Chan

That, at least, was the advice coming from some manufacturers and industrial designers at a Hong Kong forum on reinvigorating the sagging manufacturing industries in the Pearl River Delta (PRD), the heavily industrialized area around Hong Kong sometimes dubbed the “workshop of the world.”

It’s a hot topic in manufacturing circles in China these days -- how to cope with exports that dropped, for example, 26 percent in May. It is a challenge for a region that has grown strong specializing in making the world’s IPods, TVs and microwave ovens, but now has seen thousands of factories close as demand has dropped and firms wonder how to change

“The majority of the PRD makes ‘Me Too’ products and its ability to add value is poor,” said Victor Lo, chairman of Hong Kong-based battery maker Gold Peak Industries (Holdings) Ltd. and chairman of the Hong Kong Design Centre, which sponsored the June 17 forum. “Even before the financial crisis started, China had too much manufacturing capacity.”

Lo estimated that China right now has overcapacity in manufacturing of 30 to 40 percent. Before the financial crisis started in mid-2008, he said overcapacity was closer to 15 percent, and it’s accelerated as the world economy has slowed.

“The pressure is just enormous,” said Lo, adding that manufacturers should not simply wait for things to pick up in a rebound. “It means 25 percent of the capacity should be shut down for good.”

The changing global manufacturing situation can mean opportunities, however, one speaker said.

Eric Chan, a native of China’s Guangdong province and now president of industrial design firm Ecco Design Inc. in New York, said Chinese firms should think less about the export model of mega-factories, and instead put more attention to developing niche products and taking advantage of the Internet to open sales channels.

He said the popularity of the IPhone and similar technologies shows there is a lot of untapped demand, for example, for handheld electronic devices for all kinds of uses, especially in health care and education.

“There is a lot of unfulfilled desire out there, many people are not satisfied with the ‘mediocre, everybody enjoys product,’ ” he said. “The niche product could be very environmentally sensitive, and the manufacturing process could be relatively unique. 
 That niche market used to be very difficult, but now it is natural.”

He said China should look more to its own culture for ideas, echoing comments from some other Chinese designers speaking at the forum. Chan said China’s focus on becoming the “world’s factory” for the last 20 years has built the country but in some ways suppressed local culture.

“We have been losing that consciousness for the last 20 years,” he said. “It is all imported culture. It is not natural for the Chinese.”

He suggested the changing manufacturing picture brings opportunities to new players, even if it’s not clear if China is necessarily ready to take advantage.

“We know what happened to the car industry [in the United States],” he said. “Does it mean we can do a better car here? We don’t know, but definitely there is big trouble in the big car companies.”

One Hong Kong industrial designer who set up a studio in the Chinese city of Shenzhen last year said there is more interest in design among Chinese firms, but said most of the companies in the PRD are still very oriented toward making things for other companies and not developing their own products.

“It is very difficult for them to understand why they need design,” said Alan Yip, director of Yip Design Ltd.

A recent study of industrial design among about 250 PRD manufacturing firms said that while most consider design important, they don’t give enough weight to the decisions of industrial designers, and too often only consider design a visual skill, rather than integrating it into product development.

“A lot of companies in the PRD and the [Yangtze River Delta] think about brands as a visual image, not the bundle of qualities involved in being a brand,” said John Heskett, professor of design at Hong Kong Polytechnic University, who is completing the study of Chinese manufacturers and design.

Some, like Guangzhou Echom Science and Technology Group Co. Ltd., do put a lot of emphasis on design, however, he said.

Echom, which makes TV components and plastic auto parts, found that design is important in improving its profit margins because it produces better quality goods that do not have to compete so much on price, Heskett said.