By Peter Foster | Telegraph – 4 hours ago
China's sleeping giant is ready to wake up the West - Yahoo!
"You have to concentrate!" exhort several Chinese voices all at once as I stare intensely at a giant 65in LCD flat screen TV. "You need to focus very hard! Keep concentrating! Harder!"
On the screen, a picture of a large barrel is starting to emit smoke. If I concentrate hard enough, I'll manage to "blow up" the barrel by emitting brainwaves through a two-pronged headset, one part of which is attached to the forehead, the other, via a crocodile clip, to the left earlobe.
Welcome to the future world of "mind-control TV" where or so theory goes you will hop channels with the blink of one eye, while altering the volume with the other. After several minutes focusing, that obstinate barrel does finally burst into flames.
On this evidence it might be a while before mind-control TVs (Taiwan OTC: 8264.TWO - news) are a must-have for Christmas or topping the January sales, but it says something that this demo is being staged not in Japan (EUREX: FMJP.EX - news) , Taiwan or Korea, but at the headquarters of Haier, China's household appliances giant.
The mind-TV needs some fine tuning, but it speaks of an ambition that signals China's determination to follow its Eastern Confucian brother economies up the value chain.
Upstairs, in the museum at Haier's sprawling manufacturing and design centre in the north-east coastal city of Qingdao, you get a clear impression of how fast that process is taking place; Haier is achieving in a single decade what Korean companies such as Samsung achieved in two and Japanese companies in three.
As recently as the early 1990s, Haier was still producing clunky products for the home market boxy TVs and clunky, humming fridges albeit with cute local functions such as the bug-eyed, "Frog TV" that demanded children solve maths problems before watching their favourite cartoons.
But that was then. Downstairs on today's factory floor, some of Haier's 50,000 Chinese workers can be found assembling the sleekest high-definition flat screen TVs, many using Korean LCDs filled with German liquid-crystals, that will attract bargain hunters this Christmas.
The point, says Sun Shubao, Haier's general manager for Europe (Chicago Options: ^REURUSD - news) , is that China's reputation for managing cheap junk like Taiwan's in the 1980s is fast passing its use-by date.
"It's no longer all about price," he says, "Our products might be cheaper than the 'A' brands, but only by 8pc to 10pc and ours will often have superior functionality for the same price. Our 'MyZone' [top-of-the-range] fridge, for example, is selling for £799, which is not cheap."
Haier is not yet a household name in Britain, even if it is the world's largest manufacturer of household appliances with a 6.1pc global market share a figure that of course reflects Haier's 1.3bn-strong customer base at home, but also soaring sales in 165 countries worldwide.
In Europe, Haier still has less than 3pc market share with surveys showing brand recognition running at only 5pc to 10pc in France, Britain and the UK a situation that the company says it is now determined to change.
Haier wants to seize 8pc of EU market share by 2014, becoming a top-five appliance distributor in Europe by 2015 ambitious targets which it says it can achieve through a combination of smart marketing and selling (very) decent products at (pretty) decent prices.
"We need to build our brand awareness, which is low at the moment, but we are using social media and other digital marketing to target the 25 to 45-year-old consumer who is educated and open to non-traditional brands," adds Mr Sun.
Over the coming five years, British consumers can expect to see Haier's brand name appearing ever more frequently at football stadiums and art and design shows, as well as so-called "mummyblogs" and tech discussion forums, where it gives away its latest fridges in competitions.
The strategy is not to emphasise Haier's Chinese roots but to take the company's faintly German-sounding name (which comes from the Chinese pronunciation of Liebherr, its original 1984 joint-venture partner) and position it in an amorphous, supra-national space.
"Haier is the Ocean," writes Zhang Ruimin, the bureaucrat who turned Haier from a near-bankrupt fridge factory into a sprawling conglomerate, it is "indiscriminate and accommodating" as it collects the various rivers of the world and "turns them into pure green water".
Translated, the corporate psycho-babble means absorbing cultures and providing local markets what they want a trick Haier learnt long ago at home, famously modifying their washing machines so Sichuanese potato farmers could clean their spuds. In Britain, localisation is less dramatic, but means building 55cm-wide fridges (not the EU standard 60cm) for fitted kitchens, fridge-freezers split 50/50 (for all those TV dinners we Brits so like) and laying less stress on the A++ energy-saving features preferred by more ecologically conscious Continental (EUREX: CON.EX - news) customers.
By investing 4pc of its £13.4bn turnover in new technologies, Haier is also determined to be more than a copycat, producing novel anti-bacterial washing machines (no more mouldy rubber seals) or three-door fridges with a middle compartment that can switch from fridge to freezer at the touch of a button.
It is these kinds of mid-level, incremental advances (rather than brainwave TVs at this point) that are already seeing Chinese manufacturers increasingly treading on the toes of European, Japanese and US competitors, that until relatively recently could ignore the likes of Haier.
Haier is in the vanguard of a trend that is seeing Chinese manufacturers of mid-range products everything from bulldozers to fridges, ships to motorcycles, cranes to crank shafts that are now threatening the dominance of rich-world manufacturers, according to a 2011 report by the Economist Intelligence Unit.
Chinese companies are increasingly less reliant on investment and know-how from foreign counterparts and as they push, they export their own, home-grown wares to the wider world. The trend is clear. As recently as 2005, some 60pc of all Chinese exports were produced by firms with foreign partners, but by 2012 the share will have dipped below 50pc, said the report Heavy Duty, China's Next Wave of Exports .
As wages rise and China's home-grown technologies improve, a manufacturing base that was once the cheap-labour cash cow of Western corporations is swiftly becoming their direct competition.
Or as Mr Sun puts it more diplomatically: "Before, when we sold very low-end products, I don't think the European competition was particularly bothered, but as they see us adapting to local demand and producing competitive, high-end products, I think perhaps they feel rather differently."