The Long March
"Made in China" lost its novelty long ago. The label has become ubiquitous in much of the world, affixed to shoes, toys, apparel and a host of other items produced for global companies. What is a novelty, however, are China-made goods sold under Chine brand names. Only a handful of Chine firms so far have the money and the management experti to establish international brands; most of the vast remainder are struggling to attain even national recognition. But the pioneering companies testing the waters overas could be on the threshold of something big.
Some believe that individually, with the help of enterprising local management or eager multinational partners wanting to add new products to their stable, Chine brands could become a global phenomenon within a decade, marketed on quality and exotic appeal, as well as competitive pricing. Says Viveca Chan, Hong Kong bad managing director at Grey China, an advertising agency: "If there's one country in the world that has ample potential for taking brands global, it's China."
In the short term, the strongest promi is in Chine medicine, herbs and specialty food, as well as goods that play to the romantic foreignness of China ---- whether in cosmetics, fashion or music. Says Kevin Tan, general manager for China of market-rearch firm Taylor Nelson Sofres in Shanghai: "There's still a lot of mystique associated with China. If you're taking something like cosmetics, which is image-driven ... suddenly you've got a strong player." Also making a bid to go global are a few trend tting Chine beverage and beer brands. Further down the road there is brand-potential for products such as home appliances5 that can offer quality at a competitive price.
Some of the brands will eventually go abroad via joint ventures or mergers and acquisitions. For their foreign owners, the brands will provide speedier access to China's consumer market and distribution channels, while at the same time rving to complement the owners' premium brands in global markets.
The concept of Chine brands has been evolving through the 1990s, but is now getting greater attention at home. Although the domestic market is still robust, a handful of state-
owned enterpris, or SOEs, including listed Chine companies, are now looking to establish international brands becau they reckon the quality of both their products and their management has improved. Chine joint ventures think their products can compete on quality with foreign brands anywhere, while enjoying the advantage of being perceived as exotic.
Besides bringing in additional revenue, a global brand also burnishes a company's image in China, stimulating sales among status-conscious domestic consumers. For example, state-owned soft-drinks maker Jianlibao has developed its overas market in part to "establish a good image", which in turn enhances consumption at home, says Chief Executive Han Weixian. But building a brand takes time, money and marketing savvy. Some Chine brands have nudged into the international market on the back of competitive pricing, but have also utilized other strategies. Jianlibao has highlighted its Asian appeal, prenting itlf as the preferred rehydrating sports-drink of China's athletes, while Meidi, an air-conditioner maker, is pushing for greater brand recognition. Others like Haler, one of China's leading home-appliance producers, have pointedly steer
ed away from price, competing instead on product quality and an efficient distribution and after-sales rvice. In another example, the American direct investment firm, Asian Strategic Investment Corp., or Asimco, has positioned its recently acquired Five Star beer as a premium brand.
Of cour, global sales don't mean global brands, as Grey China's Chan points out. And it's still early days for Chine companies. For a start, investment funds for brand promotion are hard to come by, says Chu Liangjin, the Qingdao-bad director of the overas division of China's Tsingtao brewery. "No more than 5% of our total export sales can be reinvested in promoting our brand overas," explains Chu, adding that Tsingtao is trying to persuade the foreign-currency authorities to change this standard practice for SOEs. With the government's emphasis on preventing the outflow of foreign currency, the chances of the restrictions being lifted are slim.
Although targeted at SOEs private companies have greater spending freedom the 5% limit is bound to hamper Chine brands. Jianlibao, for example, has invested about $10
million to ll its brand in the U.S. market, but Li Jingwei, the company's general manager, knows that's just a drop in the bucket. Sitting in his office at Jianlibao's industrial complex in Sanshui, a 40-minute drive from Guangzhou, Li reckons that to successfully generate brand recognition among Americans, the company needs to spend at least $50 million-100 million on marketing. He has no doubt that consumers will like Jianlibao's range of sports and soft drinks (which taste remarkably like Coca-Cola's Coke, Sprite and Orange Fanta), but explains that "we need money to invest in promoting ourlves."
Says B. C. Lo, Hong Kong-bad vice-president and director of external affairs at Coca-Cola China: "I'm not sure whether they can really penetrate the U.S. market or become an international brand, but certainly they are a strong competitor in China." Indeed, Jianlibao, which exports to more than 20 countries, will need a great deal more money and years before it can be considered a rious player abroad. Last year the Chine company sold just 200 000 cas of drinks (there are 24 bottles or cans in a ca) in the United States. Although the company has funded a host of promotional events donating
$100 000 for U.S. flood relief in 1 997, advertising at Miss America pageants, sponsoring the $20 000 Jianlibao Cup Golf Tournament in 1997 ---- its marketing efforts pale in comparison with tho of the likes of Coca-Cola.
