Co-authored by Brian Davies, Managing Partner, Movéo Integrated Branding
The clichéd image of a Chinese consumer riding a bicycle and buying little except rice is fast being swept away. Chinese people -- in the Peoples' Republic of China, Taiwan and overseas -- are now the largest purchasers of luxury goods. And domestic Chinese brands, such as Haier and Lenovo (a sponsor of the 2008 Olympics), are coming onto the world stage.
On the B2B front, opportunities are opening up everywhere. Domestic enterprises, like Telecommunications companies ZTE and Huawei, are growing from their Chinese bases. Meanwhile, foreign multinationals are seeking to expand their business in China and capitalize on the opening of markets following China's accession to the WTO.
Just a generation ago, most goods in China were simply produced and distributed -- there were few actual brands (e.g. "Product 'A' came from factory No. 306"). Of course, a handful of products did tap into the fervor of the Cultural Revolution, such as Red Lantern radios and Panda cigarettes. And while Chairman Mao frequently mentioned Zhangxiaoquan scissors and Ostrich ink, he did so as a proud head of state, not as an endorser.
Under Mao, China was denied the opportunity to economically evolve. It wasn't until the transforming reforms of Deng Xiaoping that the very "idea" of branding became imaginable in China (advertising was banned until 1979). Once it did (perhaps as a result of latent demand), people rapidly started to establish strong relationships with favored brands. Today, brands are now seen as accepted -- even essential -- elements of a modern society.
An enthusiasm for brand
Today, the Chinese have embraced brands -- and the values they represent -- in a big way. The Chinese Brand Admiration Survey by the Ingram Brand Company found that consumers in Beijing and Shanghai have affinities for both local and international brands (6 of the top 10 "most admired brands" in Shanghai were global). Among the international contenders, Nokia was a clear standout, with strong response also generated by Nike and Adidas. Local favorites included Haier, Lenovo, Moutai and Mengniu.
The rules on branding in China are still being written, and those hoping to simply transport what has worked in the US or other parts of the world may be in for few surprises. For example, according to the Ingram survey, advertising and promotions are not the main drivers of brand admiration, but rather product/service quality and the ability to deliver on promises. The US or European marketer will need to be flexible about both the tactics and brand building strategy used in this rapidly developing environment.
Homogeneity is an illusion
While perhaps not as complex as Europe, the notion that China is a homogenous market because it is a single country is a false one. One challenge for global marketers is tailoring brands to varying regional sensibilities. There is a huge divide between the rich coastal cities and the poorer interior of the country, and companies must make sure their brand messages fit the audience. Shanghai (perhaps partly due to its colonial past) is a cosmopolitan city more open to new ideas than other parts of country. In central regions, successful brands may need to be more straightforward in their messages. This may even mean initially "selling the category" -- an approach usually frowned upon in the West.
Generational differences may come into play as well. Younger Chinese are fast brand adopters because they are "brand natives." For older Chinese, such as those in senior management positions, brands may still represent a type of "bourgeois" thinking. The process of building a trusted brand relationship with them may require a different approach.
West is best?
Clearly Western brands, especially those that entered the "new China" early and have had time to build credibility, have cachéd. On a recent trip there, I was told by a Chinese colleague not to worry so much about showing Chinese people in marketing materials. In his opinion, Western models enhanced the perception of quality. While this may be true, a new Chinese pride is emerging. At some point, stressing the Western heritage of a brand may no longer be enough to convey the quality message. With Chinese consumer companies gaining share and prestige, there is no reason to think this phenomenon won't crossover to the B2B space as well. Depending on future marketplace equities, Western brands may want to consider a shadow endorsement strategy, in which the Chinese brand name is the most prominent -- or the only -- one.
Don't go it alone
Successful branding in China (like anywhere else) depends on understanding the customer. This concern has spurred some B2B marketers to seek local expertise. According to Adweek, the country today has some 80,000 ad agencies doing everything from designing fliers to placing ads on the Internet. And yet this route is not without peril -- qualifying local resources, many with little or no track record, can be a daunting task. One way around this is to find a US resource like Movéo, that has taken it upon itself to do the extensive (not to mention expensive) due diligence needed to select the right resource. Our clients now benefit from the marketing savvy, cultural insights and geographical reach of our partner - Upstream Asia -- but only after an extensive search process was concluded. Today, an exchange of branding practices, processes and methodology has begun between the two firms. We believe the results will help our clients better integrate their global brand strategies -- while minimizing the cultural learning curve inherent in introducing brands in China.
