|
|
Global tech players must rethink China strategy |
 |
+ |
- |
17:03, August 15, 2007 |
Many multinational hi-tech firms in China are facing stagnation or even declining market share as Chinese competitors secure the emerging mid-range market for hi-tech goods.
McKinsey research shows that 30 to 75 percent of future growth in the global hi-tech industry will be in this mid-range segment, defined as products priced between 30 percent and 50 percent less than their premium counterparts.
Chinese hi-tech firms are quickly edging out global firms in capturing the emerging mid-range market. By defining innovation differently and looking for value throughout the business system, Chinese firms get more out of every R&D dollar spent, allowing them to launch goods cheaper and quicker than their global competitors.
Worryingly for global firms, enormous inefficiencies in their own R&D processes mean Chinese companies have a huge scope for productivity, cost and innovation gains. Many multinationals are aggressively hiring Chinese R&D managers and collaborating with global technical service partners to implement streamlined R&D processes.
Even more worryingly, as soon as Chinese manufacturers secure the global market for mid-range goods, they will gain the cost and scale advantages needed to move up the value chain into premium products. From there, it''''s just a matter of time before they capture high-end share from foreign firms in China and, eventually, in more developed markets.
For global manufacturers, achieving competitiveness in the mid-range segment will not be easy. Years of cumulative R&D experience have been directed at hi-tech innovation and superior quality, and as a result, products are often over-engineered for Chinese customers.
[1] [2] [3]
|
|
|
Comment
Tell A Friend
Print Format
Save Article