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Designed in China to Rival ‘Made in China’

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

Harnessing the power of design to improve products and the way they are manufactured is a critical component of successful economic development. And the high export value of designing and making “computer equipment, office equipment, telecommunication equipment, electric circuit equipment, and valves and transistors” was flagged up as a priority for developing nations back in 2005 at a meeting looking for “New and Dynamic Sectors of World Trade” (UNCTAD).

One country taking up this challenge is China. It now boasts twice as many Internet users as the United States, and is the main global maker of computers and consumer electronics, from toys to games consoles to digital everything.

China is also on course to become the world’s largest market for Internet commerce and computing.

The centre of gravity is very much moving China’s way: One study of 769 firms investing in 2,203 Chinese companies by Stanford University in California, found “the same firms that were successful in Silicon Valley … have transplanted their expertise to China,” according to Marguerite Gong Hancock in The New York Times.

But the country wants to move from ‘Made in China’ to ‘Designed in China’. This is critical because the majority of the profits to be made are actually in the designing, patenting and marketing of products. Manufacturing, as has been shown in the recent media controversy over the products made by Apple (apple.com), is not the main profit centre.

Apple employs 43,000 people in the United States and 20,000 overseas. But through its network of sub-contractors,the number employed overseas in Asia, Europe and elsewhere is around 700,000 (The New York Times). This includes around 200,000 assembly jobs in China. These workers can make US $17 a day or less.

Apple makes hundreds of dollars in profit for each of its iPhones. Apple can do this because it is the designer of the phones and holds the copyright, and it is the branded company that has built up its reputation and developed a highly sophisticated marketing and distribution network around the world. Through clever use of design, Apple created products that look distinctive in the marketplace. And those are the factors that determine the ability to make this profit. As has been noted, it isn’t just cheap wages that keep Apple’s profits high.

Getting consumers to desire and buy your products is a challenge for any company. Design plays a major part in understanding the unique demands of countries and markets, and what people find appealing or repellent.

A product that has both a successful design and is produced efficiently will generate a good profit.

The classic example from the past is Japan. Devastated during World War II, Japan set about re-building its manufacturing prowess from scratch. It brought in American innovators to introduce new concepts in manufacturing.

Japan’s openness to the new ways enabled it to re-fashion its manufacturing industries to exporting to the developed Western nations, in particular the United States. At first, quality control was an issue and Japan was mocked for making cheap quality trinkets, toys, automobiles and motorcycles. But it quickly changed from this to a reputation for making quality, affordable products and moving quickly into the burgeoning micro-electronics and consumer products markets. It also was a pioneer in computer gaming and entertainment.

The recent achievements in supercomputing in China are pointing to where things can go. China has developed the Sunway Bluelight MPP supercomputer (http://en.wikipedia.org/wiki/ShenWei). It is able to do a quadrillion calculations per second: making the Sunway Bluelight one of the 20 fastest supercomputers in the world. It was built with a Chinese-made microprocessor, and importantly, uses lower amounts of power than other supercomputers.

The clever bit is the ratio of computing power to wattage used. Energy-efficient computing is critical if computers are to make the jump to the next level in processing power.

All these trends coming together hint at big changes in the coming years.

In the past two decades, the electronics sector has enabled a number of developing countries to improve trade performance, in particular East and Southeast Asian nations.

Improving education is critical to the growth strategy. Improving education, like encouraging the pursuit of engineering as a profession, as China has done – it now has more than half a million estimated graduates, the most in the world – means new skills and ideas are coming to the industry (engineeringinchina.net).

But this is not enough. New ideas are essentially a creative process and this needs connections to business and the ability to experiment and play with ideas. Start-up incubators have proven a successful way to do this.

Thailand is a good example: Around US $4.5 billion was invested in the country’s electronics industry between 1986 and 2001. This created 300,000 jobs. The sector became so important it made up a third of the country’s exports.

Realizing that much of the work was assembly manufacturing, the government set up the Thailand IC Design Incubator (http://www.nectec.or.th/rd/electronics/be204-45/be204-45.php) to work on hard disk drive development and move up the value chain.

“In 1978, I saw workers stringing together computer memories with sewing needles,” Patrick J. McGovern explained to The New York Times. McGovern is the founder of the International Data Group, which invests in Chinese enterprises.

“Now innovation is accelerating, and in the future, patents on smartphones and tablets will be originated by the Chinese people.”

In the past, China was not able to make significant progress on this development for two main reasons. The first is copyright piracy and theft of intellectual property rights. During China’s economic rise, this theft was rampant and the country developed a reputation for being home to a vast marketplace of knock-offs of major Western brands. And the second reason was the heavy hand of the government, which scared off many entrepreneurs.

But China is re-structuring its industries to focus on innovation. In 2011, China surpassed South Korea and Europe in total patents and was in a neck and neck race with Japan and the United States. As fuel for the innovation rocket,venture capital is critical. And China is now the world’s second largest venture capital market, with the total jumping from US $2.2 billion in 2005 to US $7.6 billion in 2011.

