China

Reverse Innovation

Reverse Innovation

Last week I wrote in a post that the cost advantages of engineering in China had dissipated to the point that the only remaining rationale was developing products in China for the local market. Local designers are much more likely to create innovative products tailored for the market with radically different value propositions that those found in the developed world. This is superior to the strategy of stripping down products that were developed for a more mature economy.

Engineering in China

Engineering in China

I had three interesting points of information on product development and engineering in China last week. My conclusion is that the strategy of shifting engineering work to China to reduce costs is no longer viable. At this point, the only reason for multinationals to create engineering centers in China is to develop products for the local market. The cost advantages are gone and the skills are marginal.