Chinese brand names
determination of Chinese enterprises to raise themselves from
the lower rung of the value-added chain and establish international
recognized brand names is not in doubt. But the road to achieving
those goals is going to be long and challenging, according to
experts and senior executives who attended the fifth China Daily
CEO Roundtable themed "Globalizing Chinese Brands" in
Hong Kong yesterday.
challenges touch on wide ranging issues, including corporate governance,
management vision, investment foresight and, as many participants
agreed, the willingness to revolutionize the established mindset
that has dominated Chinese corporate culture for years.
succeed in the international marketplace, Chinese enterprises
must strive for originality in design and excellence in quality,
the experts said.
also must learn to respect intellectual property rights as rampant
piracy of ideas and of products has virtually choked off major
investment in research and development by many mainland enterprises.
question raised repeatedly at the conference was why would a Chinese
enterprise want to develop their own products to benefit unscrupulous
the daunting challenges, the need for brand building is reverberating
through many corporate boardrooms in China. As Professor Wang
Zhile, director of Research Centre for Transnational Corporations
under the Ministry of Commerce, said, the production process at
the bottom of the smile curve makes little value, while design
and marketing processes stand at the upper-end of the curve and
have much wider profit margins.
Nike as an example, Wang said that Nike mainly engaged in design,
marketing and sales activities and outsourced all of the production
process. Typical Nike shoes are sold at about 700 yuan (US$84)
in China, but the production cost is estimated at only a few yuan,
the earnest desire to establish famous brands, Chinese companies
can hardly make their way to the recognition of globally well-recognized
brands. Furthermore, Chinese brands are even less recognized and
respected than their foreign peers in China.
to Wang, Haier, the country's leading electrical appliance company,
was ranked 95th earlier this year on the 100 most influential
global brands list issued by World Brand Laboratory, a world brand
evaluation organization. It is the only Chinese brand listed in
the ranking so far. Another brand ranking conducted by Fortune
China in February this year showed that only two Chinese brands
Haier and Guizhou Maotai made their way into the top 25 brands
in China, with foreign brands filling the remaining 23 positions.
outlined a number of reasons for the absence of famous Chinese
brands on the international market. "Many Chinese companies
are struggling to survive in a fiercely competitive market and
rarely think of setting up their own brand names, while other
big companies have little experience in establishing brands,"
addition, State-owned enterprises usually turn to local governments
for protection when they are confronted with competition from
foreign rivals, while numerous private firms are copycats and
never have their own designs.
formula that Chinese companies can use to develop their own brands,
Wang said, is to first co-operate with foreign partners and learn
advanced management skills. The second step is to expand their
businesses to overseas markets through organic growth or merger
instance, TCL International, the world's major TV maker, had expanded
its international presence aggressively by acquiring foreign companies
and forming major partnerships with western firms in recent years.
It recently combined its TV-making assets with those of France's
Thomson to create the world's largest television producer, and
earlier this year it set up a handset venture with France's Alcatel.
believe the 'outgoing' strategy will be the right path for Chinese
companies not only to expand their businesses but also to establish
well-recognized brands," said Wang.
Charm, general manager of Kingdee International Software (Hong
Kong) Group, agreed and said one of the major reasons for his
company going public in Hong Kong in 2001 was that Kingdee wished
to attract personnel familiar with international practices and
marketing skills in an effort to build Kingdee into a world-recognized
came to Hong Kong and learned from foreign companies to improve
our management. Most important of all, we have to have an international
mindset," said Charm.
before expanding internationally, Chinese companies have to strengthen
their core value first, according to Ye Feng Ping, executive director
and vice president of China Unicom.
out or building brands is not merely about market share or sales.
Rather, it should take into account the company's long-term vision
and strategy," Ye said.
Hong Qing, director of China Travel Service (Holdings) HK Ltd
shared similar thoughts. "It usually takes multinational
companies years of efforts to establish a global brand name. Chinese
companies should not be rushed and should take a down-to-earth
attitude to improve the quality of their products or services
first," he said.
addition, Zheng said there was a lack of a culture in the community
of respect for intellectual property rights and also belief in
credibility that would be a challenge in setting up one's own
Zhou Li Qun, chief executive officer of China Everbright Ltd;
Nancy Payne, general manager and senior vice president of Fleishman-Hillard
Hong Kong Ltd; and Liao Qun, vice-president of Strategy and Planning,
China Banking at Citic Ka Wah Bank Ltd agreed that a company without
transparency and corporate governance could hardly build up a
trustworthy brand, as branding is based on the company's fundamentals.
Kai Ping, vice-president of Shum Yip Holdings, cautioned that
piracy would probably be a major barrier for companies' strengthening
investment to improve their original design capacities. "The
Chinese Government should speed up efforts to clamp down on piracy
and further enhance its protection on intellectual property rights,
which is also crucial for building Chinese brands," he said.
De Villiers, chief executive officer of FutureBrand, Asia Pacific,
said the lack of personnel who understand brand-building in the
market was another barrier. He said companies should strengthen
education on brands and marketing.
Chen, managing director of Interbrand China, said that training
was vital and that the Chinese Government should play an active
role in helping companies strengthen their knowledge of marketing.
Singapore's government as an example, he said the Chinese Government
should consider financing companies' R&D.
addition to personnel and piracy, Joseph Wang, chairman &
Chief Executive Officer of Ogilvy & Mather Greater China (Southern
China) said that Chinese companies should pay close attention
to innovation as many Chinese brands as well as many other businesses
in China at the moment are doing nothing but copying.
to Ogilvy's recent survey on young Chinese consumers, they have
more respect and admiration for Nike than Li Ning because Nike
has real personality and diversity.
his experiences helping Chinese companies promote brands, Richard
Tsang, managing director of Strategic Financial Relations Ltd,
said that Chinese companies usually failed to associate their
brands with life style, as most successful foreign companies did
not sell how good their products are but conveyed messages that
their products meant a certain kind of life style or personality.
Chan, managing director of M&C Saatchi (Greater China), said
that a logo not only means the image of a company or a product
but also meant quality and services as well as promises.
made-in-Japan product was considered cheap some 40 years ago,
while nowadays it contains positive meaning, Chan said. She said
she believed the same thing would happen to Chinese products,
although it would not be achieved overnight.