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Tuesday, June 20, 2006

Haier Won 2006 iF Product Design Awards

This actually could be a right direction for huge Chinese appliance industry.

Design Antidote for China’s Petty Profits?

by Viloet Han, China Correspondent

A milestone for the Chinese appliance industry was reached when the 2006 iF Product Design Awards were announced in April.

Haier’s A-003 became the first Chinese household appliance brand to win the award since the competition was first staged 53 years ago.

After more than 20 years of continuous expansion of China’s appliance manufacturing industry, the industry has encountered a kind of bottleneck. Some industry watchers in China have seen the global increase in raw material prices force OEMs in China to give up price-cutting and fast-paced expansion.

Some Chinese appliance producers are turning to industrial design (ID) to find a new competitive edge. Creating appliances with original elements and distinctive design is becoming a focus.

The truth is that, despite 20 years of expansion at break-neck speed, the household appliance industry in China has not cultivated much expertise in ID. Few decision-makers in the industry even realize its importance.

“Actually, the household industry was the first to introduce the industrial design idea,” says Li Jin, vice general director of TCL Industrial Design Company, part of TCL Corporation (Zhongshan, Guangdong, China), which also includes TCL Home Appliances Division, a maker of air-conditioners, refrigerators and washing machines. “Many engineers specializing in design work joined the household appliance industry 20 years ago. But, after that, the huge market stimulated the enterprises to develop rapidly around the strategic focus of ‘produce and market’ without efforts on industrial design anymore,” Li Jin says.

Niu Jiusheng, director of Xinxiang, China-based Henan Xinfei Electric Co., Ltd.’s Industrial Design Office, has a similar perspective. “Xinfei acknowledged the importance of industrial design as early as 1990,” he says. “However, our strategy focused on production, and marketing departments are the key power.” Still, he says Xinfei began putting more emphasis on the industrial design aspect of product development in about 2000.

Appliance maker Hefei Meiling Co., Ltd., (Hefei, China) has given ID more prominence in-house by establishing an ID center. Zheng Rongfeng, director of the center, says Meiling’s ID efforts were once scattered in several workshops that functioned independently. With the establishment of the new center, Meiling’s ID efforts are brought together, where they can be focused and maximized.

A Change in Perspective

Chen Wenlong, general manager of Taipei, Taiwan-based Nova Design Company, says he saw a basic lack of understanding of ID a decade ago. “I found the entrepreneurs lacked interest and basic knowledge on industrial design,” he says.

Today, ID professionals in China see greater awareness

of ID’s importance. Changes in the marketing environment have made ID a concern—passively or actively—to industry insiders.

An example of a company actively involved in the movement is consumer electronics and air-conditioning maker Sichuan Changhong Electric Co., Ltd. (Zhongshan, China). Changhong’s objectives were to reach the top of the China consumer electronics industry in a short period and acquire a certain level of influence globally within 3 years to 5 years. To help it achieve these ambitious goals, Changhong found the resources to create a higher level of in-house expertise in ID. Mo Wenwei, director of the OEM’s Industrial Design Office, says the office has grown to a staff of 40 in the 3 years since it was established.

Li Hong, vice general manager of Little Swan Co., Ltd. (Wuxi, China), says that there are 10 employees in its ID department and the company has traditionally designed products in-house. Now, however, Little Swan is considering inviting strategic partners to handle some of its research and development (R&D), Hong tells APPLIANCE.

Xie Fen, director of Midea’s air-conditioner design department, says that the decision-makers at the company have put more emphasis on ID this year. ID is currently handled by a specialized design firm, but Midea is in the planning stages for an independent, in-house design center, Fen tells APPLIANCE.

Kitchen electric housewares maker Guangdong Donlim Group (Guangdong, China) has come to place much importance on industrial design for giving small appliances’ brand identity and style. Pan Weidong, the assistant to the chairman of the group, says that the company is discussing a cooperative agreement with a French firm specializing in ID. Guangdong Donlim plans to leverage this design expertise to help it introduce the concept of the “French-style, Western-type appliance” in China.
It has been reported that Guangdong Midea (Shunde City, Guangdong Province, China) has 60 employees on its ID team, and plans to construct a new building to support the design of household appliances. Also, Midea is planning to set up an independent ID department under its subsidiaries.

Li Jin says TCL provided substantial financial support to its 26-staff ID company. In addition, the Zhongshan city government formed positive policies to support the ID company.

In April 2006, Qingdao Haier (Qingdao, China) became the first Chinese household appliance brand to win an iF Product Design Awards in the history of the competition. Haier won for the A-003 air-conditioner. The iF competition has been held since 1953 and is organized by the iF International Forum Design GmbH (Hannover, Germany).

An Uneven Developing Path

Interviews conducted by APPLIANCE reveal problems threatening to stall the flourishing of ID in the China appliance industry. Many OEMs don’t even have a full understanding of what ID is. Most producers seem to think ID is the same thing as product appearance, so ID efforts equate to emphasizing product aesthetics.
OEMs in China typically give their product development teams mandates of quick design and low cost. That leaves little room for enhanced ID efforts.

The result is that, even with some producers embracing ID, professional industrial designers in China are struggling to sign-up clients and the design companies are engaged in price battles, which hurts the development of this industry niche.

Knowledge as Property

It is worth noting that knowledge property should be an important and valuable result of an ID project. However, as APPLIANCE spoke to China’s appliance industry insiders, it became clear that there is much concern about the lack of protection for R&D results, especially in early stages of product development. China offers little legal protection for “soft designs,” particularly during the products’ early development stages.

Many companies feel helpless to prevent the possible loss of their hard-earned knowledge property. Naturally, this reduces industry’s enthusiasm for putting resources into ID.

Other factors are at work. Some segments of the Chinese appliance industry have entered what has been called a “petty profit era.” With profits relatively low, companies are looking for ways to reduce operational costs, often cutting costs from the R&D programs that were under-funded in the first place.

ID needs large-scale investment to ensure high-quality results. It is still unclear whether Chinese household appliance enterprises that are improving and investing in ID will retain their enthusiasm even under the cloud of petty profits.

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