Eight success stories from China

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Eight success stories from China

Under its push for “independent innovation,” the Chinese government is attempting to create a business ecosystem as it tries to shift to an economy led by domestic consumption. In 2012, China became the world’s second-biggest research and development investor, allocating $165 billion, and had the biggest R&D workforce at 3.27 million.

A growing middle class will spearhead consumption. In particular, the upper end of the middle class is expected to expand significantly to 54 percent of urban households over the next 10 years from 14 percent today. Chinese companies are responding with high-end products and services.

Eight companies are enjoying success by more or less preserving Chinese uniqueness, incorporating Western operating models and reaping the benefits of private-public ownership. Their experience can be instructive to Korean companies seeking a bigger share of the domestic consumption in China.

Yili is China’s biggest dairy company and the world’s 12th largest. The company’s strengths are derived from its own processing operations, a solid sales network and a nationwide distribution system. In 2006, Yili became the first Chinese dairy processor to introduce the pharmaceuticals industry’s standard for “Good Supply Practices.” Recently, it formed a strategic alliance with Dairy Farmers of America, the largest dairy cooperative in the United States, in an aim to advance into the global market.

Tasly, China’s leading pharmaceutical company, has unrivaled technology that combines traditional Chinese medicine with modern medicine. To expand abroad, Tasly is actively taking advantage of the government’s plan to promote Chinese medicine. The drug maker has registered trademarks in 34 countries

NE Tiger is China’s top local luxury fashion brand, specializing in high-end formal attire by blending Chinese traditional and modern styles. It is the first and sole Chinese member of the Purple Club of Kopenhagen Fur, a Denmark-based association of the world’s most influential fur design and marketing companies. In 2012, NE Tiger was named one of China’s top luxury brands by global consultant firm AT Kearney.

Inoherb Cosmetics is a mid- to low-price cosmetics brand that enjoys a premium image by combining Chinese traditional medicine and natural ingredients. Another factor in the company’s success is a distribution strategy targeting second-tier cities. Among Chinese consumers, Inoherb ranks second behind global brand L’Oreal. Its success comes from adhering to the principles of Chinese traditional medicine while exhibiting a modern image.

Vanke is China’s largest private residential real estate developer. Its competitive advantage is in tailoring homes to regions from its traditional, urban and suburban styles.

Landwasher is recognized for innovation and attention to environmentally friendly technologies to solve water shortage and sanitation issues. One of its products is a water-free, movable toilet. In the list of 50 Most Innovative Companies, business magazine Fast Company ranks Landwasher 38th. The company receives funding from a variety of sources, including the Bill and Melinda Gates Foundation.

Goldwind is the world’s top wind turbine manufacturer. It technological capabilities in wind-power generation are suited for the various geographical conditions and climates of China. Among its assets is the world’s first six-megawatt permanent magnet direct-drive wind turbine that does not use a gear box.

HollySys Automation Technologies, which provides automation and control solutions and applications, competes in a market dominated by foreign rivals thanks to government policy support. R&D spending surged 61 percent annually over the past five years.

The success of these companies has shattered the “cheap imitation” stereotype of Chinese goods and services. Their success can be summed up as combining Chinese substance with Western function, seeking common ground while respecting differences and public-private partnership.

Thanks to Korea’s high technology and soft power, its companies also can similarly appeal to consumers in China. Korean dramas, K-pop, food, fashion and electronic devices are popular in China because the Chinese believe they blend Eastern values and modern style. Korean companies operating in China need to realize they can use these cultural codes that are not as innately perceived by competitors outside of Asia.


by Yoo Jin-Seok
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