Design Investment vs Cheap Chinese Knockoffs: an emerging struggle

Comment by Patrick Avenell

There are two ways to make a new product. The first is from scratch, with designers and engineers collaborating to create something new, different and attractive. Something that fills a void in the market. Something that retailers can sell.

The second way is to take an existing product, board a flight to China, visit one of thousands of factories, and ask the locals to replicate it, but with cheaper material, so it can be sold for a fraction of the price.

So, steel ball bearings are replaced by reinforced plastic, flimsy motors are installed, and the intuitive safety devices are removed altogether. You then leave China with a cheap product you can flood the market with. Consumers’ expectations about how much they should pay for such a product will inevitably drop, so that a category that was once vibrant and profitable becomes a cesspool of cheap products, extinct margin and countless returns.

Although the first way to make a product is surely better for the industry as a whole, it is the second method that is becoming more and more prevalent. That’s why it was so refreshing to see so many appliance manufacturers at the 2010 Australian International Design Awards. Appliances compete in the open consumer category at these awards – up against strollers, bassinettes and watches – but they still dominate: securing 29 of the 36 consumer finalist positions.

At the awards ceremony, which was held in Sydney in June, the message to all industries, not just appliances and consumer electronics, was clear: only by encouraging and embracing new designs and new technologies can industries continue to evolve and to find new profit avenues.

At the forefront of this message is Dyson managing director for South East Asia, Ross Cameron. Dyson is a major sponsor of the awards, specifically the student category, as Sir James’ mission has always been to energise and reimagine product categories, rather than simply produce facsimile products.

The most recent example of this was the Air Multiplier. Whereas those getting down and dirty with their $20 fans ready to hit shelves in September are not contributing anything positive to the category, Dyson released a desktop fan that sells for just shy of $400. Naturally, a lot more money has been poured into the development this product, but there will always be a lot more margin in a more expensive product, so those revenues will continue to fund further developments.

The Air Multiplier picked up one of nine awards for design excellence in the consumer category at the gala ceremony. Also honoured in the appliance industry were De’Longhi and Nespresso for their Citiz espresso machines, Breville for its Smart Grill, Emotiv Systems for a new-age gaming headset, Kenwood for its kMix Strand Mixer, and Samford IXL and Neff for their oven with a retractable slide door.

Well done to these brands for investing in research and development. To those companies that chose to slash development budgets, channelling the funds into fleeting facsimile products instead, the Design Award had nothing for them.

Ultimately, the appliance categories missed out when the major award – for best design in any industry – was revealed. That honour went to a groundbreaking new model in hospital and surgery bedding designed in New Zealand. Still, the exposure and recognition for the brands that did win the category awards, and for the companies that were finalists, such as Electrolux, Everdure, Miele and Smeg, was significant.

These brands have made it clear that their focus is on creating new products with new technology for new consumers. These are the products that increase floor traffic, generate excitement and drive spending in retail stores. The more retailers support these products, with floor staff actively selling the $400 fan instead of the $20 model, the more this industry will thrive.

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