The International Marketplace: Product Innovation May Come Mainly From China

           Since the 2007-2008 global recession, confidence in the American model of economic development has decreased significantly. Economists are eager to draw conclusions from China’s continued economic growth even though the economic slowdown that has affected much of the developed world. Many assert that Chinese economic policy is more stable because of the government’s large role. However, it may also be the demand of Chinese consumers which shapes innovation and supply.

            The American toilet company Kohler has just released the state-of-the-art Numi toilet. This toilet, designed and marketed primarily for the US and China, has many features included especially for the Chinese market. The toilet’s feet warming system is a solution to infamously cold Chinese bathrooms. Other Chinese market features include the Numi’s music system, Skype capabilities, and a bidet. This toilet suggests that even an American company must keep the Chinese populace in mind when developing products. In an editorial in the Financial Times, Christopher Caldwell concluded that the Numi toilet suggests more than just an increase in Chinese-centered goods. He claims that this toilet “is a sign that this era of US advantage is spiraling towards its close.” 

            Caldwell is not alone in his belief that Beijing will soon begin its reign of prominence. The Numi is not the only special global product marketed for China. In 2005 GM’s luxury sedan the Buick LaCrosse was redesigned especially for the Chinese market. Joe Qiu, designer of the Chinese version of the LaCrosse, told Fara Warner of Fast Company how he created a car that would sell well in the Chinese market. The interior of the car is meant to recreate the soft, luxurious environment of Chinese nightclubs and upscale Shanghai homes. The car’s exterior is sleek and trendy, targeting the chicest Chinese clientele. Since then, sales of the LaCrosse in China have outperformed those in the U.S. In 2010, GM released the updated version of the Buick LaCrosse globally. Much to US GM’s chagrin, the car’s interior was designed by Qiu. The US team was took point on the car’s interior, but had to take into account the input and edits from the Chinese design team. This move displayed how Chinese preferences trumped American ones. As a result, China gained more clout within the powerful American company GM. 

            With the second largest economy in the world and an envy-inducing continued growth, China is beginning to rival the United States’ position as the world’s economic leader. Whether the 21st century will become the age of China will be determined over time. Right now, Chinese preferences are beginning to share the lead in the development of new global products. 

Professor Michael R. Czinkota and Sophia Berhie

Sources: Caldwell, Christopher. “Telling Lessons for the Future from China’s Bathrooms.” Editorial, Financial Times (London), June 4, 2011; Waldmeir, Patti. “The Numi Toilet: Chinese Design for a Global Market.” Globe and Mail (Toronto), May 30, 2011. Accessed June 7, 2011.​report-on-business/​international-news/​ asian-pacific/​the-numi-toilet-chinese-design-for-a-global-market/​ article2040064/​; Warner, Fara. “Made in China.” Fast Company, April 1, 2007. Accessed June 7, 2011.​magazine/​114/​open_features-made-in-china.html.

Linking Global Trade and Recovery

Patterns identified during the global recession of late 2008 highlight the remarkable impact of any ripple in trade worldwide. According to U.S. Commerce Department data, combined U.S. exports and imports dropped 18% from July to November 2008, with a decline in imports accounting for two-thirds of the drop. With the U.S. importing less, nations that export to America suffer as a result. For example, during this period, Japan experienced its biggest drop in exports ever while China and Germany experienced their biggest drops in a decade. This, in turn, means that other countries that are exporting less will also import less from the U.S. and other nations. As a result, the World Bank predicted that global trade would decline 2.1% during 2009, just two-tenths of a percent more than the last big decline in 1975.

Of course, when demand is down among the world’s global trading partners, little or no trade growth is likely to occur until a recovery begins. The question is: when will trade pick up again, and will U.S. economic policy be able to resist the urges of protectionism and promote growth in exports.

Protectionism Never Pays

Courtesy sqrpix

There is a tendency today towards domestic protectionism and while it is not surprising, it is also not wise. Using the U.S. as an example, those with global marketing experience know that a “buy American” attitude will cost the U.S. and the world billions of dollars and reduce the number of jobs. Continue reading