What will it take for a Chinese brand to be accepted by global consumers? Doreen Wang, New York-based global director of Millward Brown's BrandZ describes the path from manufacturer to marketer.
Two brands in the BrandZ ranking of China’s most valuable brands derived over half their revenue from overseas in 2014: technology company Lenovo (62%) and ZTE, which makes telecom equipment (53%). A look at the ranking over the five years since it launched clearly shows Chinese brands’ growing global presence. Lenovo, for instance, has increased the proportion of revenue it gains from abroad by 10% since 2011.
ZTE has successfully met the evolving communication needs of consumers worldwide. In the past year, it drove sales by developing its mobile internet and cloud-computing capabilities, including a cloud radio technology that facilitates clear signal transmission to mobile devices. The brand has a stronger focus on innovation than many competitors — over one-third of the workforce is made up of R&D specialists.
A series of savvy acquisitions has enabled Lenovo to expand onto the world stage, growing sales across PCs, tablets and smartphones through 2014. Acquiring Motorola Mobility, for instance, positions it to become a contender in smartphones the way it became a leader in PCs after purchasing IBM’s PC division.
Both brands have succeeded overseas by bridging the gap between how consumers perceive Chinese brands and how they view successful global brands. They have a profound understanding of consumers’ needs and desires, and meet them by leveraging their decades of production experience to make and market quality, value-added products under their own brand names.
The challenge facing other Chinese brands with global ambitions is to establish themselves as more than just manufacturers for western brands, or "hot stocks" like Alibaba — which entered this year’s BrandZ Top 100 ranking at No. 2 after its record-breaking $25 billion IPO on the New York Stock Exchange.
Close the confidence gap
The out-of-date view of Chinese brands as makers of low-price, low-quality goods has not yet caught up with the reality of Brand China. Only 32% of overseas consumers say they have faith in products that were "Made in China." Chinese brands need to change global perceptions of quality and reliability to increase trust. This will take time, and must begin with understanding the perception gap, then closing it with clever marketing that clearly communicates the reality.
Home appliance brand Haier, which derives 11% of its revenue from overseas, actively participates in the development of international quality and standards, and designs products that surpass them — emphasizing the resulting reliability and efficiency through its marketing.
Move up the value chain
Brands that previously leveraged low cost as a point of differentiation need to move toward the high end of the value chain if they are to succeed globally, and align their marketing to reflect and reinforce their new positioning. Jewellery retailer Lao Feng Xiang for example, which grew its brand value 10% in 2014, has made a bold effort to move upscale by opening a flagship store on New York’s Fifth Avenue.
Gain competitive advantage with creativity
BrandZ research shows that China’s technology brands are considered "creative" by consumers — not a characteristic normally associated with Chinese brands. This helps them compete with global technology leaders in terms of brand value. Tencent, for instance, is the fifth most valuable technology brand in the world, after Google, Apple, IBM and Microsoft, and gets 7% of its revenue from abroad.
The smartphone brand Xiaomi has successfully repositioned itself from "the poor man’s iPhone" to an exciting, disruptive technology brand. Its innovative business model to crowdsource improvements for the product interface of its handsets has built an engaged and loyal base of fans. Some overseas users even translate Xiaomi software into local languages.
What’s most important is that innovations are meaningful and relevant. Chinese marketers must have a good understanding of overseas consumers, then innovate and localize to meet their needs.
Tell a powerful story about Brand China
By playing on China’s unique cultural and social identity in their marketing, brands can offer meaningful and appealing points of differentiation. Being seen as different in a positive way is a key component of a strong, growing brand.
Banking and insurance companies could emphasise Chinese values such as diligence and integrity, for instance. Fashion and apparel brands can tell a story of China’s creativity and diversity, using designs and local crafts. Leading casual apparel brand Metersbonwe gives customers unique Chinese cultural experiences by applying different themes to stores around China, a strategy it plans to extend to its overseas stores.
For decades, consumers have bought products made in China and branded in the West. But as Chinese brands continue to innovate and produce high-quality offerings, the image of "me-too China" is no longer relevant. If brands want to be accepted, valued and desired in global markets as consumer brands, and earn recognition and profit as a result of their brand-building efforts, they need to consistently live up to and promote the reality.
Doreen Wang is global head of BrandZ with Millward Brown
This article first appeared on campaignasia.com.