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December 19, 2016

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Look what we’ve invented! China gets creative

CHINA’S consumer electronics industry was awash with new ideas and many surprises in 2016. Domestic products appeared with unique designs and popular features, sending a clear signal that the market is shifting from “Made in China” to “Create in China.”

Still, foreign manufacturers haven’t given up the ghost. Long queues awaited the new iPhone and Qualcomm’s Snapdragon processor elicited heavy promotion in China. US-based Apple and Qualcomm remain the two most profitable firms in the smartphone industry, even though China is the world’s biggest market and manufacturing base for the phones.

It all reminds me of the computer industry in past decades, which was dominated by US-based Microsoft and Intel. Inclusion of Intel processors on computers once guided purchases as much as the names of the manufacturers themselves, such as Lenovo or Dell.

China has begun to emerge as a manufacturer in its own right, with smartphone chips developed by Huawei, drones by DJI, selfie phones by Oppo and Vivo, smart accessories by Xiaomi and user-friendly TV by LeShi. Some of these homegrown products are even making a splash globally.

On auction websites, consumers have to pay an extra 500-1,500 yuan (US$72-$217) to buy popular gadgets developed locally, such as Huawei’s Mate 9, DJI’s Mavic Pro and Xiaomi’s Mi Mix. All these products were sold out immediately after their debut.

The IT website Verge called the information-technology component market in the southern city of Shenzhen “the world’s most amazing gadget creator.” That praise came after a visit to Huangqiangbei, which used to be a center for cheap copies of iPhones but now is a center of new ideas and original prototypes.

Domestic brands that once relied on cheap prices and annoying advertising are now basing their strategies on well-designed, user-friendly devices to woo consumers. In my opinion, that bodes well for the future of the industry.

Top Chinese dot-com firms like Qihoo 360 and Baidu also have expanded into hardware sectors, turning out products such as children’s smart watch with Qihoo 360 security features and Baidu’s prototype self-driving cars using data analysis and artificial intelligence. And no one can deny that LeShi’s content and interface advantages in the smart TV market are raising eyebrows, though the ambitious company’s expansion in smartphones and auto faces capital shortfalls.

Some sectors, such as virtual reality and robotics, seem to have gotten ahead of themselves in 2016. They still lack truly innovative, popular products created in China, though they have attracted considerable venture capital investment and media headlines this year. I predict these technologies will first find their niche in industrial sectors before entering households.

Here are some domestic innovations worth noting as the year draws to an end.

XIAOMI gadgetry

THIS wasn’t what could be called “the year of Xiaomi” because the company’s smartphone sales came in smaller than expected because of competition from Huawei, Oppo and Vivo.

Still, I think Xiaomi maintains a noteworthy “empire” different from other smartphone brands. Its various gadgets range from routers to set-top boxes and wiring boards. It offers users reliable quality products at low prices, which can connect to smartphones with Xiaomi applications. Its set-top box has sold well both in China and the United States.

In 2016, Xiaomi launched a concept smartphone called Mi Mix, with what has been called an “insane looking” full-screen design. People can already buy and use it, though the phone is still in limited production.

Tipping point:

Xiaomi products help people connect smart devices and offer content and services to households, rather than to individuals. Connected devices are expected to help Xiaomi gain market advantage and probably greater income in the future.

Xiaomi is not basing its future only on Chinese smartphone sales. Instead, it has plans to play an important role in the connected “smart homes” of the future in China.

Oppo & Vivo’s phones for selfie and music fans

 OPPO and Vivo overtook Huawei and Xiaomi to become the best-selling mobile phone brands in China in the third quarter, according to research firm International Data Corp.

Oppo and Vivo, both owned by Guangzhou-based BBK Electronics, surprised both the media and the information technology industry this year. They have opened thousands of stores in smaller towns and cities in the recent years, building up considerable market shares.

Besides strong distribution networks, the companies have invested heavily in features that Apple and Samsung have yet to offer. The rapid battery-charging, powerful front camera for selfie fans and lossless-quality music playing on smartphones have attracted millions of young consumers.

With their enhanced marketing positions, the firms have tended to technology research and development in the upstream chain. Oppo has co-developed a camera sensor with Sony, featuring faster focus and better performance in dark environments.

Tipping point:

Oppo and Vivo didn’t follow the trend of heavy reliance on the Internet to sell smartphones in the past two years. Rather, they focused on the ultimate demands of consumers for quality music and photography, according to Vivo Vice President Ni Xudong.

Both companies also haven’t staged public events to reveal detailed sales figures and targets. Instead, they invite film stars, models and other celebrities to promote their products, which proved a hit with young consumers.

DJI drones

 DJI, the world’s top drone maker, opened its first flagship store in Shanghai two weeks ago, its fourth outlet after stores in Shenzhen, Seoul and Hong Kong. Long queues for DJI’s new foldable drone Mavic Pro reminded me the long queues in front of the Pudong Apple store for the Chinese debut of the iPhone 5 several years ago.

Vice President Paul Xu said Shanghai is strategic for DJI because it is a market full of young, fashionable consumers who like new gadgets and technologies. DJI is expected to improve its domestic market revenue to 20 percent of income this year, which would be double that of 2015.

Tipping point:

DJI is often called the “Apple of the drone market.” It has developed its own flying balance and picture transmission technologies, and established global brand awareness. More importantly, it is aggressively looking forward with plans to expand in the domestic market and in industrial sectors, with products like its new drone for agricultural use, which I believe has great market potential in China.

Huawei’s Kirin processor

 HUAWEI aims to sell 140 million smartphones this year, up from 100 million units in 2015. They include popular models costing more than 3,000 yuan, which makes the company a competitive player in the high-end segment dominated by Samsung and Apple.

The self-developed processor Kirin is used in Huawei models like the P9 and Mate 9, offering features like multi-task operation, image processing, battery management and support of virtual reality.

Tipping point:

Sales figures aside, Huawei is now one of a few handset firms in China to design mobile processors on its own, just like Samsung and Apple. Kirin takes its name from a Chinese legendary beast that symbolizes good luck and nobility.


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