Fostering creativity

This is where industrial design SMEs are playing a crucial role by helping Chinese manufacturers realize how to create new, innovative products Chinese consumers want to buy.

By working with Chinese designers and companies, but utilizing Western design techniques developed over the US and EU's extended history as modern service economies, foreign industrial design SMEs are helping speed China along the path.

"Local designers and researchers are working with foreign design companies to gain a much deeper understanding of the Chinese consumer," Roux said.

Beyond just devising products for Chinese companies, Pratt of IDC said part of the reason they are keen on working in China is to help the industry mature.

"You are partly an educator, and trying to convince people of the value of integrated design and engineering," he said.

"There's the will and the ambition and the cash, but not the knowledge and experience. That's partly why we exist of course - to help companies achieve this."

Taking the time to educate Chinese designers on Western practice makes the transition from Europe to China - a one shot opportunity for most SMEs due to the deep financial costs of such a move - an already difficult situation more complex.

Though smaller industrial design companies face a higher level of risk when mobilizing in China, they are more capable of quickly adapting to the new environment.

"Size is not necessarily an advantage in this industry," he said. "Smaller companies have the advantage of being more agile."

For Chinese and overseas companies alike, innovation in larger design companies is often difficult. With designers often on the lower rung of a long chain of command, ideas are often shot dead in the water before ever coming to fruition.

By having a flat power structure, industrial design SMEs are able to quickly and accurately work with all elements of a product design - from the branding to the engineering.

"We don't have the hierarchy of power, so we can more easily work to directly meet our clients needs," Pratt said.

But in order to meet a client's needs, a company first must get clients.

One of the biggest divides between local firms and foreign ones is the price of services.

Though the capital of China alone may have almost 10 times the number of industrial designers than the US and the UK, Western design firms are charging almost 10 times the price of their Chinese counterparts, said Roux of IDSA.

In a 2011 survey by the Economist Intelligence Unit, commissioned by UK Trade & Investment, 53 percent of Chinese companies said they would prefer to put their money toward increasing cost efficiency rather than spur innovation.

One-third of the Chinese companies surveyed said they would rather produce cheaper versions of already existing products rather than create unique ones.

Service costs

With the average cost of having a foreign industrial design firm develop a new product ranging anywhere from $30,000 to $100,000, it is only the most committed companies who are investing in originality rather than efficiency.

As a result, companies often opt to use Chinese design firms at a fraction of the cost, regardless of the results.

But as continued profits stream in from the manufacturing sector, Chinese companies are becoming more willing to take a financial gamble - often doing so through foreign industrial design SMEs.

"In China there are more risk-takers, more people are willing to take a non-conventional route. And this helps small firms," said Lynnette Chan, creative director for Renovate, a Singapore-based industrial design company.

While foreign firms may be temporarily stepping in to satiate the needs for Chinese companies willing to risk more for a better product, China's effort to foster innovation is revealing a slow rise in the number of homegrown creative thinkers.

Domestic stalwarts

Leading the pack is Zhou Yi, founder and president of S.Point Design. Opened in 1997, the company is one of China's longest serving industrial design outfits.

Born in Wuxi, in East China's Jiangsu province, the product pioneer has been recognized internationally as one of China's top innovators and in March he was recognized by China Design News as one of the China's "most creative minds".

With clients ranging from large multinationals, like Siemens and Panasonic, to local Chinese companies trying to etch out a name globally, Zhou's company has successfully conceived thousands of new products ranging from personal watches for Nike to electronic bus stations in Hangzhou.

Zhou's company has managed to distinguish itself from the hordes of Chinese design companies focusing on how a product looks rather than works, by focusing on the strategy of a product - how will it sell rather than how will it look.

"It is more sustainable for Chinese companies to do more of a strategic approach," said S.Point's business strategy manager Lam.

"The labor force is so great here that if you are focusing on the aesthetic portion of a project there is always going to be someone who is willing to do it better than you or cheaper than you."

And while it may still be a few years before China finds its footing in the land of innovation, at least for now, they are starting small as they plant the seeds to cultivate the world's next wave of new ideas.

toddbalazovic@chinadaily.com.cn