Five Things You Need to Know Working with Aspiring Chinese Global Brands

Author: Joy Huang

During the long hours spent watching the Olympics on NBC prime time, I couldn’t but help notice notice that for several nights in a row, a well-made TV commercial with an Olympic theme from Huawei, the top Chinese telecom equipment company was aired. And then there was Li-Ning, the number one Chinese sportswear and the official sponsor of the USA diving team, whose logo was prominently displayed on each USA athlete's swim suit, along with many other athletes of different sports and from different countries. 

It gave me great pleasure to see Chinese companies with global brand aspirations to put forth what matters in branding – resources.  Until now, there has been much talk, but not enough action, or money, put into action to create brand awareness from the Chinese side.  There is obviously still a long way to go to create truly global brands that originate from China, but it’s encouraging to see continuous new efforts being made along the way, which I believe will eventually lead to a true paradigm shift that creates real momentum.

 Many western companies stand to benefit from stronger brand awareness of Chinese companies in the west.  These include their customers, local distribution channels, professional services firms and other partners in the local market.  For these western companies, the speed with which the Chinese are progressing on their branding efforts usually can be felt as painfully slow and the approach difficult to comprehend.  To set the right expectations and to help Chinese companies execute their branding strategies, there are a few things that you should know:

1.     Branding Is Second

Galanz, a Chinese textile manufacturer, once said, “Brand is a pot of gold.  We can not afford a world wide brand so we have to do OEM first.”  This is a common sentiment felt among Chinese companies going global.  When it comes to the market entry strategy, survival is the number one priority.  Most Chinese companies view branding in markets such as the U.S. as too expensive and too risky.  Only those who have very strong financial support and who have already been in the U.S. for a while are willing to take the next step towards real brand building activities.  Company cultures also play a role in how aggressive or conservative the approach will be, but in general, they are more comfortable taking baby steps and see what type of response they get.  Most other companies would choose smaller scale promotional activities aimed at immediate sales results instead.

2.     Steep Learning Cure

Building global brands is as new to the Chinese as the unprecedented economic growth China has achieved for those who live in it.  Most Chinese companies who aspire to be the next global brand did not even exist until 20 years ago.  Until very recently, branding played a very small role competing in the Chinese domestic market.  Most “branding activities” included advertising of corporate images emphasizing its history, technical competence, production capabilities and market leadership.  Being big, credible and having endorsements from the government were usually sufficient to win customer’s trust and business.  Very few companies put efforts into building emotional connections with the customers.  This operating model obviously does not work very well in markets like the U.S., and this puts the Chinese at the beginning of the learning curve all over again.

3.     Diversification and Focus

For domestic companies, competition in the China market can be fierce and margins tend to be thin.  In order for already large companies to continue to grow, many opt for a strategy of diversification.  Electronic companies, for example, can diversify into real estate, food and any other unrelated industries.   This immense interest in diversification is a fruit of companies experimenting with growth strategies and seeking the silver bullet to long-term survival.  Unfortunately, such a strategy can have an adverse effect on brand imaging and distracts management from investing on the core business brands.  As time goes, some of these diversified new business units have failed, which then in turn helps bring renewed focus on their core strength and hopefully branding strategy as well.

4.     Trust in Professional Services

So why don’t the Chinese simply hire experienced western agencies that know their markets and then all of their branding problems will be solved?   The answer lies in trust or lack of trust.  In China, the professional services industry is a very nascent and developing industry that still is dealing with the issue of establishing credibility.  Most companies have only basic experience working with them.  Coming to the U.S., Chinese companies are usually shocked at the high cost of professional services, and they are equally unsure of how much they should trust their advice.  A good practice for professional services companies is to invest in building relations, try to find common people or reputable organizations they both know and use intermediaries whenever possible.

5.     Coaching Others Helps You

To help accelerate your Chinese partner’s branding efforts that will in turn improve your performance, it is advisable to take on the role of an informal coach.  You can do so by sharing success stories of your other partners and try to understand the concerns of your Chinese partners.  If you are the customer, it is also appropriate to apply some pressure in order to move things along faster.   Set the right expectations and be deliberate in your assistance.   The Chinese appreciate the good will of a true partner.  No matter how obvious things may seem to western-minded businesses that are accustomed to a systematic approach to marketing and branding, remember all this is new to the Chinese, and there are many cultural, organizational and historical obstacles that they have to overcome along the way. 

 

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