China and global branding

[Zhende ma?]

China seems to be moving up the value chain and trying to establish a global brand presence. Will it work? Lenovo is sure trying. However, China may not have the close ties and advantages that Japan and South Korea had in using the US market to globalize their brands (though China has MFN status).

[Outofin]

Whether Lenovo will succeed is hard to tell at the time. But I'd like to broaden the topic to all China's brands.

Among the Chinese companies, Huawei is the most successful company in the global market. It has been competing with Simens, Nortel and Cisco and shows its own advantages in both technologies and marketing. But it's not in consumers market, yet. (They might launch their 3G cell phone this year.)

Haier is a renowned brand. However, I have to say, the numbers they publish are very very dubious. Do you believe Haier is 5 times than TCL in size?

We have a bunch of appliance and consumer elec companies, Haier, TCL, Konka, Changhong, etc. They will be fine. They could compete with global players in the domestic market, then they could do it in the global market too.

In the worst case, if they couldn't raise their market shares, they will still be growing with China's market. A vast market is what many countries, say, Korea, don't have. Shanghai Auto doesn't have its own brand. But it makes money, then it buys brands. Who should rule the game market, a Chinese company sells Korean games, or the Korean company which actually makes the games? It turns out the Chinese company Shengda won, because Shengda makes more money so it acquired the software company.

We probably will need more time. Samsung is still trying to change its public image and move toward hi-end market today. Consider this, we are 10 years late than Korean.

[yonglan]

However, China may not have the close ties and advantages that Japan and South Korea had in using the US market to globalize their brands (though China has MFN status).

Correct me if I am wrong, but I think almost every country in the world now gets MFN status from the US. I think that was part of the WTO.

You're certainly right about the enormous benefit Korea and Japan got, even outside of huge amounts of public and private cash. China hasn't gotten that for many decades, though they do get some minor non-bussiness assistance, for instance with road safety.

My understanding, and again someone correct me if I am wrong, is that China is already a dominant player in the home electronics market in Australia and New Zealand, from fridges to tvs.

[chengdude]

Here's what The Economist has to say:

http://www.economist.com/business/PrinterFriendly.cfm?Story_ID=3535818

[Outofin]

Here's what The Economist has to say:

I agree 70% of the article. But the author seems like a outsider. When he uses D'Long as an example, it becomes amusing. DeLong was never a serious manufacture player, was it?

I have a question for Zhende. The second option of the poll is about troubles Taiwan had. Could you explain more about Taiwan's experiences? I'd like to know. Thanks!

[wushijiao]

I think Taiwanese companies manufactures stuff for other brands, thus producing world quality products without getting the credit. For example, I'm pretty sure my Motorola cell phone was made by some company in Taiwan that Motorola contracted out (I also got this info from the Economist). I think China will learn from this. But it won't be easy.

[Zhende ma?]

When I talk about the troubles Taiwan had I mean that they never successfully had a well-known global brand. The closest a Taiwanese company has gotten to a consumer brand is Acer Computer which was well-known until the Dell/Compaq axis began dominating the PC market. Other companies like National Taiwan Semiconductor ( I think this is the right name) are massive players in their market but they are sourcing companies for parts, not well-known consumer brands like Sony, Samsung, Mistubishi, LG, etc.

[Outofin]

Taiwan businesses are doing very well in mainland. Beside Acer, there is BenQ as well. I like 台湾滚石 in music industry very much. In the US, I found Gaint bicycles quite populous here. Weichuan (or Wei Quan) is everywhere in Chinese groceries. But it's only limited in Chinese communities.

Yes, Taiwan should have done better, given its economy scale. Taiwan, HongKong, Singapore and Korea are admired as Four Dragons. HongKong and Singapore are 2 cities, which are focus on finance more than manufacture. If we take Taiwan and Korea in the same category. Taiwan is way behind Korea, in term of branding. I don't think semiconductor industry will ever have a brand, if they merely make but not design the chips.

[yonglan]

A lot of what we are talking about is very old news. About 5 years ago The Washington Post had an article about the fact that Taiwanese companies chose (long ago) to be the source for larger companies rather than brand their products as China has been trying to do.

China just better sell better crap than what they sell locally.

[39degN]

I believe China will have more than 5 global brands in 10 years. They are just not ready yet. They chosen to earn more money as the first step, it doesnt mean that they dont want to win in a long run. Once you have money you can hire the most talented and experienced people in the world to help with your brand building, product research and development, that would happen in coming 5 years. Taiwan's problem is the islands are too small, they have no big enough market capicities. Mainland is different, in the future, once you become a big player in domestic market, you will certainly be a big player worldwide simultaneously. The huge population can be too much for the country's economy development meanwhile can be an engine too. Think about Shengda's development you can get it. There's actually another potential black horse you may didnt realise yet, the Tencent, known as No.1 player in the field with its product instant massenger QQ which claimed ranging over 30,000,000 people in China if not even more. The tool is free in the first place, but right now if you want to register an account you have to pay RMB 1 Yuan through cellphone message registration. We can rarely find person who has no QQ number if he/she is a netizen in china, not to mention lots of other membership sevices attached more payments are avilable with QQ, and the population of netizens in China is still rapidly increasing. Of course the above are just examples in information related fields, we can find even more examples in other industries too.