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Industrial Design Consultancy (IDC) is a UK-based product design and development company operating across the medical, consumer, industrial and transport sectors. At the start of 2008, its managing director Stephen Knowles visited China with a view to setting up an office there. After meeting Creative Connexions deputy director Ken Grant in Hong Kong, it became clear that IDC’s China market entry plan could benefit substantially from the type of strategic market analysis Creative Connexions can provide.
‘We wanted some market research and we needed help to define our strategy to enter the Chinese market. After speaking to Ken I realised that they could help with
the whole process,’ says Knowles.
From April to August 2008, Creative Connexions undertook an in-depth quantitative and qualitative study of Chinese manufacturing companies - the potential clients for IDC’s design and development services. The research started with a broad look at manufacturers across eight different industries, examining things like company profitability, performance and potential. The focus was then narrowed to four industries of particular relevance to IDC, including a look at 19 sub-sectors within these industries. A geographical mapping of these industries showed how ‘clusters’ of related industries have gathered in certain locations like ‘communities’, says Creative Connexions business development manager Yifei Dai. ‘We worked out which industry is located in each cluster and we looked inside these clusters to see exactly which potential clients and competitor companies are in there. One, for example, had over 200 design businesses - obviously a consideration for IDC on whether to set up there,’ she says. At this point, the analysis became deeper and richer, with each cluster being mapped and prioritised for IDC. This included an assessment of which clusters were growing fastest, their expenditure on new product development, which were willing to pay for design services and which viewed design and intellectual property as a high value investment, rather than a cost. Growth forecasts were produced for the different clusters, showing business performance for the three previous years, as well as predictions for the coming six years. Creative Connexions also gathered expert opinion on the different manufacturing segments by talking to key people and organisations in China, including manufacturers, manufacturing associations, policy makers, business consultants, CEOs and designers. Combining this with the data-driven research, IDC was equipped with a very strong strategic analysis on how and where to move into China - something the company would not have been able to achieve alone.
One the key objectives of the research was to identify which of IDC’s industry segments - medical, consumer, industrial and transport - were the most attractive for investment. Creative Connexions’ analysis made it possible for IDC to make an evidence-based judgement of which sectors were growing fastest and which had the least competition. From this, the medical sector was identified as providing the most potential for investment, partly because of Chinese government expenditure on healthcare and also because healthcare equipment manufacture is seen as a relatively safe investment during a recession. Establishing the medical industry as a focus now helps IDC to decide exactly where in China to set up a business office, to build on its existing Hong Kong sales office: a base near the manufacturing cluster that serves the medical equipment industry will be more efficient. ‘Using Creative Connexions’ research has given us confidence in our strategy and allowed us to focus resources efficiently on key areas and activities,’ says Knowles. ‘It has also prevented us from making some mistakes which would have cost time and money.’
The research undertaken for IDC was complex, detailed and bespoke. Significantly, it drew on data sources that are not available in the public domain. This enabled the company to build a rich picture of the spread, composition and performance of the industry sectors that are most relevant to its business. If your business is thinking about entering the Chinese or Indian markets, this type of knowledge could prove invaluable, saving time and money in strategic planning. It would ensure that decisions to enter either market are made with the best possible information, in the quickest time and with reduced risk. As well as this, Creative Connexions can facilitate networking and profile-building opportunities and can provide consultancy on branding your business in China or India.
‘The process was worthwhile and very professional,’ adds Knowles. ‘Creative Connexions were on hand to answer any queries and also helped us to network, introducing us to connections which have
been very helpful too.’