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Chinese gadgets signal new era of innovation
DOW JONES
5 HOURS AGO
One dreams of making bathroom scales offering fitness advice. Another hopes to sell devices that track and analyze bat swings to players on Major League Baseball teams. A third wants to make bracelets for tracking missing children.
In laboratories and startups across China, tinkerers with big dreams are pushing what many in the industry see as a potential new wave of Chinese innovation. They see smart gadgets--wearables and other devices that connect to the Internet or interact with users--as an opportunity to create a Chinese-designed product for a global audience.
To get there, they are tapping China's massive electronics supply chain, which is building increasingly sophisticated products ranging from iPads to Xboxes. Proximity to that supply chain lets inventors tweak their pet projects at the factory itself, giving them greater control over the finished product.
"China will be one of the most advanced research-and-development centers for the new convergence between hardware and software, given it's the world's factory," said Annabelle Long, a director of venture capital for Bertelsmann Group.
The Bertelsmann fund has invested in a company called Zepp Labs, which makes a motion sensor that can be strapped to the end of a baseball bat. The company was formed by Robin Han, a student at Microsoft Corp.'s China engineering Ph.D. program, who was working on sensors for videogame controls but saw the potential to use them for real sports. The sensor can be attached to the end of a bat with a rubber mount. It tracks data like swing speed and arc to help coaches and players accurately tweak their technique. The sensors can also be used for tennis and golf.
The company, with offices in China and in Silicon Valley, said it has about 150,000 active users and is pushing to build a brand in the U.S. In 2013 Zepp said it raised $20 million, and it currently has teams of more than 20 employees in both China and the U.S.
In China, the company has "a team on the ground to develop and manufacture its products," said Jason Fass, Zepp's chief executive and a former Apple Inc. product manager. "Having that coverage has been enormously helpful."
China has long sought innovation as a way to develop a more sophisticated economy and to shrug off its reputation for succeeding by merely copycatting. But the new wave of gadget makers is attracting both foreign and local investors, drawn by the success of Chinese startups like its numerous mobile-app makers and smartphone maker Xiaomi Inc.
China is betting heavily on innovation as a way to help its economy develop beyond its traditional reliance on factories, exports and government spending. At a meeting of lawmakers in March, top Chinese economic planning officials called for development of a new generation of smart gadgets as part of a broader effort to emphasize cutting-edge technology. China has invested in areas to help that process, such as a pledge this year to spend 120 billion yuan (nearly $20 billion) over an unspecified period to build its nascent semiconductor industry.
Already some Chinese companies are showing greater ability to compete in relatively new areas such as smartphones. Lenovo Group Inc. and Xiaomi are making phones with competitive features and pricing and are pushing into overseas markets. Some analysts say they expect leading smartphone makers like Apple and Samsung Electronics Co. to begin ceding global market share to Chinese companies like Xiaomi and Lenovo.
By contrast, Lenovo launched its first personal computer in 1990 but didn't become an international competitor until it bought International Business Machine Corp.'s PC business 15 years later.
Jason Krikorian, an investor at venture-capital firm DCM and co-founder of Sling Media, said that the production expertise and growing quality of manufacturing in China is driving innovation in the country.
"Location is critical," he said. "That can absolutely serve as a benefit to the market and spur local innovation."
Zach Smith, a co-founder of a 3-D printer company that Stratasys Inc. purchased last year for $403 million, moved to the southern Chinese city of Shenzhen in 2012 to be closer to major manufacturers like Apple assembler Foxconn Technology Co. "Shenzhen is pretty much paradise for a maker/engineer-type geek like me," he said.
Chinese companies outside the hardware world are also exploring it. Search-engine and antivirus company Qihoo 360 Technology Co. has released a smartwatch for children, designed to track children's movement to address China's persistent child-kidnapping problem. The colorful watches also allow parents to communicate with their children and track the time they spend in different locations.
But success isn't always ensured. China is still grappling with rampant piracy, which can be a major challenge for a new company worried about losing its ideas.
"It's a great market, but how is the execution going to work?" said Wallen Mphepö, an entrepreneur who originally chose Beijing as the place to work on a pet project: wearable screens that allow clothes and shoes to change colors with a touch to a smartphone app. This year he shifted his R&D work to Lithuania to assuage potential venture-capital investors worried about idea theft, as well as for tax breaks.
"They understand the complexity of the Chinese market," said Mr. Mphepö, who kept much of the electronics work in Beijing.
Industry analysts say China still struggles to nurture its entrepreneurs. Capital can be hard to find in a country where the biggest banks tend to favor large state-owned companies, they say. Chinese corporate culture also isn't usually open to new ideas.
Some in China are trying to change that. Taiwan's Foxconn, which makes gadgets for Apple, Sony Corp. and many others in its Chinese factories, has set up a new platform called Kick2real to provide support for entrepreneurs looking to make wearable devices and mobile accessories. The site provides expert opinions on ideas for new hardware products before Foxconn eventually selects projects that it will help to manufacture.
