Industrial design services to China

Trends and opportunities

The market

China has been known as the world’s factory, with its economy largely reliant on large-scale, labour-intensive and low-cost manufacturing industries. China’s economy is now transitioning to a more services based one with a focus on innovation.

To more effectively cooperate and compete with advanced industrialised economies, the national Chinese Government has proposed the Made in China 2025 Initiative (published in 2015) to comprehensively upgrade China’s industry, focusing on globalisation, high-end production and design, and branding (Source: Shenzhen Industrial Design Association [SIDA], Shenzhen: A Innovative City Driven by Design; Centre for Strategic and International Studies, ‘Made in China 2025’, 1 June 2015).

With the transformation of the manufacturing industry, industrial design will play a key role in driving innovation in smart manufacturing. Traditional factories are now shifting from OEM (original equipment manufacturing), to ODM (original design manufacturing) and further to OBM (original brand manufacturing).

Though still in its early stages, a January 2016 report states that the industry is an A$18.7 billion market awaiting to be developed. Top Chinese investment company Shenwan Hongyuan Securities predicted that if the sector were to be rapidly developed the market will be worth around A$29.16 billion in 2018 (Source: Finance.china.com.cn, 31 March 2017). Targeted policies to support and promote this sector have been adopted in provinces and cities including Beijing, Shanghai, Hunan, Nanjing, Ningbo, Chengdu, Chongqing, Qingdao, Dalian, Shenzhen and more. 70 per cent of enterprises in industrial design are small and medium ones, mainly scattered in the three design belts—Bohai Rim, Yangtze River Delta and Pearl River Delta (Source: China Industry Newspaper ‘Industrial Design+Smart Manufacturing: A 100 billion RMB market to be developed’, 1 March 2016).

The industrial design sector is the most dynamic and well-developed in Guangdong province, especially in its cities of Guangzhou, Shenzhen, and Foshan City, which have spearheaded the most visible infrastructural and administrative improvements to support the industry. Guangdong is now home to near 20,000 high-tech firms – the most nationwide. (Source: China Daily, ‘Guangdong Sees Robust Growth of High-tech Firms’, 8 February 2017). Major companies like Huawei, ZTE, Tencent, Midea, TCL, Kelon and Konka have set up their own industrial design headquarters in Guangdong.

Shenzhen

Shenzhen’s industry design sector is one of the top four contributor to China’s national gross domestic product (GDP). Since becoming China’s first Special Economic Zone in 1980, the city has modernised and transformed into the Silicon Valley of China, ranking fourth in GDP among mainland cities (A$358.1 billion) for 2017.

Shenzhen is also recognised by UNESCO as a leading ‘City of Design’. It boasts the most dynamic cultural and creative industries in the country, which make up over 10 per cent of Shenzhen’s GDP. The local industrial and indoor design industries take up 60 per cent of the national market. Overall, designers in Shenzhen cover various fields such as graphic design, industry design, interior and architectural design, fashion design, toy design, jewellery design, crafts design, and more. Some of China’s most successful tech companies, such as smart-phone makers Huawei, ZTE, and technology group Tencent (WeChat), have industrial design headquarters in Shenzhen. The city is home to more than 6,000 design firms accounting for 100,000 employees, who create an annual output of RMB 11 billion (A$2.1 billion).

A long list of platforms exist for design companies to establish headquarters and showcase their products. There are 42 ‘cultural and creative industrial parks’ and 20 ‘creative industrial bases’ in Shenzhen. Famous parks include:

  • OTC Loft
  • Shenzhen Culture Creative Park – supported by the Shenzhen government and covers 60,000 square metres, represents a total investment of RMB 500 million
  • Shenzhen F518 Idealand
  • Sino-Finnish Design Park.

These parks are home to hundreds of design companies and great influence in the national industrial design industry.

