IN­DUS­TRY Wanda’s savvy ac­qui­si­tions need name

Company should fo­cus more on brand build­ing in over­seas mar­kets

China Daily (Canada) - - BUSINESS -

Plan­ning per­mis­sion has now been granted for one of London’s most am­bi­tious and au­da­cious con­struc­tion projects, the One Nine Elms plan fi­nanced to the tune of 400 mil­lion pounds ($625.6 mil­lion) by the ev­er­ac­quis­i­tive Dalian Wanda Group.

This de­vel­op­ment, the first to be built by Dalian Wanda in the United King­dom, will see the con­struc­tion of two tow­ers, mea­sur­ing 200 me­ters and 160 me­ters.

Th­ese will in­clude 439 pri­vate res­i­den­tial units, 52 af­ford­able homes and a 187-room, five-star ho­tel.

But it is not just this cur­rent Euro­pean ex­pan­sion, at a time of con­tin­u­ing aus­ter­ity mea­sures in the UK and across most of Europe, that is most re­mark­able. It is the sheer size and scale of the group’s ex­pan­sion plans in the next few years alone.

Dalian Wanda, headed by China’s fourthrich­est man, Wang Jian­lin, with a net worth of $13.2 bil­lion ac­cord­ing to Forbes mag­a­zine, has di­ver­si­fied suc­cess­fully in re­cent years and now boasts a port­fo­lio of com­pa­nies with ac­tiv­i­ties in real es­tate, tourism, ho­tels and en­ter­tain­ment.

Wang has stated pub­licly that ex­pan­sion into the UK, which will by no means be re­stricted to London, will con­trib­ute sig­nif­i­cantly to the group’s aim to be­come a $100 bil­lion company by 2020.

But is this blind, reck­less am­bi­tion with­out any clear, co­gent strat­egy? It is not. It also has noth­ing to do with any ego­tis­ti­cal lead­er­ship.

In­stead, Dalian Wanda is part of a new breed of Chi­nese com­pa­nies that are plot­ting a path to global ex­pan­sion, and in so do­ing in­vest­ing sub­stan­tially in a lack­lus­ter Euro­pean econ­omy.

Ev­i­dence of Wang’s cal­cu­lated and crafted ex­pan­sion strat­egy can be found in re­cent takeovers. Last year, for ex­am­ple, Wang paid 320 mil­lion pounds for the highly pres­ti­gious UK lux­ury yacht builder Sun­seeker, and the year be­fore he forked out a cool $2.6 bil­lion for the United States-based cin­ema chain AMC. The AMC ac­qui­si­tion re­mains the big­gest takeover of a US firm by a Chi­nese or­ga­ni­za­tion.

Fur­ther ev­i­dence of Wang’s and Wanda’s am­bi­tions can be found with just a cur­sory com­par­i­son be­tween the cur­rent company val­u­a­tion, $30 bil­lion, and the 2020 goal, $100 bil­lion.

But most in­ter­est­ing and por­ten­tous about Wanda’s ac­quis­i­tive ex­pan­sion ac­tiv­ity is the clear in­ten­tion to pur­sue growth via in­ter­na­tional mar­kets only. Fur­ther, Wanda’s spot­light ap­pears fo­cused mainly on the most de­vel­oped coun­tries and ci­ties.

Ex­ist­ing com­mit­ments in­clude plans in London, Madrid, Chicago and Los An­ge­les, but re­cent rhetoric from Wang sug­gests that an even broader in­ter­na­tional base will be es­tab­lished and very soon.

Once again be­neath th­ese ap­par­ently over-am­bi­tious aims lies an ex­tremely well thought-out strat­egy. Wang main­tains that the grow­ing num­ber of wealthy Chi­nese with an eye for in­vest­ment and prop­erty over­seas in the most fash­ion­able Euro­pean and US ci­ties lies at the heart of Wanda’s in­ter­na­tional ex­pan­sion plans. What bet­ter than a Chi­nese prop­erty company to en­sure that wealthy Chi­nese buy­ers re­ceive the most suit­able deal and ser­vice across in­ter­na­tional mar­kets?

At a time when the Chi­nese econ­omy con­tin­ues to slow down, over­seas ex­pan­sion makes a lot of sense, but even more so when the most fash­ion­able global ci­ties are con­cerned. Wang is com­mit­ted to es­tab­lish­ing Wanda in each of the 10 largest ci­ties in the world over the next decade.

In or­der to fi­nance this breathtaking ex­pan­sion, Wang now has plans to raise a pro­posed $3.9 bil­lion from an ini­tial pub­lic of­fer­ing of shares of Dalian Wanda Com­mer­cial Prop­er­ties Co Ltd.

Fur­ther support for Wang and Wanda’s ex­pan­sion plans came re­cently from cred­i­trat­ings firm Fitch Rat­ings. In Novem­ber, Fitch re­ported that they were “pos­i­tive to Wanda” in the longer term.

