China is a great manufacturing success and the Chinese economy has grown exponentially since the early 1980’s. No other country has even done what China has over such a sustained period.
But people are hard pressed to name a global brand from China. They make the components but now they need to take the next step and get their name on the front of the package. It may be about to happen.
Two companies are on the cusp here. Lenovo jumped to the main stage in 2005 by buying the personal computer business of IBM. There have been ups and downs in integrating the international management team but today Lenovo is the largest personal computer maker in the world. And they just bought the Motorola handset division of Google and the low end server business of IBM to help flesh out the product line.
Whether Lenovo can keep the momentum going in PCs and be competitive in smart phones and servers remains to be seen but the Hong Kong listed company looks to be one of the first Chinese brands that gets global recognition.
A second company is not so familiar. Xiaomi (pronounced Shao-me) was founded just four years ago but already is the sixth largest global handset maker and #3 in China. Their strategy is different from the competition. Xiaomi phones are based on the Android system from Google which is a standard platform. But the company updates its software weekly so sophisticated users can adjust their settings and upgrade frequently. Xiaomi sells only over the internet avoiding the retail store markup. A Xiaomi phone goes for about one half the price of a similar phone from Apple. Xiaomi has cult-like status in China and is now moving to sell in the larger BRICs, including India and Brazil.
The criticism of Xiaomi is they are just another me-too company stealing intellectual property from the West. It is true that some Xiaomi phones look suspiciously like Apple iPhones. Also the company has not yet proven they have the staying power to keep up with the likes of Apple and Samsung or even the Chinese powerhouses, Lenovo and Huawei. But Xiaomi has come out of nowhere to grow to significant size and they very well may be another Chinese brand that goes global. In the past China has been looked at as a low cost producer of Western goods. Now with domestic consumer spending booming and an increasing number of home grown brands, Western companies are going to start feeling the heat.