"The cost innovation challenge presented by Chinese companies is disruptive because it strikes at the heart of what makes many businesses in high-cost countries profitable today. It threatens their ability to earn high margins on high technology. It undermines their ability to extract a price premium by offering customers more product variety and greater customization. And it means that even if they use their specialist knowledge to move upmarket into niche segments-above the fray of low-cost competition in the mass market-they risk being blown away as the Chinese explode these niches into volume business.