Online Extra: Motorola's New Mission in China

China chief Michael Tatelman on how the handset maker is integrating the country's consumers and designers into its global strategy

A few years back, Motorola had its share of troubles in China. Local handset makers were coming on strong, and the U.S. company's market share was falling. At the time, Motorola (MOT ) did little design in China, figuring the market would do just fine with phones designed elsewhere. Big mistake. Since then, it has boosted its design presence in the mainland -- and clawed back some share from its Chinese rivals.

Motorola China chief Michael Tatelman sat down with BusinessWeek Asia Editor David Rocks recently to discuss the company's handset strategy in the mainland. Edited excerpts of their conversation follow:

Are Chinese consumers more influenced by design these days?

When you talk about design, you're talking about a digital experience, the physical experience, and the marketing picture of what it can be, all integrated together. It's more complicated than just, "isn't this phone beautiful." The winning combination is when you get all of these things lined up.

The Chinese market is very complicated. There's a replacement market of very sophisticated consumers, some of whom have owned several mobile devices. We're very strong there. In the lower-tier cities, the young people look at value, but they're also very individualistic. So we've put MP3 capability and ring tones in all of the phones at the low-end of our product line.

Is the RAZR that's sold in China different from those sold elsewhere?

It has software that's slightly customized for China Mobile -- just as we've got them customized for Verizon (VZ ), Cingular, or T-Mobile in the U.S. -- but the physical design is exactly the same. When everything comes together, when everything works, the local influence on the design creates a global hit.

So did Chinese designers have a hand in the RAZR?

Designers meet to decide on the portfolio they're going to present to the product-marketing organization. The design may originate in Boston or Toulouse or Beijing, but it gets prodded and tweaked and influenced by designers around the world. And then, at the end, there's a collaborative process that chooses what we're going to do on a global basis. And there are also local products.

When it all works -- and the RAZR would be a great example -- all that happens. You may have seen this advertisement [of a woman holding a RAZR phone that has just sheared off her necktie] on the street in NYC, but it was designed and shot in China by our team here. It's all part of the design, the image that we're doing for the devices. Then it evolves.

Do you obsess over the physical design of products for China as much as you do on, say, the RAZR?

We didn't, but we're starting to. Over the last couple of years, we've built up that part of the product line, and that will manifest itself this year and next. We'll have a value version of the sliver -- SLVR -- for well under 2,000 yuan ($250).

That's still a lot of money in a small city in China.

I've talked to my colleagues in the cosmetics industry, and you would be shocked what percent of her disposable income a 19-year-old girl spends on name-brand cosmetics. Many people in that economic group are influenced a lot by international brands.

Can you develop and release a phone on your own, or does someone have to vet the design?

We work with the global group very closely, and we review each design. Everyone can say whether they like it or not. Five years ago, we had some problems with the localized and globalized products. They weren't really consistent.

So do all the phones designed in China have a typical Motorola look?

We've got two or three design languages: We've got square and flat, like the RAZR. And the PEBL has a round silhouette. There are other products coming down the line that will look like that.

And then there are the stylus-based products. A lot of the pen-based design has to be functional. There are a lot of things you have to do to make these products look good and feel good and work well.

So that might drive you away from the basic design language in some cases?

Not entirely. There are the color and materials and finish and how we use them. There's the digital experience. We have big rules on how the screen comes up, the sounds. There are audio cues and visual cues. And mechanical cues. And in that, there's the design language.

Do you also adapt products designed elsewhere for the Chinese market?

You take a global platform and tweak it. We have a keypad for China that looks similar, but it has Chinese characters. And our team here will do what we call a "spin," changing the color or doing something small that may make the phone more applicable to the local market.

Our ability to take a product and, for a relatively small investment, make additional "looks" off of its platform is a big differentiator. It's an advantage to have multiple products. That's one of the ways you control manufacturing costs and a lot of other things from a supply-chain perspective.

What's happening with salaries for designers?

All costs are going up from a labor perspective in China because people are in demand. Things are growing like crazy. Designers are like artists. It's a part of our business where we want the superstars, and we'll pay for them.

Edited by Patricia O'Connell

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