China is famous for cheap manufacturing. We all have stuff at home that is Made in China.
Acceptable quality at an attractive price. Like your iPhone or your garden parasol.
This is obvious for everybody.
What is harder to see from the outside is that innovation is bubbling in China. Contrary to popular belief, there is a lot of new thinking going on here.
- Low start-up cost for companies and production
- Fantastic E-commerce infrastructure
- Plenty of people with nothing to lose
- A lot of people with cash to spend
Setting up the legal structure of a business is very simple in China, especially if you are Chinese. Low cost for the initial establishment reduces the cost for expensive bank loans and lowers the threshold and the risk for the founders.
The Taobao/AliPay platform makes it easy and cheap to show your products to an audience of a billion internet users in China. Taobao is a combination of Ebay and Amazon – a strong platform for displaying goods and allowing the users to order what they need. The AliPay platform is a banking layer that channels the money from buyer to seller, like PayPal but better.
I would like to give an interesting example of this.
The solar-powered-bicycle-tail-light. It is a combination of existing technologies into a new product that I have never seen before. Solar cell + Battery + LED lights = maintenance-free light for my bicycle. It is obvious that the value is that you wont have an empty battery when you are heading home in the dark.
This product is available on Taobao.com for 15 RMB + 5 RMB shipping. (total cost to the consumer 3 euro/4USD).
(and for consumers outside China, check out AliExpress, $50 for 10 pcs, free shipping)
One question is then, how about IP protection, patents and copyright law? Is this product infringing on some smart American inventor’s patent?
Actually, no. There is a patent for this product, filed 1990 in Korea and China by Yu Gunjong and Kim Yonggab at Yukong LTD. The patent has expired and everyone is allowed to make and market this product.
There have come a host of newer patents, mainly from Chinese inventors in the last five years for new functionality.
Innovation is booming in China – and all of society enjoys the benefits!