Design thinking

China Observations

Anna Bäck

 

 

 

 

Increased competition as well as greater quality awareness among local consumers has contributed to the growing understanding by Chinese companies of the importance of design expertise. Many are now looking to develop truly innovative new services and products based on customer needs and demands.

New leadership influences the market

2013 was a very turbulent year for China. With the government austerity campaign and new leadership pursuing an anti-corruption drive, everyone was waiting to see what new directives would emerge. Meanwhile, sectors including automotive, e-retail, healthcare, food service and many others witnessed double-digit growth and continued to develop strongly.  2014 is forecast to be less tumultuous, and we expect the country’s ruling Communist Party to shift China away from its long-term reliance on foreign investments and exports and more towards consumer demand.

A design and product development center

Shanghai continues to grow as a design and product development center for North East Asia. We notice that more and more companies in the area are working closely with production to establish product development units for Asia. We also see a heightened ambition to understand the needs of Asian consumers and various categories of professional users.

Understanding your customers

I have had discussions with design managers at Electrolux, Volvo and Bank of China regarding the fact that many Chinese companies are beginning to focus on the importance of actually understanding customer needs and demands. More recently, Chinese companies are not only designing products but also creating the full service and total experience that surround them.  Historically high GDP growth and limited competition in China had previously allowed companies to have little customer focus.

We now see rapid changes in the market, with growth predicted to slow from its earlier rate of 9-10 percent to approximately 7.5 percent. In addition, growth in consumption will likely remain robust, advanced offerings will find new markets as the economy upgrades, and market access and fair competition will improve. Based on the shift towards customer demand and slower growth combined with increased competition and rising quality awareness among Chinese consumers, I have noticed a wider understanding of the importance of design expertise. This means we are now seeing more and more Chinese companies starting to innovate and develop truly new services and products.

Rapid digitalization

China already boasts the world’s largest e-commerce market and a very vibrant internet and social media ecosystem. E-retail sales jumped by 50 percent in 2013. The wave of digitalization is now making its way into enterprises where the focus is shifting towards improving operating efficiency and a better understanding of customers. Global trends such as big data, cloud services and service design of internal processes are hot topics. Another increasing trend is service design within healthcare. Rapid growth of the ageing population presents a huge challenge; by 2050, 500 million people (35 percent of the population) will be 60 years of age or older. Connected health is as relevant for a micro-clinic in rural Western China as it is for the world-leading Mayo Clinic in the US. Our world is truly global!