Brand Reality Check

In the Hutong
A cross between Brad Garrett and John Goodman
1954 hrs.

JWT's Tom Doctoroff recently wrote an earnest and well-reasoned Viewpoint article in AdAge that described why China would not be producing a bevy of global brands at any time in the near future. (Tip of the Hat to Neil Drewitt for sending this in.) Nicely put and worth a read.

Those who disagree with Tom (and manage to eschew ad hominem attacks) point out that Haier has managed to build a global brand entirely without marketing. While that point would be debatable (if you could buy a Siemens fridge for the same price as a Haier fridge, which would YOU buy, and why?), let's not go there.

Instead, let us grant for a the sake of argument that Haier is indeed a global Chinese brand. Let's even grant that Lenovo, Tsingtao Beer, and Li-Ning are global brands.

When you look across China's landscape of millions of companies, could it not be said that these companies are at best the exceptions to prove the rule? That China has so few international brands in so few industries that what we are witnessing is not a trend but a statistically irrelevant series of accidents?

I do not enjoy running down Chinese companies. I want desperately to be a cheerleader for them, and I know for a fact that Tom Doctoroff wants to as well.  Neither he, nor I, nor a host of other well-intentioned commentators are trying to "keep them down by talking them down."

But to ignore the fundamental barriers these companies face in their evolution by giving them credit for having evolved further than they have is like encouraging a four year old to learn to read by sending him directly to college. At best, it is misguided. And at worst, it will do irreparable damage.

Kudos to Tom for having the courage to say something that needed to be said, and that if anything will not help his business in the near term. Great brands are built: they do not happen by executive fiat or government edict. And the sooner China's companies learn the rules of that game, the better off China will be.

Comments

[All Roads]

Hey David.

Not to take away from Tom, but the Newsweek article Generic Giants was put out a couple of weeks ago, and has also done a good job as well (my own post followed Where Are Chinese Brands Hiding?

A few big questions:
1) why would Chinese brands go abroad, and what would they really gain? If prestige is the answer, then fear of "Made in China" is going to be a major hurdle.
2) If there is a real business case, then there is the problem of where does the money come from (SME firms are NOT getting bank funding).

Closer to the question of what is a "brand", how is it that so many people are being head faked by the fact that China's industrial firms are building global structures. China's largest SOE resource firms are all expanding globally (CNOOC, Sinopec, etc), its heavy machinery firms are also making headway as well, and let's not forget all those shipping firms who are (uh.. were) moving all those containers (made in China) to Long Beach?

R

[Arun]

Well put David. Although I'd take up your offer and argue that Haier, Li-Ning and perhaps even Tsingtao don't offer much in the way of brand equity outside China, beyond cost. Lenovo does, of course, but it acquired that - and seems hell bent on frittering it all away.

A couple of Chinese brands that have succeeded as genuine brands outside China are luxury fashion brand Ports and TCL - which speak to the importance of finding the right niche, or the right geographic market.

[Bob Page]

In 1964, someone undoubtedly said a global Japanese brand was years away. In 1988, someone undoubtedly said a global Korean brand was years away. My experience at Lenovo indicates that the time is definitely coming, and I suspect it will be sooner rather than later.
http://www.mercurybrief.com/2009/10/little-house-on-the-chinese-prairie-have-midwestern-values-moved-to-beijing/

Bob Page
The Mercury Brief

[David]

Bob,

First, I think you misread me: both Tom Doctoroff and I were making the point that while a small handful of exceptional Chinese companies may become global brands in the near future, we are a long way from seeing China turn into a parallel to Japan or the U.S. in producing a number of global brands proportionate with their industrial output or the size of the economy.

And as I said about Lenovo, the extent to which it has actually become a global brand is a matter of debate. It has certainly become a leading brand in China, for all of the reasons that you point out in your post. Those folks work very hard, and they are a determined group, especially at the working level.

It would, however, be overstating the case to suggest it is enjoying similar success outside of the PRC and Hong Kong. Indeed, over the past eight months, the company has all but acknowledged its failure to effectively extend its business offshore, and is in the midst of reworking its global marketing effort. Awareness of the Lenovo name is at an all-time high, I would agree. But that has yet to translate into positive perceptions where it matters most: at the point of sale.

I would suggest, rather, that the Lenovo global brand is and remains a "work-in-progress," and that we are still 2-4 years before the name Lenovo is perceived at the same level as a Dell or an HP, and much longer (if ever) before it attains the cachet of Apple.

Love your blog, BTW.