HP, Starbucks Help Spur Innovation in China

But Corporate Culture and Educational System Are Stumbling Blocks

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Eager to shake off China's dodgy image as a low-cost producer of copy-cat knockoffs and cheap toys, as well as sustain economic momentum, local manufacturers and political leaders in China have a new buzz word: innovation.

In 2010, East Asia overtook North America and Western Europe as the subregion producing the greatest number of patent filings, according to the World Intellectual Property Organization.

"Innovation rooted in China and for China is really needed," said Richard Kelly, managing director, Asia/Pacific at IDEO, this week on "Thoughtful China," an online marketing affairs talk show produced in Shanghai.

In addition, research has become a booming business among multinational and local companies.

"China has over 1,200 foreign-invested R&D centers that are innovating for Asia-Pacific and the global markets. China is such a big priority for most companies, including Starbucks," said Marie Han Silloway, the retail chain's chief marketing officer in China, where the company has developed products specially for the local market, such as Green Tea Frappuccinos.

A key stumbling block is China's education system. Chinese students, given little exposure to creativity and development of problem-solving skills, are left woefully unprepared for jobs at global companies, especially in fields that rely on innovation. (This week WPP Group partnered with the Shanghai Art and Design Academy to develop a three-year marketing and communications college program in China to create a source of market-ready talent.

An overhaul of China's education system "should be the first priority for the whole country," said Ellen Hou, TBWA Group's head of planning for Greater China.

Robin Seow
Robin Seow

Multinationals are left with the task of retraining students but that presents another stumbling block. China's Confucian culture preaches respect for elders, including corporate bosses, creating a nation of "yes men" in the office. Staffers can be reluctant to say what they think, said Robin Seow, VP-marketing in Asia-Pacific and Japan for Hewlett-Packard's Personal Systems Group.

Marketers should encourage employees' "appetite for risk -- and failure," Mr. Seow told "Thoughtful China" host Nicky Wang. "We need to let the team understand and feel confident that , 'I am given a chance to come up with good ideas to succeed. At the same time, I may trip, I may fail, and that is acceptable to the company and my boss.' I think this is the key mindset."

HP faces substantial challenges in China. It currently ranks a distant fourth in China's PC market with market share below 9%, behind China's Lenovo Group, U.S.-based Dell and Taiwanese brand Acer, according to Gartner. Also, laptop battery recalls have hit the company's image.

In terms of marketing, however, HP has become a company to watch under Mr. Seow's leadership. Based in Beijing for the past five years, he has developed some of China's most ambitious and unusual marketing programs aimed at rural consumers and youth, non-traditional consumer groups for the HP brand.

In the first phase of the "My Computer, My Stage" platform three years ago, HP encouraged consumers to express dreams, achievements and goals through writing or illustrations on a dedicated site. Later, HP invited them to write and post hip-hop songs online and, finally, create a feature film.

Mr. Seow is also courting China's blogger community -- now numbering more than 50 million -- by sponsoring gatherings bringing influential internet users together in engaging, competitive formats.

In 2010, he partnered with a Communist Youth League program that sends university graduates to small towns in rural China. A nationwide "Creating a Better Life" contest for HP financing, equipment and training turned thousands of the government's young guns into unpaid technology evangelists promoting HP.

Normandy Madden is senior VP-content development, Asia/Pacific at Thoughtful China, and Ad Age 's former Asia editor. See earlier episodes of Thoughtful China at www.thoughtfulchina.com.

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