In Zhongguancun, the northwest part of Beijing known as the home to many of China's new startups, the local government subsidizes one laboratory for gadgets called the Beijing Makerspace. On a recent visit, the laboratory was littered with 3-D printers, laser cutters and piles of circuit boards. A number of tinkerers were working on everything from screens that can be attached to shoes to sensors that track the movement of crowds in bars and clubs.
Its founder, Justin Wang, said a number of local officials became particularly gung ho about helping out after they visited the MIT Media Lab in the U.S. "They see there is cross-boundary, cross-disciplinary innovation from the grass roots," he said.
"They say 'OK, let's help you,' " he said. Mr. Wang said he plans to cooperate with the local government and Foxconn to create a small factory where aspiring hardware startups can build prototype products before they are sent elsewhere in China for mass production. The new space will feature a library of chips, sensors and material for their use.
Ken Xu, a partner at Chinese venture-capital firm Gobi Partners, said his firm began investing in hardware startups in China in 2012. In addition to investing in the Beijing laboratory, it has also bet on one company that creates small devices to monitor air quality in Chinese homes and a second that has made a smart scale that gives diet and exercise recommendations.
"People care a lot about their weight," he said. "They may not do a lot to change it, but they want to know it."
Domestically, a few companies have generated big buzz. One startup called Tomoon Technology announced plans to make a smartwatch last year after Samsung announced plans for its Galaxy Gear line of smartwatches. It featured an aluminum band and a screen that uses an e-ink screen to increase battery life
An ad for Tomoon went viral on Chinese social media. In 24 hours it got more than 28,000 preorders for the watch, which it sold for 499 yuan ($81), a discount from the Samsung watch's 2,499-yuan price tag in China.
The rush proved a challenge, as the company then had only about 30 employees, said Wang Wei, a Tomoon founder. Many of the orders melted away--out of a total of 70,000 preorders, only about one-tenth paid. Of that group, about 1,000 are still waiting for their watch.
Tomoon is undaunted. Mr. Wang said that the company is already at work on a second smartwatch, with an expected release date of September. The watch will monitor the wearer's health, and take steps like reminding the person to stand up after sitting for too long.
"I am sure that we can surpass the big international companies in innovation," he said.
Chinese gadgets signal new era of innovation | Business Spectator
DOW JONES
5 HOURS AGO
One dreams of making bathroom scales offering fitness advice. Another hopes to sell devices that track and analyze bat swings to players on Major League Baseball teams. A third wants to make bracelets for tracking missing children.
In laboratories and startups across China, tinkerers with big dreams are pushing what many in the industry see as a potential new wave of Chinese innovation. They see smart gadgets--wearables and other devices that connect to the Internet or interact with users--as an opportunity to create a Chinese-designed product for a global audience.
To get there, they are tapping China's massive electronics supply chain, which is building increasingly sophisticated products ranging from iPads to Xboxes. Proximity to that supply chain lets inventors tweak their pet projects at the factory itself, giving them greater control over the finished product.
"China will be one of the most advanced research-and-development centers for the new convergence between hardware and software, given it's the world's factory," said Annabelle Long, a director of venture capital for Bertelsmann Group.
The Bertelsmann fund has invested in a company called Zepp Labs, which makes a motion sensor that can be strapped to the end of a baseball bat. The company was formed by Robin Han, a student at Microsoft Corp.'s China engineering Ph.D. program, who was working on sensors for videogame controls but saw the potential to use them for real sports. The sensor can be attached to the end of a bat with a rubber mount. It tracks data like swing speed and arc to help coaches and players accurately tweak their technique. The sensors can also be used for tennis and golf.
The company, with offices in China and in Silicon Valley, said it has about 150,000 active users and is pushing to build a brand in the U.S. In 2013 Zepp said it raised $20 million, and it currently has teams of more than 20 employees in both China and the U.S.
In China, the company has "a team on the ground to develop and manufacture its products," said Jason Fass, Zepp's chief executive and a former Apple Inc. product manager. "Having that coverage has been enormously helpful."
China has long sought innovation as a way to develop a more sophisticated economy and to shrug off its reputation for succeeding by merely copycatting. But the new wave of gadget makers is attracting both foreign and local investors, drawn by the success of Chinese startups like its numerous mobile-app makers and smartphone maker Xiaomi Inc.
China is betting heavily on innovation as a way to help its economy develop beyond its traditional reliance on factories, exports and government spending. At a meeting of lawmakers in March, top Chinese economic planning officials called for development of a new generation of smart gadgets as part of a broader effort to emphasize cutting-edge technology. China has invested in areas to help that process, such as a pledge this year to spend 120 billion yuan (nearly $20 billion) over an unspecified period to build its nascent semiconductor industry.
