Opinion / Op-Ed Contributors

Creating brand value in global market

By Wang Zhile (China Daily) Updated: 2011-08-18 08:17

After reform and opening-up, Chinese companies have, through their own efforts and with government support and the promotion of many industrial associations, achieved remarkable progress in brand building.

Brands are the intangible assets of companies. As assets, they can be freely transacted, which means ownership of the brands can change. Not only can foreign companies purchase the brands of Chinese companies, Chinese companies can also buy foreign brands. Such transfers of ownership don't involve a change in the brand's nationality they are merely a change in company ownership. Thus, there are no brands owned by China only brands owned by Chinese companies. Take Volvo, for example, which was purchased by Geely Automobile, it is not a Chinese brand, but a brand owned by a Chinese company.

If we mistake a company's brand as being a nation's brand, it will politicize trade issues.

Therefore, we should not mistake the nationality of the company for the nationality of the brand.

In the latest government document on brand building in industrial enterprises, it specified "brands of industrial enterprises in our country" instead of "Chinese brand". It emphasizes that companies are the owners of brands and as such they are responsible for further developing their brands.

Confusing a company brand as a national brand will lead to politicization in the brand-building process, and excessive administrative intervention and missteps in the company's development of the brand.

Since brands belong to companies, they must be recognized by the market and grow and develop through market competition. Better business operations mean better brand awareness; but a decline in a brand's appeal will obviously adversely affect a company's business. For example, with its market share decreasing, the Nokia brand has devalued to the extent that some experts forecast that it will be purchased by another company in 2012.

During three decades of reform and opening-up, many Chinese companies have created their own brands and strengthened their global presence through international competition. However, there is still a big gap between them and top international brands. The challenge we must address is how to promote Chinese well-known brands into renowned brands in global markets.

We can rely neither on ideology or administrative intervention to cultivate and develop renowned brands, and we must let the market decide whether a brand can survive and thrive.

To do this we should build a domestic market and integrate fully with the global market by eliminating market barriers and protectionist measures.

We should be more globally aware and cultivate and develop brands that are truly global in cooperation with transnational companies.

With the end of the Cold War in 1992, a new era emerged, characterized by peace, development and cooperation. Globalization has become the trend. Transnational companies have rapidly developed to be global companies that build the global industry chain and increase the localization process.

Mergers and acquisitions (M&A) among foreign and Chinese companies are common now. Therefore, we should be impartial to companies that compete in the Chinese market and "provide equal market treatment for both domestic and foreign companies and brands" as the document stated.

Only in a fair competitive environment can Chinese companies build globally renowned brands.

The author is a researcher with the Chinese Academy of International Trade and Economic Cooperation.

(China Daily 08/18/2011 page8)

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