Rank­ing China’s global brand builders

China Daily European Weekly - - Comment - Mike Bastin

As the Chi­nese econ­omy con­tin­ues its tran­si­tion from low-cost pro­duc­tion to high-qual­ity pre­mium brands, the new year be­gan with the re­lease of the first BrandZ Top 30 Chi­nese Brand Builders’ rank­ing and re­port ear­lier this month.

This re­port is the re­sult of ground­break­ing, new re­search that pro­vides tremen­dous in­sight into the brand-build­ing progress made by Chi­nese com­pa­nies in over­seas mar­kets. The re­search method­ol­ogy fo­cuses on over­seas con­sumers’ at­ti­tudes, be­liefs and feel­ings to­ward Chi­nese brands. Chi­nese com­pa­nies and China’s im­age have been sub­jected to con­sid­er­able in­ves­tiga­tive re­search over many years, but rarely have Chi­nese prod­uct and ser­vice brands been sin­gled out with an in-depth, mainly qual­i­ta­tive re­search study.

In to­tal, 167 es­tab­lished Chi­nese brands were in­cluded in the study, for which con­sumers were sur­veyed across seven of the world’s most de­vel­oped mar­ket economies: the United Kin­dom, France, Spain, Ger­many, the United States, Aus­tralia and Ja­pan. World-lead­ing ad­ver­tis­ing and pub­lic re­la­tions agency WPP and global mar­ket re­search com­pany Kan­tar Mill­ward Brown col­lab­o­rated with Google to pro­duce the pi­o­neer­ing re­port.

The re­port’s over­all find­ings make for ex­tremely en­cour­ag­ing read­ing for those Chi­nese brands hop­ing to con­tinue their ex­pan­sion deeper into over­seas mar­kets. More and more Chi­nese brands now en­joy in­creas­ing brand aware­ness lev­els.

But the re­port’s most sig­nif­i­cant claim con­cludes that the cir­cum­stances are now very fa­vor­able for Chi­nese brands to build pow­er­ful brands based on their high qual­ity and emo­tional con­nec­tions with over­seas con­sumers.

Len­ovo, China’s PC gi­ant and the world’s largest pro­ducer by sales vol­ume, was named the most pow­er­ful Chi­nese global brand builder at present. This should come as no sur­prise, given Len­ovo’s clear com­mit­ment to in­ter­na­tional ex­pan­sion ever since its au­da­cious ac­qui­si­tion of the IBM PC brand well over 10 years ago.

Close be­hind Len­ovo comes an­other con­sumer elec­tron­ics brand suc­cess story in the shape of Huawei, China’s gi­ant multi­na­tional net­work­ing and telecom­mu­ni­ca­tions equip­ment and ser­vices com­pany, head­quar­tered in South China’s city of Shen­zhen, in Guang­dong prov­ince. In re­cent years, Huawei has proven it can com­pete with even its fiercest ri­vals, such as Ap­ple and Sam­sung. Huawei’s ac­claimed P9 smart­phone pro­vides demon­stra­ble proof of the com­pany’s com­mit­ment to tech­no­log­i­cal in­no­va­tion, high qual­ity stan­dards, brand build­ing and it is ru­mored that an even bet­ter model, the Huawei P10, could be launched very soon.

Chi­nese e-com­merce gi­ant Alibaba is ranked third, which should also come as no sur­prise, given its fairly re­cent list­ing on the US stock ex­change.

Chi­nese con­sumer elec­tron­ics brands rep­re­sent a large share of the higher-ranked brands, with smart­phone brand Xiaomi com­ing in at num­ber 5, the third con­sumer elec­tron­ics brand in the top 5.

The re­port finds that th­ese higher-ranked brands now com­pete far less in price than they used to and have gained an en­vi­able rep­u­ta­tion for qual­ity, re­li­a­bil­ity and ser­vice in the minds of over­seas con­sumers.

But in ad­di­tion to a clus­ter of strong con­sumer elec­tron­ics brands, Chi­nese in­ter­net brands are also mak­ing more than a good name for them­selves around the world and are seen by many over­seas con­sumers as very com­pet­i­tively in­no­va­tive.

The re­port does still present chal­lenges fac­ing Chi­nese brands in their quest for global recog­ni­tion and rel­e­vance. Over­seas con­sumers, de­spite grow­ing ac­cep­tance of and trust in Chi­nese brands, re­veal an al­most ha­bit­ual reach to­ward longer-es­tab­lished global brands, rather than the Chi­nese “new kids on the block”. But even this habit ap­pears to be wan­ing, as Chi­nese brands prove them­selves more and more and rely on price less and less.

It is also ap­par­ent from the re­port that con­sumer like­li­hood of pur­chas­ing a Chi­nese brand over an es­tab­lished, non-Chi­nese ri­val brand varies from coun­try to coun­try. In France, Ger­many and Spain, for in­stance, con­sumers ap­pear far more likely to con­sume a Chi­nese brand, while Ja­panese, Bri­tish and Amer­i­can con­sumers still hold stronger at­tach­ments to lo­cally pro­duced brands. Fur­ther­more, ge­o­graph­i­cal prox­im­ity can, at least par­tially, con­trib­ute to brand recog­ni­tion.

