In 2012 Vijay Govindarajan and Chris Trimble published Reverse Innovation, a book about products designed for emerging markets that later found buyers in rich ones. Their best-known example was a portable ultrasound machine that GE developed in China for rural clinics that couldn’t afford the full-size version. A few years later it was being used at accident sites and in emergency rooms in the United States.
Innovation could flow uphill, in other words, but what flowed were cheaper and simpler versions of things the West already had. Most Western executives still think of China that way, as the place where things are made for less.
What comes out of China now is harder to spot, because it’s a way of winning customers and keeping them. Chinese brands are years ahead of their Western peers at it.
Start with something useful
Take coffee. Luckin launched in Beijing at the start of 2018 and asked its customers to order in the app before they arrived, then pick up their cup at the counter without queuing. Most of its stores are small pickup points built around that habit. Delivery and prepaid coffee packs sit on top of that convenience. By 2023 Luckin had more stores and higher sales in China than Starbucks.
People go back to Luckin because it’s the easiest way to get a coffee, and each service it adds gives them one more reason. We call this an engagement ecosystem. It’s the experience infrastructure underneath everything a customer does with a brand, and utility is what sets it off. The services can live in one app or in several, as long as each one is useful on its own.
Meituan applied the same logic at the scale of a platform. Western delivery apps mostly compete on speed and fees. Meituan began with group buying and food delivery, and it now rents out power banks and bikes and sells hotel stays and groceries. Each of those gives people a reason to open the app on a day they aren’t hungry.
The platforms do much of the work
Part of what makes this possible is that Chinese consumers spend their digital lives inside a handful of platforms. WeChat and Alipay are where people message friends and pay for almost everything, and inside them sit millions of mini-programs, small apps that open instantly and use the login and wallet the customer already has.
A Chinese brand can reach a new customer with a single scan of a QR code, on a café table or a power bank station. In the West the same brand usually needs an app download and a sign-up form first, and that’s where most customers give up. Douyin, the Chinese version of TikTok, brought content and checkout just as close together, and brands there sell on livestreams that run all day.
What travels to the West
Europe and the US have nothing quite like WeChat, so copying Chinese features one by one rarely works. The logic underneath travels much better. A retailer that asks what it could do for its customers between purchases can start building an engagement ecosystem with the tools it already has, whether that’s its own app, WhatsApp, Apple Wallet or its stores.
Culture matters as much as technology. Chinese consumers moved to mobile payments early and almost all at once, so they came to expect every service to work in a few taps. Live selling on Douyin leans on social proof in a way Western shoppers respond to differently. Adapting any of these ideas starts with understanding why it works in China, and the reason is often different from what it looks like from outside.
The head start won’t last
The Western retailers who adapt these ideas first will have a few good years before everyone else catches up. Every executive who visits Shanghai and sees how people shop there makes that window a little smaller.
The companies that gain most will treat what happens in China as intelligence to act on, and they’ll start now.
At Intel-led we find the Chinese ideas with the best chance of working in Western markets and work out how to adapt them. If you’re wondering which of them could grow your business, let’s talk.