Traditionally, “made in China” came with the understanding that the quality was low and that performance, particularly if the products were in tech markets, could not equal that of other countries, specifically the United States, Japan, and even South Korea.
This traditional thought is being upended now, and China is poised to takes its place as a producer of high quality, high-tech products and to move into highly competitive emerging markets.

There are three major thrusts that have moved China into this more competitive status, and they bear some discussion, because the truth is rather a “mixed bag.”

R&D Funding

China is poised to invest more in R&D than the U.S. by 2020. It is, in fact, taking on huge projects in nuclear energy, quantum physics, clean energy, nanotechnology, and water purification/de-salinization. Because it was largely unscathed by the global financial meltdown of 2008, China continued to grow its economy to become the 2nd largest one in the world, nipping at the heels of the United States. Because of its growth, it has been able to invest huge amounts in R&D, and the results are beginning to show.

The other reason for investing in larger and more high-quality technological innovations is that other smaller Asian countries are taking over the production of lower-quality, smaller tech products, especially Vietnam, Indonesia, Malaysia and Thailand.

“Borrowing” Technology

While funding for education and training of its best and brightest is a part of China’s overall plan to become a world technology leader, the government has devised other methods of more rapid growth by strictly controlling and supervising multinational corporations who are flocking to China to tap its huge market base. To do business in China, these companies are often forced to move their R&D facilities onto Chinese soil, where intellectual property rights are not wonderfully secure, and to partner with local companies in projects such as airlines, high speed rail, wind and solar energy, electric cars, etc. And in order to gain these partnerships and to get the projects, these multinationals are required to share their technology with their local partners.

One would think that these corporations would object and “go home.” Some do, but many more do not. They succumb to supervision and to sharing their technology because there are huge profits to be made and, if they do not comply, their competitors will. What these “foreign” companies must realize that these same Chinese companies with whom they partner now will soon become their biggest competitors in the world market.

Chinese Tech Companies that are Poised for Huge World Markets

Through acquisition of technology from foreign corporations, through its own investments in R&D, and through some smart purchasing, China is moving onto the high-quality, high-tech stage. Accordingly, the following companies are “on the move.”

1. Lenovo: This is the world’s largest PC producer, and it is buying up older technologies, such as IBM’s server business and the Motorola Smartphone. Why? Because it can also sell these products in emerging markets. In fact, Lenovo is now the 3rd largest seller of smartphones in the world, and it can use those profits to invest in higher quality technology.

2. Huawei: This maker of telecom network equipment has a huge market in Europe. Some countries, including the U.S., have not allowed purchasing of this equipment, however, because it is feared that there may be surveillance technologies embedded within. Nevertheless, the company is poised to grab a huge share of the marketplace in the near future.

3. Xiaomi: Smartphones and tablets that are reasonably priced allow Xiaoni to move into emerging markets, in both Asia and Latin America, and its prospects are quite solid.

4. Tencent Holdings: Some of its products are variations of U.S. — made apps, and are only selling in China for the time being. It also has an auction site that rivals e-Bay, and lots of smartphone apps. It is currently the 5th largest Internet-only corporation in the world and, should it decide to move beyond the borders of china, will be a major “force.”

5. Baidu: This is the Chinese equivalent of Google, with more than a billion users in China. Currently, it is expanding into Singapore, India, Australia, and Brazil

6. ZTE: This company makes the cheapest smart phones in the world, and is rapidly expanding its sales all over Asia and into other emerging markets around the globe. It also produces network equipment, along with handsets and software, but has also come under suspicion by the U.S.

7. Alibaba is China’s answer to Amazon, and it offers business-to-business, business-to-consumer, and consumer-to-consumer e-commerce. It has a U.S. channel and can certainly compete for a huge online consumer audience.

There is no doubt that China is becoming a major player in technology. To get to the point of rivaling that of the United States, however, will take a huge investment, but one which the government is more than willing to make. And where it does not yet have the expertise, it has certainly found ways to get it through continued pressure on multinationals that want a strong presence in the country.