It is this journey up the manufacturing ‘value chain’ that many countries look to with admiration and jealousy. And the secret to being able to move up this value chain is design – savvy product design combined with savvy design of manufacturing methods to continually drive down costs and drive up quality. How long until China has its own Apple and not just an Apple knock-off (http://www.bbc.co.uk/news/technology-14503724)?

Resources 

1) Red Dot: The red dot logo stands for belonging to the best in design and business. The red dot is an internationally recognised quality label for excellent design that is aimed at all those who would like to improve their business activities with the help of design.Website: http://www.red-dot.de

2) Dutch Design in Development: DDiD is the agency for eco design, sustainable production and fair trade. They work with Dutch importers and designers and connect them to local producers in developing countries and emerging markets. Together products are made that are both profitable and socially and environmentally sustainable. Website: http://www.ddid.nl/english/index.html

3) C3: C3 offers product design and product engineering services in Shanghai, China. Their strong point is managing innovative design processes from scratch (market research) until production: a one shop service: Website: chinacreativecompany.com

4) Dahua: Zhejiang Dahua Technology Co., Ltd. is a partially state-owned publicly traded company based in Hangzhou which sells video surveillance products and services.  Leading video surveillance product and solution provider in IP camera, NVR, HD cctv camera, Analog, PTZ and other vertical solutions. Website: https://www.dahuasecurity.com/uk

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

The NEEMIC brand, founded in 2011, makes sustainable fashions and champions green production methods in China. 

Read more here: Creating Green Fashion in China

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2021

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Computing in Africa is Set to Get a Big Boost

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY 

The image of Africa as a technological laggard is set to be seriously challenged as a number of developments converge in 2007. Alongside the booming African mobile phone market – itself now getting global attention for innovation – the African computer scene will soon have both the software and hardware that acknowledge the continent’s unique needs while being affordable. Further challenging stereotypes, the continent’s burgeoning and dynamic open source software movement is the subject of a new film by a Danish filmmaker, and the African-made Ubuntu, Linux-based operating system now has a new user manual to help it attract new adherents.

African technological innovation rarely makes headlines in the West. But a Danish filmmaker is changing these perceptions with his film showing the dynamism and enthusiasm behind the open source software movement in Africa. The yet-untitled film, directed by David Madie, is from Eighty Days Productions and is due for release in the spring of 2007. It follows a young computer entrepreneur, Wire Lunghabo James, from Uganda’s Linux Solutions in Africa, who has been instrumental in building the Web’s presence in the country and in East Africa.

“This film will show the characters fighting for what they believe in. This happens to be Open Source, which I think is an important agenda,” director Madie told Tactical Technology Collective ( www.tacticaltech.org), a website “demystifying technology for non-profits.”

Unlike off-the-shelf software, open source software has many advantages. It is free, and no licence fee is required, so as many copies as necessary can be made. It is fully customisable, so local languages and cultural conditions can be taken into consideration. It is a universal language (the most popular is Linux) and thus it is easier to understand how a specific application works. For developing countries, it has the advantage of empowering local programmers and dymistifying computer programming, removing it from the domain of private companies and large government agencies. In 2005 the New Partnership for African Development (NEPAD) urged African countries to embrace open source software to encourage the growth of indigenous software development.

“I think he (James) is also a role model in the sense that he combines doing a business, with doing social work. To him these things are not opposites: these are things that can perfectly work well together. You can do business in a social manner,” Madie said.

The Ubuntu software programme is a complete, free operating system that emphasizes community, support, and ease of use while refusing to compromise on speed, power, and flexibility. Ubuntu is an ancient African word meaning humanity to others, and its software version is described as Linux for human beings – designed for everyone from computer novices to experts. Ubuntu is the most in-demand Linux system in Africa, and the official guide is aimed at NGOs, home users or small businesses.

One Laptop Per Child Project (OLPC)

In another development, the One Laptop Per Child project (OLPC) has announced the release for general sale of its durable bright green and yellow laptops ready loaded with Linux-based operating systems. Customers in wealthy countries will have to buy two laptops, with the second going to a developing country. Five million will be delivered to the developing world over the summer of 2007. The eventual aim is to sell the machine to developing countries for US $100, but the current cost of the machine is about US $150. The OLPC laptop’s software has been designed to work specifically in an educational context. It has built-in wireless networking and video conferencing so that groups of children can work together. The OLPC project is working with the search engine Google, who will act as “the glue to bind all these kids together”. Google will also help the children publish their work on the internet.

The One Laptop Per Child project (http://wiki.laptop.org/go/Home) has struck its first deal with Rwanda’s president Paul Kagame to provide every school pupil with a laptop computer within the next five years. The laptops and all the support costs will be covered by OLPC.

Resources 

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.