There’s a persistent perception that Chinese companies simply manufacture and reverse engineer, but in reality the country’s industries are starting to shape global business innovation, most notably in the social media, entertainment, mobile technology, and ecommerce sectors.

According to Larry Keeley, author of Ten Types of Innovation, there are three main areas to consider: configuration, “the innermost workings of an enterprise and its business system”; the offering, “a company’s core and collection of products and services”; and experience, “the customer-facing elements and business system of an enterprise”.

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To a great extent, innovation in China has recently taken on these characteristics—sometimes the leaps have been big, sometimes small—but they’ve stretched across company activities and gone deep into specific areas of development.

In this climate of change, Campaign Asia-Pacific will present and examine several cases of Chinese brands that are leading with innovation.

Smart Chopsticks

For thousands of years, chopsticks have been a universal, largely unchanged eating utensil in China. Now the design is getting a few enhancements.

Kuaisou, a new smart chopstick, allows users to detect contaminated or artificial properties and measure the nutritional value of the food they’re about to eat. A product and service innovation from search giant Baidu, this exemplifies a development born out of necessity, tackling food-safety issues currently plaguing China. Starting as an April Fool’s joke within the company, the idea gained serious traction and was announced early in September.

With chopsticks being a historical Chinese invention, they are an ideal strategic choice of product for Baidu to innovate and market as part of its brand. It could also enhance Baidu’s existing information network, gathering and leveraging new data, which should enable further development.

Social-media users have both lauded Baidu’s efforts and lamented the reality that makes such innovation necessary in the first place. However, it’s through this evolution of the chopstick that Baidu is attempting to create new value, strengthen its core business, and develop its own brand.

 

Biometric buys

Forget about using passwords to make online transactions: use your thumb instead.

Security is one of the main challenges facing financial payment innovation. Banks and credit-card companies are constantly looking for opportunities to marry technology and user-experience in ways that benefit businesses and consumers. The issue lies in creating efficient, user-friendly payment experiences that are also safe and protected.

China’s Huawei has focused on developing biometric technology to solve this problem. In conjunction with the Alipay wallet app, a mobile-payment solution with over 100 million users, the company has developed fingerprint readers that allow safe mobile e-payments without passwords.

 

AVD systems

Watching videos was just the start. Now you can interact with them.

Putting consumers in the driver’s seat has been a big part of driving engagement in the social age. The challenge for video content has been in making it interactive while delivering the experience across all platforms and devices simultaneously.

AVD Digital Media China has developed in-video interactive apps technology, which merges digital landscapes and allows viewers to touch and influence content in the videos seen on their tablet and mobile devices.

People, products and locations featured in the video content are interactive, in an approach which presents a new opportunity to advertisers while offering a personalised experience to users.

Deployed on several Chinese platforms, the system has garnered hundreds of millions of Chinese user impressions and engagements across all major devices. This innovation is a big leap for video content, user experience and marketing.

 

Haier

Rip apart the hierarchal and cultural concept of management to make the most of people and their potential.

Work cultures have a tendency to become ingrained in people’s behaviour, inhibiting innovation and the productive mindset of a brand. The problem is magnified with a large workforce.

Haier China faced this challenge with its 80,000 employees. The company underwent a significant overhaul to put creative power in the hands of its people. Haier’s CEO Zhang Ruimin focused on innovating the company’s management system, identifying it as a key strategy to developing the brand.

The company flattened its management hierarchy and tackled the Chinese culture of seniority head on in order draw out the creativity and potential of its workforce and produce a thriving entrepreneurial spirit internally. Zhang set up a self-organising bidding system that maximises internal talent, allowing everyone to pitch project proposals and bid on them. The radically decentralised approach also gives workers the power to vote out inept leaders.

The strategy stands out as a management and engagement innovation that breaks the mould of China’s workforce relations. In 2013, Haier’s revenue reached US$30 billion—a sign that transforming the company from the inside out has worked.

 

YY

In a population of over 1.3 billion people, this online channel gives anyone the chance to be famous.

Starting out as a video network hub for hardcore gamers in 2005, YY’s platform began attracting karaoke fans. It adapted the network to cater to this and created a virtual gift economy—an idea taken from its gaming origins.

Now thousands of viewers log on to gift their karaoke singer idols with virtual goods—ranging from thousand-dollar brand-name sports cars to 82-cent roses—that can be exchanged for cash.

YY takes a 60 per cent cut from the virtual goods transaction. However, despite YY bringing in significant revenue through deals with real-life TV competitions, it has reportedly had trouble interesting overseas investors—primarily because its business model is so new and untested in Western countries.

 

Xiaomi

How deeply can customers be involved in improving a product? How can low prices generate sales  and lasting customer engagement?

Xiaomi has used the process of iteration seen in software development and applied it to hardware development, launching small batches of new phones, learning from users and then reconfiguring the designs before going through the entire cycle again. Each time, Xiaomi delivers an incrementally superior crowd-sourced product specifically tailored to Chinese consumers.

Coupled with this is a business model that focuses on low prices with thin margins: Periodic flash sales tied to gamified social-media campaigns draw users to win further discount coupons and then take advantage of revenue through after-purchase software sales.

Although taken alone these innovations aren’t new, the configuration and adaptation on whole makes Xiaomi unique.