By David Dayton in "Silk Road International"
This article started a discussion on the China Law Blog LinkedIn group. Since I participated a bit (and I thought I summed it up nicely, “if I do say so my damn self“) I thought I’d share my comments here.
Interesting article. Convoluted point. My ten cents:
1. He’s right that Chinese brands aren’t famous in the West yet. But while ubiquitous elsewhere in the 3rd world, they are not “famous” in other countries either. I do a lot of business in Vietnam and Thailand–Chinese brands of soap, motorcycles, noodles and other household items are everywhere–are they famous/have they built a brand or are they the lowest entry points into the market and so everyone carries them? Ditto Li Ning shoes–famous or cheap options with aging/unfamiliar reps (Shaq–failed at his own shoe line, JKid, Battie). Maggie Rauch points out that they are not really going global at all, just trying to look like it for the Chinese Market (see #4 below).
2. Taking market share and “building a brand” are not synonymous. If a Chinese brands takes (the bottom?) 5% of Coke’s high-end tea market, I’m willing to bet, they’ll let them have it. When a Chinese brand makes a serious play at their connection with McD’s or the NBA OUTSIDE of China you know that have both branding success and market share (and deep pockets).
3a. The Chinese market is not the same as the West, true. That they don’t understand this is the knock against Western brands that fail going into China. But like every other article on this topic, the pro-Chinese side here fails to mention that this is also the very same reason that Chinese brands don’t do well in the West.
3b. While HK and each city and class in the mainland are unique and must be understood individually, for some reason we’re supposed to believe that expensive tea and Li Ning and other Chinese brands (that no one has heard of) are getting the entire “West” right all at the same time? And the first time they try it too! LA and Lisbon are the same? Paris and Chicago? Hell, LA and Irvine are not the same.
4. China is culturally (and internetly, yea I just made that word up) isolated. Not because they aren’t connect or don’t ‘get out’ but because they are so big at home that there is often limited motivation to move into the unknown when there are still so many opportunities in the known. Ok, and they have repressive investment, currency, internet, and travel laws too.
5. Read Elite China or Luxury China for details on what the Chinese consumer really want. Wait 25 more years before anyone produces The Chinese version of Good to Great (even the examples of the past ten years like Hai’er have since stumbled) or the coffee table book: Famous Chinese Brands.
6. This NYT article from 5 years ago says the same thing as the BW article–China brands are going big soon. Look out world! Totally different brands mentioned than Shaun’s article–what does that say about the longevity/global position of Chinese Brands?
7a. BW list of 20 Top Chinese Brands–where’s Huawei and Hai’er? I guess since they are not “technically” registered Chinese companies they don’t count? What does “Top” mean? Certainly not famous or global.
7b. Of the 20 brands in the BW list less than 1/2 are private–only Moutai and Lenovo in the top 10 are. And if these are the best, then branding efforts are pretty pathetic. (Anecdotal evidence: I’ve lived here for 10 years and speak Chinese and haven’t even heard of some of them IN China, let alone out of China.) I think that this is really a list of actually profitable state owned companies with a couple of semi-private companies thrown in just for (Wall) street cred.
8. The best book to read about this would be Capitalism with Chinese Characteristics–it points out specifically (written by a mainland Chinese scholar at Harvard) that NONE, not a single one, of the big Chinese success stories would even exist without Hong Kong. Most of the companies are not really Chinese and even when they are, they leave as quickly as possible to protect themselves from the Chinese govt.
Finally, (or maybe this should have been first) if people can’t name the Chinese brands off the top of their heads then how can Chinese companies be meeting any objective definition of “building a brand?!”