“China is home to the world’s second largest economy and its most dynamic market, but, as yet, its companies have struggled to create any distinctive global brands,” reflected Fiona Wilson in a Monocle article “Brand National – China” a year ago. “Could it be that only a few even want to try?” When Li-Ning 李宁有限公司, the Chinese sportswear brand, began its launch in the US in 2010 it underwent a logo redesign, adopted an English slogan and invested in an expensive TV and print advertising campaign.
“Most Chinese firms don’t need to go global,” says Jonathan Chajet, former Asia Pacific exec at the brand consultancy Interbrand. “The ones that are going outside are the ones that have already consolidated their merket share at home and can build profits that will fund global expansion. Going overseas is the only way that those firms can hit their growth targets.”
Many Chinese firms’ business models are based on low cost and they don’t have the margins to justify the expense of battling their way into reluctant markets. There are already plenty of Chinese brands – such as car maker Chery – selling in Africa, Brazil, Southeast Asia and the Middle East. Chery Automobile is a partner of ZAZ since 2006 and manufactures from CKD kits some of its vehicles in the plants from Zaporizhia and Illichivsk. Since February 2011, the Chery A13 is manufactured on full-scale in Ukraine, where it is sold rebadged as the ZAZ Forza.
Why would Chinese companies chase 300 million middle-class consumers in Europe and the US when the real opportunities are with the 3 billion consumers in China, Africa and India (See SinS book review. Africa Rising: how 900 million African consumers offer more than you think) who are already predisposed to their products ( See Africa-Asia prospects II: more solid research on Africa needed to inform Sino-African relations).
Most Chinese companies are geared towards the Chinese market and they would have to struggle to turn themselves into something that looks like a global brand. Few are prepared to take the risk that Lenovo, the world’s second largest PC maker, did when it dropped its original Mandarin name (Legend) for something that would work in the international market.
Like many private Chinese automakers, some Geely models are criticised for too-closely resembling those of famous-name foreign manufacturers. In Western media, the Geely GE has seen such opprobrium for looking like a Rolls-Royce.
Company name aside, the other big question for the CEO of any Chinese company is how much they want to signal the “Made in China” tag. The reputation for shoddy products once stuck to Japan and Korea. (See Africa-Asia prospects I: Japan’s dilemma of North or South)
What no-one is expecting is a global consumer brand, let alone a luxury label, to emerge from China. Yet analysts are eyeing Erdos (Mongolian for “Luxurious Palaces in the Grassland,” to say “Showily and Graceful Life”), the Inner-Mongolia-based cashmere company that can legitimately claim to be a world leader (it controls 40% of China’s raw cashmere and supplies to luxury labels). “Erdos” is the first cashmere trademark that wins the honor of China Famous Brand.
In 2007, Erdos Group opened a flagship store in Shanghaito extend its luxury 1436 brand (named after the cashmere yearn) to eastern China, after opening stores in Beijing and Shenzhen. This store is the brand’s 15th specialty store in China. (See Shokay: a Socially Conscious Business in China)