China Corner
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Product Innovation is the Way Forward
Source: a&s China Best Buys | Date: 10/13/2012
 

The volatile European and American market have created uncertainty and impacted on the business of China's manufacturers. In such a bleak economy and currently no signs of improvement, survival becomes challenging for manufacturers. Ken Li, Chairman of Chuango shares some survival strategies at a&s CEO Forum on how to make it through difficult times.

Market, Product or Promotion Problem?
Breaking into the European and American market is already challenging, however now with widespread recession throughout Europe and a slow American market which has made it even more difficult to sustain business or even tap the market. Despite these obstacles, there are opportunities that exist. “After returning from our trip in May from U.K., we discovered that there was an increase in sales,” said Ken Li, Chairman of Chuango. “Although there were delays for orders, the number of orders continues to increase.”

Entering into a new market, Chinese manufacturers are perhaps not performing as anticipated, they ask themselves where the problems lie. Is it a problem with the market, product or promotion? According to Li, in most cases, it is most definitely a product problem. “In 2009, when we started the European and American market, we realized that product standards were very high, regardless whether it was for IP, CCTV or intercom systems,” said Li. “I do believe that if there are good products then the chances of success are high in the European and American market.” Learning to provide customers with customized products is the way forward.

Product Design and Innovation for User Experience
The recurring problem in the Chinese security industry is “me-too” products. Depending on such products to break into the European and American market is not sufficient due to the high standards as previously mentioned. “If companies are interested in the European and American market, product appearance, branding and patents are important,” said Li.

Most of Chinese suppliers are focused on R&D and sales promotion. And in terms of design, they focus mainly on software and hardware. This is the difference between Taiwan and Korean products in comparison with China's products. However, the biggest difference between Chinese products and European products is in the design and user experience. “Regardless of hardware or software, I believe that China's manufacturers have the ability to match international standards but in terms of user experience and product design, there is a long way to go,” said Li. “When we first began targeting the European and American market, we faced with the difficulty of attracting clients with our products. After spending time analyzing markets, we discovered that user experience is crucial in the mid-end market. Therefore, we innovated and developed our products.” When it comes to product design, it should be considered from a customer's perspective and from how the products can bring opportunities and benefits for clients.

High Pricing Relies in Investment
China's security industry has been plagued with the problem of pricing wars from DVRs to low-end network cameras. Deploying the low pricing tactics to win over customers is something that has become common for some Chinese suppliers. But it surely leads to short-lived success.

“I believe that if there is a good product which is innovative then pricing should be equal,” said Li. “In comparison to other alarm products, our alarm pricing is high. Under today's unstable European and American economy, the reasons we still increase are due to our investment in R&D and product design.” When manufacturers have their technology and unique products, they are no longer dictated by pricing wars. “Our core values are highly gratified by our partners and this truly enhances our market during the difficult times,” Li added.


 

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