Historically speaking, innovation and China haven’t often appeared in the same thought. However, over the past decade, and especially during the past five years, this trend is starting to change. Due to factors including lower start-up costs, companies at the forefront of this change typically fall into tech-related categories such as online platforms (Tencent, Taobao, Baidu) and wireless and telecom vendors (Huawei and ZTE). Nonetheless, it is also important to understand that innovation is happening across a number of industries, despite less popular coverage. And although there are many factors that continue to work against creativity in China, there are signs that the country is heading in the right direction.
Websites and platforms that are based on social connectedness are increasingly receiving attention. A popular example is WeChat, an app that offers users a wide variety of ways to connect with others – from “Shake Shake”, which matches strangers who use the feature simultaneously, to “Drift Bottle”, which allows users to send messages on an open server in the hopes of receiving a reply. Meilishuo.com also showcases an innovative business model in that it allows users to “follow” those that post pictures of themselves modeling different ensembles, and then couples that with links that lead to online purchasing channels such as TMall and Taobao.
However, innovation in China is not limited to technology services. One non-tech specific innovation can be seen through higher quality service offerings. Haidilao is one of the better-known examples of a local company that offers an innovative business model. Customers at the national hot pot chain can enjoy a manicure or a game of chess while waiting for their food, a “kungfu noodle” performance while eating, and an extremely high standard of service throughout. This idea of providing higher quality service is also being echoed by smaller scale business, for example, last month a local Chinese language school began offering a complimentary dumpling delivery service on students’ birthdays.
Other forms of innovation are seen through product customization. Longxin and Zongshen, two private motorcycle manufacturers based in Chongqing, have opted to use a “localized modularization” approach to compete with manufacturers that have foreign partners like Honda or Suzuki with deep pockets and proven designs. In the new business model, rather than laying out every detail of the parts they want from their suppliers, the motorcycle-makers specify only features like size and weight, and let outside designers improvise.
The key insight here is that although China’s innovation is currently most widely exhibited in the technology sector, new approaches are increasingly spreading to other industries. This trend should be of special importance to foreign businesses that are either looking to enter China or are already here. For them, the message should be clear - keep an ear to the ground, be prepared to take the long-term view and invest in ways to train and retain talent.