On 4 October 2004, BusinessWeek regional editor for Asia Bruce Einhorn asked in an Eye on Asia blog entry, “Why Can’t China Build Global Brands?” Naming TCL, BenQ, and Lenovo as examples, he wondered why the buy-an-established-Western-brand strategy hasn’t worked as well for these Chinese brands as it has for their other Asian predecessors, such as Sony and Samsung.
That was four years ago. Today, the story is a little different.
In early July, the World Brand Laboratory’s list of the world’s top 500 brands posted fifteen Chinese brands, three up from last year (a 25% increase). This makes China the seventh most highly represented country in the ranking.
Admittedly, 15 of 500 (or 3%) isn’t necessarily something to boast about. And neither is seventh place. But taking a closer look at the Chinese brands that have made it can shed light on why it has taken such a long time for Chinese brands to debut on the global scene; more importantly, what it takes for a Chinese brand to go global.
China’s Big 15
Among China’s big brand-names are two oil and gas companies (Sinopec and China National Petroleum), three banks (Bank of China, Industrial and Commercial Bank of China, and China Merchants Bank), a couple of consumer durables manufacturers (Haier and Changhong), public utilities (State Grid and China Railway Group) and high-tech companies (Tsinghua Tongfang and Lenovo), an insurance company (China Life), and an airline (Air China).
So what do these successful Chinese global brands have in common?
Three observations: First, these brands have very strong positions in the domestic market—i.e., they were very strong China brands long before they became global ones.
Second, they learn to shine with and not against brand China, leveraging China’s almost unparalleled fame. (If you notice, most of these brands are identifiably Chinese.)
Third, they come to outgrow the China mega-brand and, over time, take on unique identities all their own.
Becoming Global by Being Local
The one major reason China is such a big hit is the sheer size of its domestic market. It’s so big that, not only does everyone want to be in on the action, they NEED to be in on the action. China accounts for 1.3 billion of the world’s population of approximately 6.6 billion. (One person out of every five in the world is a citizen of the People’s Republic). Thus, for any company to be truly international, they need to have some presence in China.
On the other hand, for China’s domestic companies, becoming a strong leader locally would already mean, in a manner of speaking, becoming “global.” After all, if you managed to get half of all Chinese citizens to buy into your brand franchise, you already have 10% of the world in your pocket.
Piggybacking to Stardom
It’s easy to establish that, if countries were brands, China would definitely be among those few at the top, being one of the most remembered and talked about in the world. In no small measure, China has become a star in the global stage. And this can sometimes be good for Chinese companies.
Think of Bank of China or Air China. “China” is so deeply ingrained in their company branding that they share strongly in the brand’s popularity. Sure, this can work for Chinese companies just as much as it can work against them. But for many of those on the list of China’s big 15, it’s been more good than bad.
Outshone by a Mega-brand
But that doesn’t seem to explain why so few Chinese brands are making it to the rankings, does it? Or, for that matter, why it’s taking so long for them to get there?
“China” commands very strong brand equity. So much so that, while this does help small Chinese brands gain early fame, the China mega-brand often overshadows the brands of these very same companies.
People outside of China may not know Geely International Corp., for example. But anyone who’s visited China will surely have run into, if not ridden on, a Geely motorcycle. Many would have heard about Geely and, perhaps, would have even spoken about Geely to others. Geely is, after all, China’s first and largest automobile manufacturer. The issue is that Geely has become known as “that big Chinese car manufacturer” and has failed to take on, in the minds of global citizens, an identity independent from that of the China mega-brand.
Under such circumstances, only the biggest, best or, otherwise, superlative companies in China, build brands that are famous enough to stand out amid the glowering brand China.