Already some Chinese companies are showing greater ability to compete in relatively new areas such as smartphones. Lenovo Group Inc. and Xiaomi are making phones with competitive features and pricing and are pushing into overseas markets. Some analysts say they expect leading smartphone makers like Apple and Samsung Electronics Co. to begin ceding global market share to Chinese companies like Xiaomi and Lenovo.
By contrast, Lenovo launched its first personal computer in 1990 but didn't become an international competitor until it bought International Business Machine Corp.'s PC business 15 years later.
Jason Krikorian, an investor at venture-capital firm DCM and co-founder of Sling Media, said that the production expertise and growing quality of manufacturing in China is driving innovation in the country.
"Location is critical," he said. "That can absolutely serve as a benefit to the market and spur local innovation."
Zach Smith, a co-founder of a 3-D printer company that Stratasys Inc. purchased last year for $403 million, moved to the southern Chinese city of Shenzhen in 2012 to be closer to major manufacturers like Apple assembler Foxconn Technology Co. "Shenzhen is pretty much paradise for a maker/engineer-type geek like me," he said.
Chinese companies outside the hardware world are also exploring it. Search-engine and antivirus company Qihoo 360 Technology Co. has released a smartwatch for children, designed to track children's movement to address China's persistent child-kidnapping problem. The colorful watches also allow parents to communicate with their children and track the time they spend in different locations.
But success isn't always ensured. China is still grappling with rampant piracy, which can be a major challenge for a new company worried about losing its ideas.
"It's a great market, but how is the execution going to work?" said Wallen Mphepö, an entrepreneur who originally chose Beijing as the place to work on a pet project: wearable screens that allow clothes and shoes to change colors with a touch to a smartphone app. This year he shifted his R&D work to Lithuania to assuage potential venture-capital investors worried about idea theft, as well as for tax breaks.
"They understand the complexity of the Chinese market," said Mr. Mphepö, who kept much of the electronics work in Beijing.
Industry analysts say China still struggles to nurture its entrepreneurs. Capital can be hard to find in a country where the biggest banks tend to favor large state-owned companies, they say. Chinese corporate culture also isn't usually open to new ideas.
Some in China are trying to change that. Taiwan's Foxconn, which makes gadgets for Apple, Sony Corp. and many others in its Chinese factories, has set up a new platform called Kick2real to provide support for entrepreneurs looking to make wearable devices and mobile accessories. The site provides expert opinions on ideas for new hardware products before Foxconn eventually selects projects that it will help to manufacture.
In Zhongguancun, the northwest part of Beijing known as the home to many of China's new startups, the local government subsidizes one laboratory for gadgets called the Beijing Makerspace. On a recent visit, the laboratory was littered with 3-D printers, laser cutters and piles of circuit boards. A number of tinkerers were working on everything from screens that can be attached to shoes to sensors that track the movement of crowds in bars and clubs.
Its founder, Justin Wang, said a number of local officials became particularly gung ho about helping out after they visited the MIT Media Lab in the U.S. "They see there is cross-boundary, cross-disciplinary innovation from the grass roots," he said.
"They say 'OK, let's help you,' " he said. Mr. Wang said he plans to cooperate with the local government and Foxconn to create a small factory where aspiring hardware startups can build prototype products before they are sent elsewhere in China for mass production. The new space will feature a library of chips, sensors and material for their use.
Ken Xu, a partner at Chinese venture-capital firm Gobi Partners, said his firm began investing in hardware startups in China in 2012. In addition to investing in the Beijing laboratory, it has also bet on one company that creates small devices to monitor air quality in Chinese homes and a second that has made a smart scale that gives diet and exercise recommendations.
"People care a lot about their weight," he said. "They may not do a lot to change it, but they want to know it."
Domestically, a few companies have generated big buzz. One startup called Tomoon Technology announced plans to make a smartwatch last year after Samsung announced plans for its Galaxy Gear line of smartwatches. It featured an aluminum band and a screen that uses an e-ink screen to increase battery life
An ad for Tomoon went viral on Chinese social media. In 24 hours it got more than 28,000 preorders for the watch, which it sold for 499 yuan ($81), a discount from the Samsung watch's 2,499-yuan price tag in China.
The rush proved a challenge, as the company then had only about 30 employees, said Wang Wei, a Tomoon founder. Many of the orders melted away--out of a total of 70,000 preorders, only about one-tenth paid. Of that group, about 1,000 are still waiting for their watch.
Tomoon is undaunted. Mr. Wang said that the company is already at work on a second smartwatch, with an expected release date of September. The watch will monitor the wearer's health, and take steps like reminding the person to stand up after sitting for too long.
"I am sure that we can surpass the big international companies in innovation," he said.
Chinese gadgets signal new era of innovation | Business Spectator
