Monday, August 04, 2008

Chinese entrepreneur dreams of a global brand

By Associated Press

BEIJING (AP) _ His company's gadgets are barely known abroad. But Aigo CEO Feng Jun, a boyishly exuberant walking advertisement for the fast-growing Chinese electronics maker, is out to change that.

Seconds after meeting a reporter at a business conference, the burly, baby-faced 39-year-old whips an Aigo computer memory card out of his wallet and throws it to the floor to show its durability. He plucks an Aigo digital camera off his belt and snaps pictures. Then he plays back the conversation on his MP3-equipped watch, also from Aigo.

"We want to be another Samsung, another Sony," said Feng, who started the company in 1993 with $26 from his mother.

Feng is a prominent member of a wave of entrepreneurs striving to break with China's status as a cheap, anonymous factory and join the global elite of consumer brands that create profitable technology. They are a key element of the national image that China's leaders hope the upcoming Beijing Olympics will showcase to the world: bold, creative, high-tech and international.

More importantly, the shift is a step that economists say China must make if it is to move up the economic ladder and continue its rapid growth.

It is too soon to know which, if any, of China's would-be global brands will succeed, said Stefan Albrecht, a McKinsey & Co. senior partner in Beijing.

Most successful so far is Lenovo Group Ltd., the world's No. 4 computer maker following its 2005 purchase of IBM Corp.'s PC unit. Other aspirants include appliance maker Haier Group and TV set manufacturer TCL Group, which owns the Thomson and RCA brands.

China's advantage is still low costs, not creativity, Albrecht said. But he said the Chinese brands that succeed should climb the ranks faster than their Japanese or Korean predecessors, because Chinese companies adopt new products or strategies more quickly and are willing to expand by acquiring established foreign outfits.

"For some Chinese companies, you could argue they need only five to 15 years to develop a global brand," Albrecht said.

Feng is candid about Aigo's daunting challenge in persuading foreign customers to pay brand-name prices for made-in-China goods.

"Perhaps consumers all over the world will think China is all low-end. But we want to be the high-end," he said in an interview at Aigo's headquarters in Beijing's Haidian district, the base for Lenovo and other technology companies. "To change that view is very difficult, but we have no choice."

The aspiring gadget king wants to use the Olympics to boost Aigo's brand abroad, marketing translation devices for visitors. In Europe, Feng is trying to raise Aigo's profile by paying to display its name on the McLaren Formula One team race cars.

Feng represents the second generation of Chinese technology entrepreneurs.

In the 1990s, foreign-trained scientists came home from the United States, Australia and elsewhere to found Web sites and other companies.

In contrast to their science backgrounds, Feng studied civil engineering -- the classic grounding for earlier generations of communist technocrats -- at Beijing's Tsinghua University, the alma mater of President Hu Jintao. He then got a master's in business administration from Peking University. He has never lived anywhere but the Chinese capital, though he is studying English and says he might like to go to Harvard.

Such homegrown success stories are beginning to emerge as China's fast-developing economy and education system start to offer the training and experience that technology entrepreneurs once could get only abroad.

Feng worked for a government construction company before he quit to start Aigo -- known in Mandarin as Aiguozhe, for "Patriot" -- in a cramped apartment to sell keyboards to China's infant computer industry.

He made his name not as an inventor but as a hard-driving salesman. A biography published last year, "Patriot: Feng Jun" by Huang Qiuli, dubbed him "Five-Yuan Feng" for his willingness in his lean years to slash the profit margin on a keyboard or computer housing to five yuan (85 U.S. cents at that time) to close a sale.

Aigo took off in the mid-'90s when it started making portable computer memory devices. Today, it is China's biggest producer of them, including the credit card-size 30-gigabyte unit in Feng's wallet. Aigo has expanded the range of products sold in its orange-and-white packaging to include digital cameras, MP3s, portable media players and a digital microscope. Its 1,700-member work force includes 700 people in product development.

Revenue is growing 60 to 70 percent a year, with 80 percent of profits plowed back into research, Feng said. He declined to give figures but BDA China Ltd., a Beijing research firm, says Aigo's 2006 revenue was 2 billion yuan ($290 million).

Aigo's growth has made Feng a star in the Chinese business press. The World Economic Forum, known for its annual Davos conference, named him the only Chinese member on its list of Young Global Leaders.

Still, Feng's company faces the same handicap as other aspiring Chinese brands: it has yet to develop a unique, must-have product -- its equivalent of an iPod -- with fat profit margins. That leaves Aigo vulnerable to pressure from other low-cost competitors.

Despite his boyish energy, Feng dresses in the standard Chinese executive's blue suit and talks the MBA talk of corporate strategy. His management ideology, dubbed "Six Win," stresses to employees that Aigo cannot succeed unless its partners and customers do too. Feng refers to such mutual benefit as "1 + 1 11."

To stay in touch with consumers, Feng requires his executives to spend one day a month working the complaints counter at an Aigo service center. Product development specialists put in time as salespeople.

Feng's latest attempt at a signature product is the Aigopen, a gadget that reads aloud when pointed at specially printed books or maps. Beijing's imperial palace has ordered them to use with its exhibits. Aigo also sells an Aigopen-equipped Olympics Encyclopedia.

Feng opened a European office in France last year, followed this year by its first U.S. office in San Francisco. He put off expanding into the United States until Aigo could set up service centers, which he says is key to a premium brand. Feng said that for now, Aigo has no plans for foreign acquisitions.

"We want to do the Europe market last year and this year," he said. "Next year will be the United States. Step by step."

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On the Net:

http://www.aigo.com