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Consumers tiring of cheap tech?

I've been watching some interesting changes in the global marketplace for hi-tech products.

Starting about 10 years ago, China started to become a powerful force in the consumer electronics and technology market. They started rolling out products at incredibly low prices -- so low in fact, that people were prepared to "take a punt" even though their expectation was that the quality would be low.

Despite a lot of really bad products in those early days, China has lifted its game and now delivers some very good gear, still at an impressively low price.

However, there are some changes in the wind.

I'll use the RC model and amateur "drone" marketplace as a small (but growing) market from which to cite some examples.

Back in "the old days", the technology for radio controlled models was expensive.

You'd pay "big bucks" for a "brand name" radio control system from a European or Japanese manufacturer and a lot of the time, these systems were "adequate" rather than mind-blowing in their performance and feature-sets.

Likewise, the airframe for a model was often something you had to build yourself from a box of balsa pieces or you paid through the nose for a semi pre-built model.

Then China appeared on the scene and, almost overnight, everything got a whole lot cheaper.

The equivalent of brand-name radio control equipment that had previously cost NZ$1000 or more was now available under the "Happy Dragon goodtime fly machine" or similar Sino brand for a quarter or fifth that price.

Sure, some of it was pretty questionable in terms of quality control but over time, the Chinese have largely sorted such issues and now the gear they sell is often every bit a match for the spendy-brands from Japan.

In the area of airframes, the Chinese, with their tireless armies of slave-labour, have done the same thing -- making a "ready built" version available for less than the cost of the materials you'd need to build your own from scratch.

Other electronics -- such as onboard video cameras, antennas and other stuff were also quickly mass-manufactured by the Chinese and sold at a price which was very, very affordable.

As a result of this flood of cheap stuff, many traditional Western manufacturers have had to significantly scale down their operations and some have even shut down completely.

Even in the retail area, local hobby shops have disappeared from many towns and cities -- enthusiasts preferring instead to simply shop online from uber-cheap online outlets which ship direct from mainland China or Hong Kong.

But now, something very interesting is happening...

In the past year or two, a number of Western-based companies have popped up and started selling in direct competition to the cheap Sino offerings. The most interesting thing of all is that these companies are not selling on price -- they're selling on the basis of *value* and quality.

An inexorable climb in the price of the Chinese products combined with the growing technical complexity of this stuff has meant two things:

Firstly, some of the Sino-tech is no longer "cheap". In fact, some of it is downright expensive!

Secondly, Westerners are increasingly becoming time-poor and have a growing appreciation of "turnkey" solutions and the amount of time/money such systems can save them over the long term.

As a result, a growing number of these "high value" startup companies are now thriving in the face of Sino-tech.

Each of them carves a new niche in a massive (and still growing) market -- especially when it comes to "drone" technology.

Sure, you can still save yourself some money (although not as much as you might think) by shopping around and buying cheap bits from multiple sources -- then trying to get them to work in concert to create the desired result; however the growing number of system integration companies that can ship you a box which gets you up and running in next to no time is growing.

One of the reasons these startups are growing so quickly is that, with only a few exceptions, they have a very happy and loyal customer-base.

It has really surprised me just how much of a premium some people are now prepared to pay in order to buy stuff that they know will work and has a high level of support and backup.

So here's an idea for all those NZ retailers who complain that they're losing sales to Chinese-based online retailers. How about you start delivering the added value that is clearly in such high-demand? Instead of simply slapping a massive markup on your wares and then bitching when people buy elsewhere -- why not offer them a *solution* that constitutes greater *value* than the direct-import alternative?

People may buy on "price" the first time -- but many of them learn a sobering lesson and when they do, they'll wake up to the importance of *value*. Those who sell "cheap stuff" will make just one sale to a customer. Those who sell on "value" will get the referrals and satisfied customers needed to create a long-term sustainable business.

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