May 22, 2012 1:04 am

Country focus: Chinese wares face struggle for acceptance

If numbers were all that mattered, the 13 Chinese names in the Global BrandZ top 100 would indicate the country has finally come of age.

It has seven of the top 10 brands in Asia and outshines other emerging markets in the rankings.

But none of the mainland’s brands are true household names with a significant global footprint.

Most are ranked among the world’s most valuable brands largely, or even exclusively, because they are big in China, not because they are good at selling an image globally.

Though China has made steady progress up the rankings, “brand China” remains largely in its infancy. It will be years, possibly decades, before the mainland’s brand clout catches up with its financial muscle, analysts say.

Many of those that made the top 100 are state-owned businesses that are big because China is big: banks, insurance companies and telecoms that rely on 1.3bn consumers to boost their name recognition.

Asia: Top 10 by brand value
Rank Brand Brand value ($m) Brand contribution* Brand momentum**
1 China Mobile 47,041 4 9
2 ICBC 41,518 2 9
3 China Construction Bank 24,517 2 4
4 Baidu 24,326 5 10
5 Toyota 21,779 3 5
6 Tencent/QQ 17,992 4 8
7 Agricultural Bank of China 17,867 2 4
8 NTT DoCoMo 15,981 3 6
9 China Life 14,587 3 9
10 Samsung 14,164 3 9
 Source: Millward Brown Optimor (including data from BrandZ, Datamonitor and Bloomberg)
 * Out of 5
 ** Out of 10

There are some exceptions: Baidu, China’s largest online search engine, Tencent, which runs the world’s largest instant messaging service, and new entrant Moutai, a spirits brand with a strategy for conquering the globe.

But there are, for example, no Chinese carmakers in the list, despite Beijing’s 30-year-old ambition to build a world-class automotive industry. Chinese consumers almost universally tell market researchers they prefer foreign brands on every basis except price.

Foreign carmakers dominate the market, with more than 70 per cent share; and for the past two years local automakers have been losing rather than gaining ground.

Foreign cars are seen as more reliable, stylish, impressive, and just better all-round value than Chinese-branded cars, which continue to compete mostly by being cheap.

Klaus Paur, auto analyst at Ipsos in Shanghai, explains: “Sometimes, international car manufacturers understand Chinese consumers better than Chinese manufacturers do.” He adds that international carmakers have even done a good job of penetrating the lower end of the market where locals once dominated.

Some mainland carmakers, such as privately owned Great Wall and Chery, have made limited inroads into selling competitively priced cars in other emerging markets, such as Brazil or Russia.

However, Chinese industry executives admit that they are battling a global perception of China as the source of cheap, shoddy, possibly dangerous goods – whether they be cars or infant milk powder.

The story is largely the same in the luxury sector, where local brands are struggling to raise the image of “made in China” from the lowest end of the market to the highest.

Homegrown luxury brands have begun to emerge, some backed by government cash, but they will have a tough sell to persuade even mainland consumers they can deliver quality and style equal to that of historic European luxury houses.

Over time it can happen, says Stanislas de Quercize, president of Van Cleef & Arpels: “I see in China an excellent eye for design,” he says, adding “the craftsmanship has always been there, we just need to stand back and look at a longer period of time.”

Tom Doctoroff, chief executive of JWT North Asia, a WPP subsidiary, says in his soon-to-be published book What Chinese Want that some Chinese brands can make it overseas by “exploiting narrow markets in which ‘Chinese-ness’ is seen as an advantage rather than a weakness”.

One brand trying to do just that is Shang Xia, a luxury brand launched recently by Hermès and designer Jiang Qiong’er, with an impeccable family pedigree and a keen eye for modernising ancient designs.

Taking inspiration from such unlikely symbols of imperial elegance as bamboo underwear worn by China’s rulers in summer, Shang Xia’s goal is to resurrect the image of an older China where only the best would do.

It is that rare thing: a Chinese brand that celebrates its Chinese-ness, rather than hiding it. If it succeeds it could herald the emergence of China as a power to reckon with in the global luxury business and provide a blueprint for others to follow.

Jerry Clode of brand consultants Added Value says Shang Xia has a strategy that could work: “embed their brand in a story of 5,000 years of continuous culture ... and avoid negative perceptions of what an international Chinese brand would mean”.

He believes its success could “provide a pathway for other brands with core Chinese equity to try to do the same thing without a foreign partner”.

But the majority of Chinese brands cannot trade on Qing dynasty romanticism as a core value. They will have to forge their own Chinese-ness before representatives of the world’s largest country can take their place among the true pantheon of global brands.

Additional reporting by Shirley Chen

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