Chinese firms work on their international brand image

(China Daily)
Updated: 2006-11-03 20:59

This Tuesday was a dark day for Li Dongsheng and his company TCL Group. Its flagship TV arm TCL Multimedia Holdings Ltd said it would cut staff and trim its operations in Europe, as it struggled to build TCL into a global brand.

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When the TV maker formed a joint venture with French video-technology group Thomson two years ago, one of TCL's goals was to expand its presence in Europe and North America through the brand influence of Thomson.

But in the first nine months its European business had already brought US$202 million in net losses.

That will not dampen Li's enthusiasm to make his brand known to the world. Nor will it prevent other Chinese companies from seeking global prominence for their brands.

The brand value of one Chinese firm, China Mobile, is already big enough to place it on consultancy firm Interbrand's global top 100 list.

"Chinese companies could catch up very fast in brand-building," said Jez Frampton, chief executive of Interbrand, at the BusinessWeek CEO Forum yesterday in Beijing.

There are parallels to be found between today's China and Japan 50 years ago in terms of aspirations, strategies and moves to build globally known brands.

Although Chinese products and services are often associated with words like "cheap" and "low quality," many have now gone beyond that level.

China is the world's largest manufacturing base of computers due to the low cost of labour. But Lenovo now has products and brands on a par with those of HP, Acer and Dell after 21 years of technological development, the acquisition of IBM's PC unit and the rights to the Think brands.

Many Chinese firms, poised to move onto the global stage for a bigger market and higher profit margins having already achieved success in China, are also determined to build their own brands.

And learning from the experience of successful companies is a major step in their strategies to build brands.

Neusoft, the biggest Chinese technology services outsourcing firm, started 15 years ago from a joint venture with Japanese partner Alpine.

It had no budget for brand-building and now has a corporate brand and cultural centre to establish brand images inside and outside the company.

It hired Interbrand in 2005 to formulate a branding strategy and changed its company logo to "Beyond Technology," trying to depict itself as a global service provider.

"I do believe the use of professional consulting firms to help make your brand strategy is very important," said Liu Jiren, chairman and CEO of Neusoft.

Samsung, a brand-building model for many Chinese firms, stresses the importance of sports marketing to take brands further afield.

The Olympic Program (TOP), the International Olympic Committee's top sports sponsorship programme since 1998, has been a key factor in Samsung's success.

In 2004, Lenovo became a TOP partner of the Olympic Games. Its brand was seen by millions of people at the Turin Winter Olympics this year and will be seen by billions more in 2008 on its home turf in Beijing.

Leveraging the existing influence of established brands is considered a shortcut for companies in China to expand into the global arena.

In the past three years, electronics maker TCL formed a joint venture with Thomson. Lenovo acquired IBM's PC business. Haier and CNOOC tried to acquire MayTag and Unocal. All of these moves have helped expose Chinese companies to the world.

And innovation, which often goes hand-in-hand with brand image, has become vital for Chinese companies.

China Mobile, with a brand value of US$3.55 billion according to Interbrand and the 85th most valued brand in the world, has been a leader in the use of data services among mobile operators.

It has about 300 million subscribers slightly more than the population of the United States and these people send 1 billion text messages per day.

Working with Google, the world's biggest mobile carrier in terms of subscribers and market capitalization will also launch new services like a mobile search.

But there are still many potential pitfalls for this newcomer to the global stage.

Many Chinese companies focus on the tangible aspects of brand-building.

They spend a lot of money on ads in the global media, print new name cards with new logos and give out gifts with their new logos at exhibitions.

"You need to have a promise in the brand to your customers," said Gerard Kleisterlee, chairman and CEO of Royal Philips Electronics, whose brand value has risen by more than 50 per cent since it began repositioning in 2004.

Chinese companies still need to follow global changes closely.

With the popularity of the Internet, blogs and Wikipedia, communication has become a person-to-person process, rather than the old model between mass media and the public.

Frampton said that this change means some control in branding has shifted to the hands of consumers and failure to recognize this trend could be dangerous.

While blogs have become an important vehicle for circulating brand image, Chinese companies still prefer TV channels, newspapers, and Internet portals.

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