Chinese brands face growth hurdles
Updated: 2014-12-12 14:40
By Zheng Xin in Beijing(China Daily USA)
Despite the rapid growth of major Chinese companies, maintaining that exponential growth on the international stage, especially in established markets such as the United States, has proven a great challenge.
Doreen Wang, global head of BrandZ, Millward Brown, said Chinese companies should further invest in their brands with more purpose-based societal benefits to boost the growth rate of acceptance and consideration of the Chinese brands abroad.
BrandZ is the world's largest brand equity database conducted by Millward Brown, the world's second largest market research organization based in New York,
"To crack the local-to-global code in pursuit of the brand dominance on a global stage, the Chinese companies should further build up their brands," she said. "To make a brand well known and accepted is not only making an advertisement in Times Square, but more of making the brand meaningful to its users, spiritually and mentally, so that consumers recognize your products and are willing to buy."
Despite the Chinese brands' gradual penetration into markets in Brazil, Russia, India and South Africa in recent years, the firms are still at their infant phase in tapping markets of the United States.
"Most brands, while entering the overseas market, prefer the developing countries, and the United States and some European countries are markets of commanding heights for the Chinese firms," said Wang. "Few Chinese brands consider the United States as the strategic market, and that's part of the reason for the poor recognition of Chinese brands in the country."
According to the 2014 BrandZ Top 100 ranking, a list of the most valuable Chinese brands by Millward Brown, only over a quarter of consumers will consider purchasing a Chinese brand.
Millward Brown's 2013 Going Global Awareness Study suggests the awareness of Chinese brands is lowest in the US, with only six percent of US consumers who can name a Chinese brand.
In the US the reputation of Chinese brands is usually associated with government-run companies, safety issues and fake merchandise, said the2014 BrandZ Top 100.
The reputation of the Chinese brands may constrain the growth rate of acceptance and consideration, it said.
Wang said many Chinese firms are too keen to achieve quick success and instant benefits, while neglecting investment in the brands and benefits in the long term.
"While most of them vow to become top enterprises in the world, few realize the significance of bringing more purpose-based societal benefits to its consumers," she said.
While Pampers aims to make every mom happy and Dove to help women across the world build up their confidence and self esteem, many Chinese firms seem to have ignored the importance of the purpose-based marketing.
"While many successful Chinese companies like the computer technology leader Lenovo and home appliance manufacturer Haier, with a wide range of products from air conditioners to washing machines to refrigerators, are poised to enter the US market, these financial powerhouses are still unable to make their brand well known and accepted."
The efforts in advertising to Olympic sponsorships, international package design, English websites and services are just not enough to help them to achieve the transformation from local to global brands.
While many Asian companies have succeeded in transforming their expertise into global brands, like Samsung transforming itself from a South Korean brand to a global one thanks to its product designs different from those of its competitors and Honda, Hyundai and Toyota with their innovative product designs, the Chinese companies have barely achieved it.
Wang said another reason for failing to go global is the immense home-based market and the absence of pressure to move beyond the borders.
"The local market is sufficient enough and many firms don't find going global, or tapping the U.S. market very essential," she said.
However, she believes that despite the brand names in neon lights in China's shopping districts may barely attract western shoppers for now, it won't be long before Chinese brands gain wider acceptance.
Alibaba, for instance, has set a very good example for Chinese firms, by affirming its entrepreneurial purpose, helping small and medium enterprises realize their dreams, and in the process made itself into a successful global brand, said Wang.
"Many Chinese firms do have the great products and potential to ascend to the top of the global markets, but many just don't know how to compete and how to penetrate in an efficient way," Wang said. "It takes time, but the outlook is still optimistic."