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7 Jun 2021

What Brands Can Learn from the Chinese Approach to Innovation

Since some rather hard-hitting sanctions were applied to the leading Chinese tech brand Huawei in the Europe and USA, you might think Chinese brands would be in retreat. Far from it. In many ways, the motivation to dominate in specific categories has seen their brands lead the way in innovation and brand development with a targeted, customer-centric approach.

Huawei has quickly pivoted to develop its own operating system and focus more on a huge domestic market. Meanwhile, the white goods brand, Haier, has recently been identified as one of the fastest-growing companies in the UK. Recent Tracker research by Grant Thornton (in collaboration with the China Chamber of Commerce in the UK) reported that Chinese companies continue to make a significant contribution to the UK economy.

Despite the sanctions and controversies, these companies continue to power ahead with a unique approach in contrast to other brands that continue to offer much of the same. So, what perhaps could other brands learn from this approach to brand development and growing market share? There are possibly five key reasons their brands have been able to succeed in a challenging environment.

1. They don’t procrastinate

The speed at which Chinese brands react to events and markets is quite astonishing. Huawei invested heavily in Europe, both in terms of marketing, infrastructure, and even opening physical retail outlets in a fast-growth strategy to grab market share. However, having been in pole position to expand and build the new 5G network, its fortunes have dramatically waned. Its 5G kit must be dismantled and Huawei’s smartphones sold overseas cannot be equipped with Google’s GMS (Google Mobile Service), which has seriously affected their overseas sales of smartphones. Sales in the Asia-Pacific (outside China) were down 8.7% in 2020. Sales in Europe, the Middle East, and Africa (EMEA) were down 12.2% and sales in the Americas crashed by 24.5%.

This would be a crushing blow for many brands. However, Chinese sales for 2020 rose 15.4% year-on-year. Fortunately for Huawei, China accounts for 66% of its total sales. Understanding quickly the changed environment, the brand has reacted by launching HMS (Huawei Mobile Service). At pace, Huawei has created its own operating system, to remove its dependency on Google. This is because the company realized it couldn’t rely on other companies. The brand has reacted quickly with cool-headed rationality, focusing on other areas they can control. This is a good lesson for all brands who are forced by politics to react to changed circumstances.

Far from mourning the lack of access to the US and European markets, it will now potentially become the biggest platform. This will increase its power and the spoils that come with it. In pivoting to create something new, Huawei has supported existing brand-loyal customers and appealed to patriotism in its home country. It has done this while also potentially attracting a new audience who welcome an alternative option for operating systems.

2. Relentless focus on customer experience

Simply put, Chinese brands have shown an uncanny knack for knowing how to tap into what people want and deliver a great customer experience. To start with, they take note of the build features people enjoy. Part of the reason they can succeed in this is, ironically, by not being first to market with the new features. Their real skill is waiting for other products to launch and then synthesizing learnings and reacting, tapping into the emerging trends.

For example, as soon as a new Samsung device appears, Asian brands often react by mimicking it and possibly improving it. There certainly have been controversies about the extent to which this behaviour blurs into copying and also brand or patent infringement, and yet the tech industry has long been premised on synthesizing ideas and improving on them. These brands are perhaps just more shamelessly blatant (and effective at doing this.)

The philosophy is that, if the technology is out there, it’s now fair game. Huawei’s MateBook X Pro – which has undoubtedly been influenced by the Apple Macbook Pro – is a classic example here. It replicates a lot of the best features of Apple’s brand but so many reviews point to its customer-experience-focused improvements. Such as a better webcam, touchpad, and connectivity, as commented in a recent review. This ability to very rapidly emulate and implement what else is out there is a positive for challenger brands in a fast-moving and rapidly changing consumer landscape.

3. Appealing price points

In a world of inflation-busting prices for new tech products, challenger brands have gone against the grain with entry points that are really appealing. For example, Oppo and Xiaomi have equivalent products that could sit alongside the Samsung Galaxy. They provide price-conscious consumers with reasonably priced alternatives that offer the same or a better experience at half the cost. In fact, you get so much more tech for your pound. Giving the people what they want, at a realistic price point, is certainly an attractive mantra that resonates with many.

As we come out of a damaging global pandemic, many people’s incomes have been negatively impacted, and this is a key driver for consumers to try alternate brands. As a consumer, you will think, “I can spend £900 on a device or £345 on the same (if not better) device from a brand such as Xiaomi?”

As consumers, we want to pay less for products that deliver what we want. But there have been questions around the ethics of how tech products are produced. Certainly, we are seeing this demand among sections of Millennials and Generation X & Z. In particular, they want a better understanding of the sustainability and ethics involved in how their device is made, but also packaged and recycled when no longer needed.

To read the full article please visit Branding Mag.

The photo that accompanies this article is by Athena from Pexels

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