One of the rea­sons for Fitch’s vote of con­fi­dence in Wanda’s long-term fu­ture is the metic­u­lous prepa­ra­tion the company car­ries out when eval­u­at­ing and then im­ple­ment­ing an over­seas ex­pan­sion project. Fur­ther­more, the Wanda man­age­ment has on nu­mer­ous oc­ca­sions made it abun­dantly clear that they do not show any favoritism to­ward pos­si­ble part­ner or­ga­ni­za­tions from China.

In­stead, a rig­or­ous ex­am­i­na­tion of each po­ten­tial col­lab­o­ra­tor’s com­pet­i­tive sit­u­a­tion and suit­abil­ity is con­ducted, lead­ing to an un­bi­ased and in­formed decision.

Wang has also pro­fessed a cer­tain hu­mil­ity by mak­ing it clear that key to Wanda’s over­seas suc­cess is their abil­ity to learn and learn quickly and adapt to each, of­ten very dif­fer­ent, in­ter­na­tional city.

But Wang and Wanda seem to not have paid much at­ten­tion to any brand build­ing strat­egy.

The con­glom­er­ate’s vast ar­ray of business in­ter­ests could be grouped into the fol­low­ing cat­e­gories: real es­tate, tourism, ho­tels and en­ter­tain­ment (cin­e­mas). But what we have not seen is any at­tempt at brand build­ing within or even across th­ese broad cat­e­gories.

While each scheme and project nat­u­rally has its own name and, there­fore, some sort of brand iden­tity, it is also ex­tremely im­por­tant for Wanda to pro­vide some ad­di­tional “brand stamp” that serves to en­hance the of­fer­ing and build trust and cred­i­bil­ity gen­er­ally.

Sim­ply rub­ber-stamp­ing each in­di­vid­ual project with the name Dalian Wanda will prob­a­bly not be the best way for­ward. The cur­rent cor­po­rate name is both too long and in­com­pat­i­ble as a sec­ond brand name where such di­ver­sity ex­ists across prod­uct cat­e­gories.

In­stead Wang and Wanda should opt for a range brand build­ing strat­egy. Range brand­ing in­volves a strat­egy in which an or­ga­ni­za­tion, of­ten with a sub­stan­tial and di­ver­si­fied prod­uct port­fo­lio, de­vel­ops sep­a­rate brand names for each of its dif­fer­ent range of re­lated prod­ucts.

Ex­am­ples can be found in many in­dus­tries. Heinz and Green Gi­ant are ex­am­ples of range brands in the food in­dus­try and Gil­lette’s Oral-B brand is another ex­am­ple of a brand that stretches over a range of re­lated prod­ucts.

If Dalian Wanda is to come any­where near achiev­ing Wang’s ob­jec­tive of a $100 bil­lion cor­po­rate brand val­u­a­tion, then it is highly likely that strong, emo­tional brand names will play an es­sen­tial part in such an enor­mous fi­nan­cial val­u­a­tion.

In­tro­duc­ing a fresh as­so­ci­a­tion very soon, by way of an emo­tional range brand name is, there­fore, a nec­es­sary step in Wanda’s ex­pan­sion plans.

In­di­vid­ual prod­uct brand nam­ing will prove far too time-con­sum­ing and ex­pen­sive and will deny Wanda any form of im­por­tant brand co­he­sion as it ex­pands glob­ally.

Range brand nam­ing, how­ever, with a suit­able name for each of the cur­rent cat­e­gories such as ho­tels and cin­e­mas, of­fers an ex­tremely at­trac­tive al­ter­na­tive.

The cor­po­rate name should re­main part of the over­all brand iden­tity but fade as the range brand names achieve in­creas­ing, in­ter­na­tional aware­ness and hope­fully pos­i­tive and emo­tional as­so­ci­a­tion.

So, what should th­ese range names be and how could emo­tional mean­ing be achieved?

Here Wang and Wanda have to demon­strate even greater con­fi­dence and de­ter­mi­na­tion by con­struct­ing range brand names that build pos­i­tive, emo­tional as­so­ci­a­tion with Chi­nese cul­ture.

As­so­ci­a­tion with an­cient China in par­tic­u­lar will, with­out doubt, res­onate with the Euro­pean and US ur­ban con­sumers. Such brand names will also prove ex­tremely dif­fi­cult for the com­pe­ti­tion to em­u­late or launch any sort of ef­fec­tive coun­ter­at­tack.

Wang has shown tremen­dous tenac­ity and clearly pos­sesses a re­mark­able business brain, but the bold­est and most de­ci­sive move into brand build­ing, range brand­ing and Chi­nese brand as­so­ci­a­tion is now sit­ting on Wang’s shoul­der.

Giv­ing the cold shoul­der to brand build­ing at Wanda will cer­tainly lead to fail­ure to reach Wang’s 2020 aim of a $100 bil­lion company val­u­a­tion. The au­thor is a vis­it­ing pro­fes­sor at the Univer­sity of In­ter­na­tional Business and Eco­nomics in Beijing and a se­nior lec­turer in mar­ket­ing at Southamp­ton So­lent Univer­sity’s School of Business. The views do not nec­es­sar­ily re­flect those of China Daily.

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