Next week I will be visiting China for the launch of the Mandarin translation of The Global Brand. This version of the book contains a completely new chapter written by my colleagues Peking Tan, Jason Spencer, Yee Mei Chan and William Wei of MillwardBrown ACSR that focuses on marketing in China and the specific challenges faced by Chinese brands seeking to go global.
Among the biggest challenges faced by Chinese brands in foreign markets are the connotations associated with the words “Made in China.” But is this difficulty really any different from the one faced by Japanese companies in the 1950s? I wonder if focusing on “Made in China” is missing the essential point. Brands establish and maintain their credibility by innovation and by demonstrating that they can create better products and services than the competition. The old saying is right: Give people a better mousetrap and they will beat a path to your door—even even if that door is in Guangzhou or Tianjin. It is not a matter of where the company is based but what they produce and how they go to market.
The following are my thoughts on the matter, but it would be great to hear different ideas and opinions. They might stop me losing face in front of my Chinese audiences next week.
In a survey conducted by Millward Brown in eight countries in 2006, we found that informing respondents that a brand was “Made in Japan” resulted in much higher claimed purchase intent for almost all product categories. (The exceptions were clothing, food, and beer.) By contrast, the descriptions “Made in China” and “Made in Korea” had very similar influences on people’s stated likelihood to purchase a brand as. Upon learning that a brand came from either China or Korea, respondents said they were less likely to buy it. However, even though people seem to be expressing some reservation toward Korean brands, many Korean companies have established a credible and growing brand presence in developed economies, just as their Japanese competitors did before them.
The biggest difference between perceptions of goods originating from China and those from Japan is that China is thought to produce only low-cost products, while Japan is seen to offer innovative, high quality, and prestigious goods. In other words, Japan has now established strong brand-related credentials. How did that happen? The answer is that companies like Toyota, Sony and Panasonic consistently produced first-rate products that anticipated or created new consumer needs. While these brands have now “made it,” other Japanese brands are still up and coming. For instance, the retail clothes chain Uniqlo seems intent on following in the footsteps of its better-known compatriots with its line of inexpensive but high-quality products. (Click here to read WSJ article)
There seems to be little question that Japanese and Korean brands do serve as good role models for brands in China seeking to go global. The question then becomes, do Chinese brands have the vision, will, and capabilities to make it happen? Tom Doctoroff, writing for the Huffington Post (click here to read), seems pretty sure that they do not (and his experience of all things Chinese totally eclipses mine), but I can’t help but wonder what someone in Japan would have said about Toyota’s early ambitions to go global. If Toyota had announced in the 1950s, or even the 1970s, that by 2009 they would outsell all three domestic automotive companies in the U.S., people probably would have laughed their socks off.
With that in mind, here are five things that I think Chinese brands need to do to become more successful on the world stage:
- Anticipate future shifts in consumer needs and demand.
- Use price to establish a geographic footprint, but then ensure that people pay for upgrades to the basic product.
- Seek opportunities to change preconceptions about quality and price.
- Build your brand and ensure it is in synch with local culture (in terms of product, positioning and communication).
- Enlist local staff in new countries. Empower them and ensure good communication across borders.
So what do you think? Can Chinese brands make it on the global stage, or does “Made in China” hold them back? What else do they need to do in order to be more successful?
(5 votes, average: 4.8 out of 5)
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July 6th, 2009 at 12:19 am
I think this is a very pertinent article in the current context when the BRIC countries are increasingly gaining recognition on a global platform.
Though ‘Made in China’ products have been known to be low cost, people increasingly buying them from across stores be it Walmart or Banana Republic has lend them credibility. I personally have seen products bought within China and their quality is far superior to what we typically associate with ‘China’. If China does continue to provide low cost items but good quality items nevertheless consumers in an increasingly ‘recessioned’ world should go for them!
Of course, the one issue to look at is what I call branding ‘by reiteration’ vs. ‘by intent’. People look at China as ‘low cost’ because its products are low cost and they have been ‘exposed’ to this idea at various levels at various points of time consistently.
The question is can Chinese companies do what Ikea has done for Sweden? Can they get together and focus on building that one consistent IDEA for China? That is what will determine how quickly they brand themselves and how successfully they beat other possibly SEA competition.