There may also be some sort of “hang­over” ef­fect tak­ing place, due to which Amer­i­can and Ja­panese con­sumers still hang on to the past, even the very re­cent past, when their coun­tries were widely seen as tech­no­log­i­cal pioneers. But now, ac­cord­ing to the study, con­sumers are in­creas­ingly look­ing to China and Chi­nese com­pa­nies for the lat­est tech­nol­ogy break­throughs, mak­ing now the most op­por­tune time for Chi­nese brands to pen­e­trate global mar­kets. Gone is China’s im­age of low prices and low qual­ity in its prod­ucts and brands.

This de­cline in neg­a­tiv­ity, which dogged Chi­nese brand build­ing in the past, has also been matched by an in­crease in con­sumer in­volve­ment when de­cid­ing on brand con­sump­tion choice. The re­port finds that fame alone is no longer as sig­nif­i­cant a fac­tor as it once was when con­sumers choose brands. In­stead, a more ra­tio­nal, con­scious and self-con­fi­dent con­sumer now places tan­gi­ble ben­e­fits and rel­e­vance higher.

This has helped Chi­nese brands com­pete with brands which have en­joyed in­ter­na­tional fame for far longer.

Har­ness­ing the power of the in­ter­net also ex­plains the in­ter­na­tional rise of many Chi­nese brands, such as Alibaba and Ten­cent. Chi­nese, in­ter­net-driven brands have shown that it is not nec­es­sary to ini­tially fo­cus on the do­mes­tic mar­ket to en­sure steady growth, but that in­ter­net-driven in­no­va­tion can al­low a brand to ex­plode on to the global scene with al­most overnight suc­cess.

De­spite a wel­ter of pos­i­tive find­ings, the re­port does also pro­vide a sober­ing as­sess­ment of the chal­lenges fac­ing Chi­nese brands in in­creas­ingly com­pet­i­tive over­seas mar­kets. High among th­ese chal­lenges is the need for even more cre­ativ­ity and in­no­va­tion, per­haps not in the use of the lat­est tech­nol­ogy, but in brands’ mar­ket­ing ini­tia­tives. In­no­va­tion in tech­nol­ogy is an ab­so­lute ne­ces­sity on to­day’s global bat­tle of the brands, but it is not on its own suf­fi­cient. Brands have to build on this very tan­gi­ble form of growth with layer upon layer of emo­tional mean­ing that res­onates with con­sumers’ in­creas­ing need for emo­tion­ally-ful­fill­ing life­style experiences.

Cre­ativ­ity in all as­pects of a brand’s ap­pear­ance and pro­mo­tion is now the next hur­dle for Chi­nese com­pa­nies to over­come. But even here, there are en­cour­ag­ing signs, with Chi­nese com­pa­nies such as Huawei in­vest­ing heav­ily in sports and en­ter­tain­ment spon­sor­ships to build emo­tional con­nec­tions with over­seas con­sumers, aug­ment­ing its rep­u­ta­tion for qual­ity and ser­vice.

So what could this all mean for Euro­pean busi­nesses? Should Chi­nese brands be seen as friend or foe? At a glance, the an­swer to this ques­tion may ap­pear to be the lat­ter, but look­ing into the ques­tion fur­ther should yield a dif­fer­ent con­clu­sion. This is good news for Euro­pean in­dus­tries in which the rise of Chi­nese brands in­ter­na­tion­ally rep­re­sents many sub­stan­tial op­por­tu­ni­ties.

Chi­nese brands will now be seek­ing more long-term co­op­er­a­tion with Euro­pean part­ners all along the sup­ply chain, for ex­am­ple. Euro­pean brands can also now see their Chi­nese com­peti­tors as an op­por­tu­nity to learn from their tech­no­log­i­cal ex­cel­lence, in par­tic­u­lar.

The idea that the rise of Chi­nese brands in­ter­na­tion­ally poses a sig­nif­i­cant threat should be dis­pelled when pin­point­ing the sources of Chi­nese brands’ suc­cess. It was, and still is, the firm pres­ence of Western brands across the China main­land that ini­ti­ated this brand-build­ing path. Chi­nese com­pa­nies learned ex­ten­sively from th­ese newly ar­rived Western brands and were spurred on to be­come even more com­pet­i­tive than their es­tab­lished Western ri­vals.

If Chi­nese brands can rise to the ar­rival of Western brands in China, then surely Euro­pean brands can do like­wise now that more and more Chi­nese brands have ar­rived in their back­yard.

The au­thor is a vis­it­ing pro­fes­sor at the Univer­sity of In­ter­na­tional Busi­ness and Eco­nom­ics in Bei­jing and a se­nior lec­turer at Southamp­ton Univer­sity. The views do not nec­es­sar­ily re­flect those of China Daily.


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