Shunde, Foshan

Located at the centre of Southern China’s Pearl River Delta, Shunde is a district within Foshan City, and a world renowned manufacturing centre. Shunde achieved a GDP of A$52.33 billion in 2016, and is home to over 3,000 domestic appliance manufacturers, including Midea, Kelon and Galanz. It is also the largest furniture wholesale market and distribution centre in the world. Entrepreneurs from Hong Kong, Macau, Taiwan, Japan, Korea, Europe and the US have set up 1,797 foreign-invested enterprises in Shunde, with a total investment amounting to A$6.38 billion.

Guangdong Industrial Design City (GIDC)

The industrial design industry is strongly supported by the Shunde government through specific policies, particularly through the establishment of the Guangdong Industrial Design City (GIDC) in 2009. The GIDC is a mega project located in Shunde that focuses on industrial design and providing value added services to the whole industrial chain. The initial project attracted investment of over A$11.24 million and reconstructed an area of 30,000 square meters.

Nearly 80 industrial institutes have offices in the Park, gathering over 700 professional designers and producing thousands of competitive designs every year. The GIDC characterises itself as an industrial design service cluster set up to serve the local manufacturing market.

Guangdong’s booming industrial design sector is visible through its cities’ continued dominance in patents and trademarks. In 2016, capital city Guangzhou saw 99,112 patent applications, up 56.4 per cent year-on-year and ranking number one in China (Source: Guangzhou Municipal Board for International Investment: Invest Guangzhou, ‘Guangzhou Ranks the First in Both Patent Applications and Invention Patent Application Growth Rate’, 1 March 2017). In 2016, Shenzhen’s PCT application number takes up 83.3 per cent of the provincial total and almost half (46.6 per cent) of the national total and it has been number one nationally for 13 years consecutively. The invention patent number per 10000 people is 80.1, which is ten times the national level. According to WIPO, by the end of 2016, Shenzhen ranked number two globally behind Japan, with Silicon Valley number three among global innovation-active cities. Guangdong also received 689,434 trademark applications last year, and garnered a total of 2,043,798 valid trademark registrations, topping all other provinces (Source: State Intellectual Property Office of the P.R.C, ‘China’s Trademark Application Amounts to 3.691 million in 2016’,  22 February 2017).

Legislative framework

Guangzhou IP Court was established on December 16, 2014 as one of the three IP Courts in China (Guangzhou, Beijing and Shanghai). These three specialized courts make up China's first batch of pilot IP courts. First instance IP civil and administrative cases relating to patents, new varieties of plants, integrated circuit layout designs, technological know-how, or computer software, are now dealt with by the Guangzhou IP Court, which means parties receive specialist judges possessing relevant technical expertise and experience, rather than normal civilian judges at basic and intermediate courts.

Opportunities

The Chinese Government has outlined three main tenets to its approach in developing the industrial design sector:

A globalised business environment

Currently, efforts to open up and globalise the industrial design sector mean that foreign firms are encouraged to set up regional headquarters in the Pearl River Delta region, especially in Shenzhen or Guangzhou, where free trade zones operate and generous tax incentives may be given either independently or with a Chinese partner. The national and provincial governments are eager to boost innovation and commercial activity in this sector, and have also reduced red tape for foreign investors.

A desire for partnerships and services

Chinese companies aim to ‘transform and upgrade’ from traditional manufacturing to high-end manufacturing and design. Therefore, there is significant desire for international cooperation. Chinese firms want to bring in any advantages from their business partners or utilise consulting services to develop the domestic and overseas markets. According to a 2013 HKTDC survey, 95.7 per cent of surveyed enterprises in Guangdong indicated that they had considered increasing or had already increased investment into developing and promoting their brands, and upgrading product design and R&D capability. Ninety-one per cent indicated that they would consider or are already seeking overseas business partners, primarily to increase sales (36.8 per cent) and enter into ‘technological cooperation’ (33.5 per cent). Overall, financial and professional services such as brand design, product development, marketing, business consultancy, and legal/accounting and banking/financing services are most in demand (Source: HKTDC Research, ‘Guangdong: Hong Kong service opportunities amid China’s ‘going out’ strategy’, 11 December 2013).

