Thursday, August 11, 2011

Why China is not a brand leader, yet?

A piece I wrote for a brand new financial magazine, The Analyst. The inaugural issue is out, so I share it with you here, and it's not as goofy as my other pieces...

The recent inclusion of China’s search engine,, by Millward Brown, a WPP-owned company, in it’s Brandz Top 100 brand evaluation report, raised many interesting questions. Is China already a brand superpower? Are the days of Apple and Google, ranked number 1 and 2 respectively, as valuable brands numbered?

Chinese consumers, as with the rest of Asia, are becoming increasingly brand-conscious, with one survey noting that a typical office employee needs to wear at least three branded items to feel comfortable at work. In fact, a report from KPMG International Co-operative’s notes that buyers in China rank French brands as the most favourable labels, followed by those from Italy and Hong Kong.

The report which was based on a survey of 12,000 consumers in 24 Chinese cities noted that China is continuing its march toward becoming the largest luxury market in the world, buoyed by extremely favourable attitudes towards brands, increasing levels of wealth in tier-two as well as tier-one cities, and a continued confidence in future economic prospects.

Clearly, brand consciousness is centred on global brands, not Chinese alone. If so, why was there a perception that China may become a branding superpower soon? Simple. Because it is seen as an economic superpower.

About 47% Americans think China is the (retain word in italics to show emphasis) economic superpower, according to a poll by the Pew Research Center for the People & the Press, while only 31% think the United States is leading the economic front.

Never mind the fact that US GDP is ten times bigger than the Chinese, but media-obsessed Americans are ready to believe the might of the land of the Great Wall and Peking duck.

In fact, the same survey could get China snickering when in fact a poll conducted by the Global Times, a tabloid published by the Communist Party mouthpiece - the People’s Daily - revealed that only 12% of respondents view China as already having become a world superpower.

Blame it on American China-phobia, seeing that they have been bumming about without a bad guy to pin every bad thing on since the demise of the cold war. Still, it remains to be seen if China is going to forge ahead with just a handful of homemade brands.

Few Asian brands due to myopia

For one, the Google incident must have etched in the American minds that sent the “take it or leave it” message to the Americans when the frustrated search engine provider decided not to extend its service anymore to the Chinese when the latter’s government kept playing the “now you see, now you don’t” game with censorship.

Perhaps, it explains why Baidu, the search engine, leap-frogged 141% in brand value to US$22.6 billion from no.29 to no.3 in the Brandz ranking. (Google is valued at US$111.5 billion and Apple at US$153.3 billion).

It’s like shutting the front door to prevent the neighbours pet from coming in, while letting your Rottweilers out through the back door.

Belonging to the Asian fraternity, China too can take the receiving end of an accusation that Asian CEOs money-making mentality can hinder brand development.

James Baladi, chief executive of BrandAsian, a brand consulting firm, and author of The Brutal Truth About Asian Branding: And How to Break the Vicious Cycle, in an interview with a Thai newspaper, said while there are many good Asian companies, there are very few great Asian brands mainly due to “myopic leadership” of many of its chief executives.

If Baladi’s assertions are to be believed, the leaders, who are only concerned with the pursuit of prosperity think brands are just logos, slogans or trademarks, or the burnt mark on the rear end of cattle.

He also noted that the bosses in a typically family-owned business tend to be autocratic, “but most of the time, the chief executive don’t know everything”. In short, consumers are Kings, but the boss seems to know better.

In the case of China, it’s the Big Boss itself, the government, which is chairing the meetings, and is the very image a consumer would conjure up when a Chinese product is mentioned. And not quite rosy, nor lotus-y pictures, one might add.

China needs to do more

On the glamour front, China lacks the celebrity it needs to hawk its brands. What is it with the same mugs of Jet Li and Jacky Chan, when the Hollywood assembly plant keeps churning out celebrities, a dime a dozen?

When even the c-grades “leaked video clip” celebrities like Paris Hilton and Kim Kardashian are plugging some product or another.

China needs to do much more in grooming future celebrities, though certainly they would morally be concerned about grainy video-clip marketing.

Another hurdle the country has to clear before it can find its way in becoming a brand superpower is the proliferation of counterfeit products.

If foreign brands are replicated at the speed of light, imagine their own home-grown products. Earlier, U.S. Commerce Secretary Gary Locke came down on the Chinese government on the availability of fake products in the market.

“When over 80 percent of all software installed on computers in China is counterfeit and when first-run movies continue to appear on rogue websites as soon as they show up in the theatres—then we know the problem is still grave,” Locke said at an event on Capitol Hill acknowledging the World Intellectual Property Day.

“Made in China” is just a tag and it will take longer for consumers to understand that it actually meant “assembled in China.”

If counterfeit products is a headache, China has to deal with a migraine called “tainted products”. Three years ago it vowed to clean up the food industry after milk products tainted with the industry chemical melamine killed at least six babies and sickened 300,000 others.

Yet, reports of tainted pork, toxic milk, dyed buns and other dodgy foods have surfaced as recent as second quarter of this year clearly underscoring the government’s inability to oversee its huge and under-regulated food industry.

A more recent displeasure among all the consumers worldwide occurred when readers’ realised “exploding melon” was not a supermarket tabloid headline, nor it is a title of a sleazy film, but literally bursting watermelons due to too much growth hormone.

Around 20 farmers around Danyang city in Jiangsu province were affected, losing up to 115 acres of melon.

Forget the global paranoia, negative perception, worries about counterfeit product and fear or exploding fruits; China’s increasing economic power has become a public concern amongst the Europeans and elsewhere according to a recent global poll conducted for BBC World Service.

“Compared to BBC World Service polling in 2005, negative views of China’s growing economic power rose—and are now in the majority—in France (up from 31 to 53%), in Canada (up from 37% to 55%), in Germany (up from 44% to 53%), in Italy (up from 47% to 57%) and in the USA (up from 45% to 54%),” the statement issued on the poll said adding that negative views also grew significantly in countries such as the United Kingdom (up from 34% to 41%), and Mexico (up from 18% to 43%).

The poll conducted by GlobeScan/PIPA among 28,619 people in 27 countries reveals that the numbers that say that China is becoming more powerful economically is a bad thing have increased substantially across a number of China’s key trading partners—and especially in G7 countries.

The two nations with the most positive views of China’s economic growth were in Africa—Nigeria (82%) and Kenya (77%).

China can take comfort from how history treated some other Asian countries' brands. A blast to the past would reveal that Americans and the Western world in general snickered at the thought of “Made in Japan” products, and Sony came and collectively wiped the smirk off the consumers’ faces.

Likewise, South Korea’s Samsung is now a brand to reckon with, when once it was dismissed as a Motorola knock-off.

China has to fight enduring brands, like Coke which celebrated it’s 125th anniversary earlier this year and not conveniently lock itself out or induce others to do so.

In short, China is not going to be a brand superpower, anytime soon.


1 comment:

mike said...

I think china is very smart when it comes to brand consulting. They might not be the brand leaders yet but they profit the most off products Americans buy