July 6th, 2009 at 1:26 am
[...] here: Nigel Hollis » Blog Archive » Is “Made in China” unequivocally the encumber … This entry was posted on 星期天, 七月 5th, 2009 at 9:34 下午 and is filed under [...]
July 6th, 2009 at 2:22 am
Another problem is the perception that Chinese products, on a certain level, are flimsy by cultural association. The Japanese developed their reputation by consumer belief: people could see that brands were consciously trying to make products better through continuous improvement. Unfortunately there’s still a negative association with mainland goods on “cutting corners,” especially with scandals of recent past.
Until this perception changes (perhaps unreasonably so on a macro-level), it’ll be hard pressed to see shifts in perceptions.
July 6th, 2009 at 2:30 am
[...] See original here: Nigel Hollis » Blog Archive » Is “Made in China” really a handicap … [...]
July 6th, 2009 at 6:47 am
I think “Made in China” stands as a brand in itself, for the myriad of non-branded “no-name” products. I’m not sure if that was ever the case with Japan or Korea.
So far, I think “MiC” is still more powerfull than Geely, or Huawei, or the others.
July 6th, 2009 at 9:11 am
I can think of one interesting parallel. Back in the 1980s the British perception of Spain was of beach resoprts with tower block hotels, British beer and fish and chips. At the same time Britain was a huge consumer of Spanish wine which was drunk in greater quantities than French wine. The only trouble was that it came to Britain in giant tankers, was bottled under all kinds of unlikely names, and was virtually undrinkable. I spent several years working with the body representing “Wines from Spain” and they began to shape their own destiny.
Today Spain is recognised for the excellent wine it always made (but that never used to make it to the UK!). It is still known for its beach holidays but there is a much more developed understanding of the diversity and elegance of Spain - and for its wonderful food as well as its wine.
In other words - perceptions can change. China, now associated with small plastic toys, will develop world leading brands. They will have to be built on great product delivery - just as Spain recognised the need to change the wines it was marketing. And perceptions of China will develop too. I believe there is still a fascination in western markets with the allure of the East. China is a huge and diverse country with many assets that it can use to shape its own destiny.
July 6th, 2009 at 10:50 am
We did some research for our baby carrier brand when we were considering manufacturing somewhere other than UK. The problem with the Made in China research is that a lot of people will say ‘I don’t like it/it would affect my choices’ on principle… but the more revealing question is to ask: “where were the Levis/Nikes (or baby product) you’re wearing/using right now made?” - and most people don’t know (let alone care).
I recognise that a brand of chinese origin (rather than a western brand made there) is a different kettle of fish, or sushi, or Yu…
July 6th, 2009 at 1:55 pm
When I think of China, I think of low-cost manufacturing expertise. I do not think of world-class brand marketing expertise. This is a hurdle they’ll need to overcome (as Korea is beginning to do; see Hyundai and Kia) before their brands are as accepted as Japan’s.
July 8th, 2009 at 8:32 am
to Gideon’s point,
I wonder if people make a distinction between made for Levis/Nike in China where there is some level of assurance in product standards versus a locally owned/managed product exported to the world.
A wise man once said that “trust is a result of competence, integrity consistency and respect”. If we add to this that a “Brand is a promise kept”- I think the Made In China question has some years to go to prove itself.
I think this is a challenge that China itself must seek to conquer and not something that sleek branding/packaging/pricing will achieve. China has to prove itself - recent high profile product tainting, workplace safety and environmental issues underscore the smallness of the global village and how actions by one can impact the entire made in china franchise.
July 10th, 2009 at 5:34 am
The challenge has become bigger because of combination of ‘baggage of exporter of cheap goods’ and perception of ‘cutting corners’ (not only on quality front but also on integrity). But there is little doubt on ‘capability’ of Chinese companies to produce quality goods. So, what may help is certification of ingredients and quality by a credible, transparent, non-govt. industrial body (or better still a foreign company).
Peking, Jason, Yee Mei, William: hope there would be an English translation of the chapter you are writing
July 13th, 2009 at 11:06 pm
Thanks for the comments everyone.
Aarthi, I love the distinction you make between branding by iteration and intent. However, if you do not first manage to create a good quality product and do so consistently then you cannot create a brand by intent. Some Chinese brands have begun to challenge MNC brands on the first count, now they need to go beyond price to “brand up.” By which I mean to create the basic brand credentials of reliability and trust before moving onto the higher order aspects of identity and emotional appeal.