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Demand for overseas goods creates potential

China will stage its largest annual political and legislative events - the "two sessions" - starting on March 3. China Daily takes a close look at a series of likely hot topics and catchphrases during the sessions.

Today's catchphrase - Supply-side reform: This profound change to China's economic map was underlined by the central government late last year with a series of policies to improve public service, environmental protection and production quality, and to further open up to the global economic system. China's economy needs a makeover, but instead of working on the demand-side, attention has turned to stimulating business through tax cuts, entrepreneurship and innovation, while phasing out excess capacity resulting from the previous stimulus. Such measures are intended to increase the supply of goods and services, consequently lowering prices and boosting consumption.

Chinese shoppers' predilection for overseas products, as evidenced by the numbers who buy daily necessities abroad during the Spring Festival break, signals huge opportunities for domestic companies endeavoring to make better-quality products.

The mainlanders on vacation in Japan spent billions of yuan on household goods such as toilet lids and rice cookers, as well as basic products such as shampoo and toothpaste.

Some people, such as Victor Chan, managing director of Daming United Rubber Products in Guangzhou, Guangdong province, blame the trend on Chinese people's blind worship of foreign commodities. He believes many products made on the Chinese mainland are now world-class, equal to any foreign competitor.

However, Cai Jun, a 28-year-old bank clerk in Beijing, thinks differently. She spent Chinese New Year in Tokyo, where she picked up a rice cooker, an item that is available in any Chinese supermarket.

"The rice cooker I bought enjoys a good reputation in China. Many of my friends told me Japanese rice cookers have a special technology," she said.

Wang Qing, who visits Japan each year to buy everyday products, traveled to Kyoto for Spring Festival. "I'm not crazy about foreign brands," she said, "but the quality of many Chinese products means they are just not worth the price. Also, toothpaste made in Japan is double or triple the price in a Chinese supermarket."

Her shopping list this year also included daily necessities that can be commonly found in most Chinese stores, including thermoflasks, blood pressure monitors, skin cream, multivitamins and breakfast cereal. "I stock up on necessities on my annual trip to Japan," Wang added. "It means I don't have to worry about product quality, while the price difference saves me the cost of a round-trip ticket."

Opportunity

Many Chinese hold a similar attitude, a fact that has hit small and medium-sized Chinese companies that have struggled to meet the growing demand for high-quality products. Yet this demand has also generated niche markets for Chinese enterprises that value customer experience and have built their reputations with trailblazing designs and products.

Daming United Rubber manufactures Aoni condoms, recognized as the world's thinnest prophylactic, and Chan said his company has strict production regulations to ensure quality.

"Our standards reach the national level or even the international level," he said, adding that to meet growing demand in the mainland market, the company is preparing to build a second production facility in Hong Kong to increase output. Last year, Daming produced more than 200 million condoms.

For other innovation-oriented companies in China, the desire among domestic consumers for high-quality goods is an opportunity to turn their cutting-edge technologies into popular products.

Technology company Hongda Hi-tech Group in Changchun, capital of Jilin province, for example, has developed a wide range of fingerprint-activated locks. One product can store and recognize 99 different sets of fingerprints and has a service life of more than three years.

"Our locks can quickly determine whether two friction ridge impressions are likely to have originated from the same individual," said Wang Xin, the company's chairman. "Leading research in fingerprint sensors has given us an unrivaled edge over our competitors."

The company's locks are now widely used in high-end hotels, residential neighborhoods and government offices throughout China, as well as exported to more than 30 countries and regions, including the United States, India, Brazil and Germany.

The key to Hongda's success lies in its years of research and development in the fingerprint identification technology, which it began in 1996.

"We believe the growing appetite for better quality products will give Hongda a push," Wang Xin said.

Contact the writers through zhengxin@chinadaily.com.cn

(China Daily 02/29/2016 page3)