New wave emerges on the global scene

By Cecily Liu in London (China Daily) Updated: 2015-08-10 08:20

"They are willing to expand beyond business boundaries to bring experiences in a holistic, seamless way to consumers, constantly going into new offerings that make sense for consumers," Yu added.

Like Xiaomi, WeChat has rapidly expanded internationally, especially in markets such as India, Malaysia, Mexico and the Philippines.

As of August 2014, the four-year-old app had 438 million active users, with 70 million outside of China.

While this new method of globalization is spearheaded by digital companies, the international mindset at its core can provide great inspiration to traditional Chinese manufacturing firms.

"For example, a business-to-business heavy machinery company would typically rely on the export model by building machines to ship abroad," Yu said. "But they could also partner with field workers and local firms to take their feedback into its manufacturing process."

Yu pointed out that such a model would work well with machinery, automotives and construction equipment.

The selection of key overseas markets to expand into is also crucial to this global strategy because consumers in different countries have diverse characteristics when it comes to content co-creation.

For example, Xiaomi has deliberately avoided the US market, because the United States does not have a large population of highly educated young people who would willingly spend a large amount of their time to develop content for a smartphone platform for free.

Going global

Instead, Xiaomi has expanded to countries such as India, Indonesia and the Philippines, where the user characteristics are much more similar to China's.

"Xiaomi is trying to avoid moving too fast. By the time their product performance becomes very good, they will have built up capabilities, design and software, and then they can move into mature markets," Yu said.

This new method of internationalization, of course, also ties in with China's plan to move from an industrially based economy to a knowledge-based one.

Instead of entering the international market from a low-margin segment, they can now compete on high margins, taking market share from incumbents.

Over time, this trend will change the international perception of Chinese firms, and the commonly used phrase "made in China" will be substituted by "designed in China". And unique to Chinese design would be "something breathtaking in terms of scope", Yu said.

"To underline this, a typical designed-in-China product would not be a niche product such as Swiss design, because China does not have that environment," Yu added.

"A Chinese-designed product would be one that changes the rules of the game overnight by bringing a lot of benefits to a big class of people who are used to not having any alternative."

Also, the rapid internationalization of Chinese firms is also creating a fundamental change to the global investor base.