Key to top Asian tech firms' success: Innovation, knowing their customers

Korean consumer electronics giant Samsung grabbed headlines earlier this week when it unveiled a prototype bendable television at the Consumer Electronics Show (CES) in Las Vegas. The 85-inch bendable TV switches between a flat panel and a curved screen at the touch of a button.

Less gimmicky but also unique was a new product unveiled at CES by Chinese PC giant Lenovo. The new multimedia home PC has a 19.5-inch screen which can fold into a big tablet.

The innovation shown by these two tech giants has propelled them to the top tier of Asian brands, edging out household names such as Sony and Panasonic, said Mr Bryan Wang, vice-president and China country manager of research firm Forrester.

Innovation is only one key to their success. Knowing what their customers want is equally critical, said Beijing-based Mr Wang.

Samsung, which makes semiconductors, refrigerators, TVs, as well as industrial equipment, has been a global player for 30 years.

"Everywhere you go, you meet Korean executives from Samsung. They embed themselves in local markets to learn the needs of local customers," he said.

In Lenovo's case, its acquisition of IBM's PC unit in 2004 for US$1.25 billion (S$1.59 billion) gave it the global credibility it lacked. Prior to that, it was a traditional PC maker strong in China, trying to make waves overseas.

But Lenovo did not rest on its laurels. In the last four to five years, it has moved away from PCs to embrace the post-PC era of smartphones and tablets. While leapfrogging Hewlett-Packard and Dell as the world's No. 1 PC maker, it has also focused on mobile devices with good success.

In the second quarter ending Sept 30, 2013, Lenovo sold more smartphones and tablets than PCs for the second quarter in a row.

Revenue in that quarter from this segment, which also includes smart TVs, was 15 per cent of total revenues of US$9.8 billion, up from 8 per cent 12 months ago.

Mr Wang said: "This strategic move is critical. Look at Taiwanese PC maker Acer. Founded in 1976, it was among the top PC makers in the world.

"While Lenovo focused on making PCs of higher quality and design and expanded into smartphones and tablets, Acer was slow to catch on to these new trends.

"Now it is in trouble, it had to recall its founder Stan Shih out of retirement to steer the company."

Chinese firms such as Huawei would do well to learn from these two companies. While Huawei has installed more than 60 4G or Long Term Evolution networks globally, it has not done well in enterprise tech or the smartphone business, said Mr Wang.

"For mobile networks, you talk to phone companies, there aren't many of them but there are billions of consumers. They need to learn what they need. I think Huawei needs another three to five years before they learn how to do business globally," he added.

But the dark horse on the horizon with the potential to nudge out Samsung and Lenovo is Chinese phone maker Xiaomi.

Only four years old with a valuation in the billions, its success is in selling phones with the same specifications as Apple and Samsung but at almost half the price.

Industry insiders say Xiaomi sells phones almost at cost to consumers but makes money selling apps, games and online services.

It is also customer-centric, inviting feedback from users on what features to add. Xiaomi clearly wants to expand outside of Asia with the hiring of ex-Googler Hugo Barra to oversee global sales.

In Singapore, it already has a Facebook page to announce that it will be available here shortly.

But can Xiaomi thrive abroad?

To succeed Chinese firms must adapt themselves to local markets, language and culture, Ms Lydia Lei Lee, China chief strategist of public relations firm Weber Shandwick, said. "Not all that works in China will work overseas. They should also learn how to communicate to different stakeholders. In China it may be sufficient to talk to the government.

"But overseas they may have to communicate with unions, industry groups and non-governmental groups on their business plans so that they are better understood."

Whether a bendable TV will succeed is debatable. What is crucial is that constant innovation, speed to market and understanding customer needs are paramount to Asian companies becoming global brands.

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