China Catalyst: Powering Global Growth by Reaching the Fastest Growing Consumer Market in the World

CHAPTER 10

The New Export Machine

For those in the mature, developed markets of the West, more innovation is coming your way. China's export machine used to involve just physical goods; that was the old world. The new world places intellectual capital and innovation into the export mix. New ideas, processes, and products invented to tap the growing consumer market in China are increasingly becoming global. Here is why:

• A dense market. China's consumer market, especially in the established coastal regions, is dense and competitive. This is driving new ways to reach consumers.
• A growth in innovation. China's innovation capacity is undergoing significant growth, led by a vast and educated labor force supported by the strength of government investment.
• More constraints. As the pressure for growth drives companies inland, market constraints spur further innovation. Although much progress in infrastructure has been made, distribution systems often don't work. Physical stores cannot be built fast enough to ensure market coverage. These constraints lead to innovations born out of necessity.
• The market pace. China is a more iterative market in terms of new product launches. The cycle time from ideation to market launch is faster, followed by rapid improvement cycles after the initial consumer response. The careful, deliberate, top-down approach used by multinationals in the past is rapidly being replaced in all markets by faster development cycles that force a quicker pace.
• A broader ...