products directly to you with transparent prices. Click here to find out more.
Made in China has come a long way and a lot of good products are manufactured in China and sold by innovative Chinese brands. We urge you to do your research, acknowledge your biases and look beyond labels when you purchase your next product.