China Design

Sony had a problem in China: The company was seen by many young Chinese as Daddy's brand. So in August the company opened a design center in Shanghai. The three designers there quickly set about trying to understand the lives of young Chinese, giving 50 of them digital cameras and asking them to document their daily lives in photographs. By September the designers had tacked dozens of the pictures -- people in their bedrooms, hanging out with friends, playing basketball -- onto the wall and divided the group into seven categories, such as "Cheerful Next Generation" and "Try Hard for Life." Then the team set out to design a line of MP3 players that would appeal to the trendsetters in these groups. The devices, in muted colors with a smooth river-rock-like appearance, are scheduled to hit the market in China early next year. "If we understand [young Chinese], we can design better products for them," says Katsumi Yamatogi, the veteran Sony Corp. (SNE ) designer who heads the studio in Shanghai's trendy Xintiandi district.

There's a lot of that going on in China these days. As Chinese companies seek to build global brands and foreigners aim to boost sales in the mainland, they're transforming the country's design business. Chinese manufacturers realize they need better products if they want to break out of China and beef up their margins on sales abroad. And foreign companies such as Sony are starting to see that as Chinese consumers get more discriminating, they're no longer content with the tired, designed-somewhere-else models that many overseas-based marketers once sold in China.