China Power

Branding China

Chinese firms appear to have a bit of a problem with brand recognition. The govt isn’t helping.

Here’s an interesting experiment. Take a moment and see how many Chinese brands you can think of. Cars, electronics, food and beverage companies—anything at all. Stumped?

I admit this isn’t my question, but one posed this week by Washington Post writer John Pomfret. As Pomfret notes, China last year overtook Germany to become the world’s largest exporter (China’s exports totalled about $1.2 trillion). But he suggests the country’s lack of globally-recognized brands could hinder its rise to superpower status:

‘No big marquee brands means China is stuck doing the global grunt work in factory cities while designers and engineers overseas reap the profits. Much of Apple's iPhone, for example, is made in China. But if a high-end version costs $750, China is lucky to hold on to $25. For a pair of Nikes, it's four pennies on the dollar.’

Setting aside the reasonable question of whether being a superpower is also about aspiration and influence (in which case brands surely have a role to play), Pomfret argues that the failure of Chinese companies to innovate and create their own brands is already holding the country back economically.

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‘The problem is exacerbated by China's lack of successful innovation and its reliance on stitching and welding together products that are imagined, invented and designed by others. A failure to innovate means China is trapped paying enormous amounts in patent royalties and licensing fees to foreigners who are.’

So, can China respond? Gary Shapiro, president and chief executive officer of the Consumer Electronics Association in the US, believes so, although he rightly notes that simply purchasing established Western brands such as IBM personal computers can only take China so far.

Writing in the Huffington Post yesterday, he argued that if China wants to build its brands that it will need to stop effectively undercutting them by insisting on state support through unfairly tilting the market in favour of domestic firms and insisting on rules under which the Chinese government has to buy Chinese brand products. This, he says, only adds to a perception of weakness (though to be fair, the US has been known to dabble in the odd ‘Buy American’ clause).

And the poor image of domestic brands doesn’t just hurt Chinese firms hoping to challenge their Western counterparts overseas, but also domestically. To many younger Chinese especially, Western brands are just a little bit trendier, a point perhaps made no clearer than by the struggles of baijiu. While sake, for example, is known the world over, its Chinese sister is increasingly being shunned, at least according to Jing Daily.

‘Absent any real “retro” panache or the flashy advertisements of a brand like Absolut or Chivas Regal…baijiu risks losing out among a whole generation of more internationally minded, upwardly mobile drinkers,’ the magazine reports. ‘Though it still far and away dominates the Chinese spirits market by sales volume, this could change within a few decades if baijiu makers can’t figure out a way to tap the demand of younger revellers who care more about style and flavour than history and tradition.’