Branding

Branding is one of the most in demand services from industrial design companies where tastes and preferences are becoming diverse. Many Chinese companies aren’t just upgrading product designs but building their own brands. Successful, creative and original branding is still a weakness in China, where copycat brands have dominated for a long time.


Australian firms are able to capitalise on extensive commercial opportunities within the Guangdong (or China) industrial design sector by aligning themselves with this approach. Such opportunities may include:
  • developing and providing expertise in modern industrial product designs especially in relation to information communication technologies, intelligent design, and the Internet of Things; and/or similar products for commercialisation in China
  • providing branding services
  • providing services and expertise in interior design and furniture design.

While the industrial design industry is still relatively new in China, it is a robust and rapidly growing sector, receiving highly proactive government funding and substantial investment from private investors. Australian industrial design companies have a great opportunity to form partnerships or offer consulting services to this thriving industry.

Competitive environment

Foreign industrial design players in China are mainly those from Europe and America. Famous foreign industrial design companies that have a presence in China include Ideo, Frog Design Karim (in Shanghai) and Rashid Design Studio (in Shenzhen) from the United States, Designaffairs from Germany (Shanghai), Jacob Jensen from Denmark (Shanghai), Veryday from Sweden (Shanghai), Avarte from Finland (Shanghai) and Karim Rashid Design Studio(Shenzhen). Some Australian design companies have offices in China, but there remains a huge market to be tapped, particularly in South China.

Due to strong government funding, newly created industrial design events and awards, and newly established intellectual property (IP) courts (in Beijing, Shanghai and Guangzhou), design companies now operate in a much better regulated and supportive environment. This has helped facilitate the growth of more original local designs and brands, and international cooperation with other companies.

The opportunities in the Chinese market are strong enough to ensure its competitiveness against other countries with more established industrial design sectors, including the Netherlands, Germany and Japan etc.

Marketing your products and services

Market entry

The best way to enter the industry is to cooperate with local partners or establish a local office. It is also suggested to localise your offering, marketing and sales methods to suit the Chinese market.

For brands entering China, a sound social media strategy is vital. Wechat, as a mobile application for messaging, microblogging and e-commerce, is one of the most popular and important platforms. Besides, Weibo, the Chinese version of Twitter which boasts many Chinese celebrities and key opinion leaders (KOLs), is also powerful in marketing. Alternatively, Baidu, the Chinese version of Google and the most used search engine in China is also famous for its paid-listing advertising model.

Participating in key Chinese industrial design events like the Shenzhen International Industrial Design Fair is another effective way for market entry or expansion in China.

Introduced in 2013, the Shenzhen International Industrial Design Fair (SZIDF) is a yearly fair showcasing the newest designs and technologies in modern industrial design, covering fields such as intelligent hardware, wearables, robots, drones, eSports, virtual reality, crowd-funders, and incubators.

Hosted by the Shenzhen municipal government, and organised by the Shenzhen Industrial Design Profession Association (SIDA), SZIDF is the largest industrial design fair in the world with an exhibition area of 15,000 square metres.

In 2016, SZIDF attracted 220 exhibitors including 175 international firms. Three quarters of the floor were dedicated to international pavilions, with representatives from numerous overseas companies and agencies, including:

  • Black Ant Advertising (India)
  • Handmade in Germany (Germany)
  • Designaffairs (Germany)
  • Florence Design Week (Italy)
  • Design Denmark (Denmark)
  • Design Gitta Foldberg (Denmark)
  • SKAGEN (Denmark)
  • Berkeley Sourcing Group (America)
  • ANIMA Barcelona (Spain)
  • Benoy (UK).

Links and Industry Contacts

Industrial Design Associations 

China Industrial Design Association
Guangdong Industrial Design Association
Guangzhou Industrial Design Association
Shunde Industrial Design Association
Shenzhen Industrial Design Association

Other websites

Guangdong Industrial Design
Shenzhen City of Design
State Intellectual Property of the PRC

Contact details

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