CES: China's debut on the main stage

2 hrs.

Devin Coldewey , NBC News

This year at CES, two names largely unknown to consumers made a sort of public debut. Huawei and Hisense, Chinese manufacturers that have for a long time focused on making devices for other companies or on the Chinese mainland market, have decided that they want to be the next Samsung or Sony. It's not as audacious as it sounds.

Many countries in East Asia figure prominently in electronics, of course, and have for decades. Precision Japanese engineering made itself felt in home audio and TV sets as far back as the 1950s ? Yamaha, Denon?and of course, Sony competed fiercely for decades with American brands like RCA Victor and Zenith. More recently, it's Korean companies like LG and Samsung that have been expanding their reach.

But China was also always there, albeit in the background. While they manufactured billions of items, from electronics to textiles and toys, the only hint you had that it was made in China was a sticker saying so on the bottom.

With China's growing presence on the global stage and a new capacity for high-quality manufacturing, that's set to change, and companies like Huawei and Hisense, formerly content to play bit parts, are looking to get a bit more front and center.

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At CES in the past, most Chinese-branded devices were relegated to the International Pavilion, a sort of cordoned-off area stuffed full of cable makers, tchotchkes?and copycat devices?? much like what you might find in a real Asian electronics manufacturing?district. But in the last few years, brands known in China have been inching onto the show floor proper. And this year, Huawei and Hisense, finally even scheduled press conferences.

Like all CES press conferences, Huawei's was a bit stilted. But the message was clear: We're big and we're here.

"We're the second biggest telecoms supplier in the world,"?Richard Yu, Huawei's chief device strategy & marketing officer, explained on stage Monday. "We are using more advanced manufacturing technology than the iPhone." And indeed, the Huawei-branded devices being announced felt as solid and original as any high-end phone?? not the plasticky,?budget-rate stuff people have associated for years with Chinese products.

Shao Yang, the company's chief marketing officer, explained in an interview that Huawei decided only recently to really take on the global market:?"In the past we have focused on infrastructure?? and we've been quite successful." But the success of Apple and others changed the game, and Huawi's partners (Chinese telecoms operators) begged them to make not the "cheap and similar" phones of the past,?but something new and powerful.

This led to lessening the number of phones the company?manufactures, from nearly 150 in 2010 to just 23 now. By focusing on more recognizable and higher-quality?phones (but still variety?? "People like to use a different phone from others," Yang said), Huawei thinks it?can compete head-on with giants like Apple or Samsung.

Hisense is also is on the main show floor for the first time. The company's decision to pursue its own brand and go global with it has met with great success. More than half the products it sells internationally are now Hisense-branded, instead of being rebadged by other companies?? up from just 10 percent a few years ago.

At its Monday press conference (another CES first for Hisense), execs described how they're going from a local white-label manufacturer to global brand of their own.

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To see why big manufacturers were beginning to enter the consumer market, I talked with Ross Rubin, founder of analytics firm Reticle Research.

"it continues a pattern we've seen many times in the industry, of companies moving from OEM (original equipment manufacturer) to consumer brands," he said. "HTC was another good example, even Samsung many years ago.?More of the value that consumers place on devices is in the operating system."

Rubin pointed to prepaid carriers like US Cellular and Virgin Mobile as big opportunities for companies like Huawei.?

"Android's maturity and support for a wide range of components allow a lower bill of materials," he explained, meaning cheaper phones and no need for subsidy by carriers?? which means monthly bills can be lower as well.?

Of course, a few years ago,?the last big push from Chinese manufacturers didn't really pan out: Netbooks. Companies like MSI and Asus, previously known for making computer components, turned out these cheap devices by the millions?? and while people snapped them up initially, the momentum ran out and these days they're hardly being made at all. Could the same thing happen to this new generation of phone manufacturers?

When I asked Huawei's Shao Yang about this, and who would be its?biggest competition, he demurred: "The industry is quite crowded, but our biggest competition has to be ourselves.?If we focus on the iPhone or Galaxy or HTC, it will lead us the wrong way." It's hard to argue with the wisdom of self-reliance, and indeed this decision to strike out on their own does seem to have led to success so far.

Other Chinese brands???ZTE, BenQ and many more?? continue to make their own push, be it in displays, phones?or cameras. But the emergence of China not just as a great place to have your gadgets built, but as a serious competitor in software and design is only beginning.

The end result can only be good for consumers, as competition in the tech industry tends to breed research and innovation???not to mention lower prices. It may not be long before your high-end devices aren't just made in China?? they'll be conceived there as well.

Devin Coldewey is a contributing writer for NBC News Digital. His personal website is coldewey.cc.

Source: http://www.nbcnews.com/technology/technolog/ces-chinas-debut-main-stage-1B7819459

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