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What Apple Can Teach Us about the Future of Business in China

September 29, 2011

Posted by Don Dunnington at September 29, 2011 02:11 AM

On Sunday I walked the length of the Nanjing Road Pedestrian Walkway, about 45 minutes round trip. Near one end of this upscale retail mall I came across a large crowd pressing its way into a huge Apple store.

It looked like the sort of crowd you'd expect the day they release a new iPhone model. The fist floor was filled with long tables set up with iPad, iPhone, and Mac demos. Downstairs was filled with counters where you could consult with technical associates about your Apple purchase.

Judging from the crowd at the store, and the number of iPhones and iPads I see on the street, in restaurants and on the trains, Apple’s growing influence is as big in China as it is in the US.

At the top of today’s business section of the English language China Daily, a headline proclaimed “Chinese manufacturers’ interest in innovation was fanned by Apple products, Shanghai Expo.”

In the story, China Daily’s Cai Jing reports “the popularity of the iPad and other Apple products has awakened Chinese manufacturers’ passion for creativity.” The news story also credits the recent Shanghai 2010 Expo as playing a role in boosting the area’s creative industry. Yang Jeiming, a product designer with his own company, says he constantly hears manufacturing clients tell him, “I want something as chic as an iPad.”

The article reports that Shanghai’s so-called creative industry employed 1.08 million people, mostly design professionals. These creative companies accounted for 10 percent of Shanghai’s GDP in 2010, according to the Shanghai Municipal Statistics Bureau.

Advertising and exhibition services achieved the highest growth rate (71.4 percent in 2010), followed by industrial design (25.2 percent). Higher growth is expected for both advertising and industrial design studios as a result of the economic problems in Europe and the US, which has prompted Chinese manufacturers to look to domestic markets to fill in for declining exports.

Wang Yang, a product designer in Shanghai, told the newspaper, “Since the outbreak of the global economic crisis in 2008, an increasing number of domestic manufacturers have asked us to improve the design and function of their product.”

A Drive for Higher Quality in the Domestic Market
Yesterday, I met with William Wu, General Manager of the
Colormax equipment manufacturing plant in Wuxi, China. He has also seen an increase in business this year from Chinese manufacturers serving the domestic market. He said Chinese processors are purchasing higher-quality equipment, particularly loss-in-weight feeders, that can help them improve the quality of their end products.

Colormax is a K-Tron company that offers Chinese process industries an affordable combination of Western control technology and locally-produced mechanical components. Wu says China’s manufacturers are attracted to the higher Western standards Colormax follows in the quality of the equipment it makes, the level of service it offers and faster delivery times.

Quality in Food and Pharmaceutical Industries Through Automation
Today I met with William Tang, General Manager and Sales Director for China in K-Tron’s Shanghai office. He told me he is seeing a significant increase in interest from China’s food and pharmaceutical industries. “Quality through material handling automation is their priority,” he said, as they strive to meet higher government standards and win consumer confidence.

Tang said Chinese food and pharmaceutical manufacturers need to upgrade their material handling systems on a number of fronts. “They are replacing manual systems with automated conveying and feeding systems,” he said. “Automated conveying systems lessen the possibility of contamination,” he said, which is “a very important consideration.”

Tang said K-Tron’s gravimetric feeders are helping to upgrade the critical end-quality of Chinese food and pharmaceutical products, and the feeder controls provide validation of what went into the product.

Need to Earn Consumer Confidence Illustrated
The importance for Chinese manufacturers to win domestic consumer confidence was brought home to me in a very personal way when a Chinese friend took me to a nearby pharmacy. I wanted to buy a Chinese herbal remedy for cough and sore throat. I’m taking an antibiotic, but I’m leading workshops over the next three days and want to be sure I don’t lose my voice.

She recommended a bottle of heavy black syrup with 18 different herbs. The most important selling point, she said, is that the medicine is made in Hong Kong, not mainland China.

The remedy, by the way, tasted surprisingly good and seems to be helping. Wouldn’t it be a delicious remedy for the Chinese domestic industry, if with the help of Western feeding and conveying technology like K-Tron’s, China’s consumers start buying Chinese processed foods and medicines with confidence. And they are actually made in China.

Confidence in Water, Too
Another personal encounter with China Daily, this time in Europe, brings the quality issue home to the water and waste water treatment industry in China. In June I was flying from Germany to Italy on a discount German airline. Among the free papers they handed out was the English language, European edition of China Daily.

The China Daily's inside feature was all about the country's efforts to clean up Lake Tai (Tai Hu), one of China's five largest lakes. An important tourist and recreational attraction,it had been poluted by industrial waste and Wuxi's exploding population. The article explored the broad range of efforts being taken to clean the lake up.

According to a recent online China Daily story, the city has spent 10 billion yuan ($1.5 billion) in each of the last three years to improve water quality, and the green algae that covered the lake in 2007 has been brought under control.

Don Dunnington
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