Branding has a long history in China.

The made-in-Jingdezhen, label has been a seal of fine ceramic-ware since the Song Dynasty (960-1279).

Jingdezhen is a town in East China's Jiangxi Province.

More recently, in the Qing Dynasty (1644-1911), many famous brands were established in Beijing, which was the imperial capital back then.

Tongrentang, the best-known brand in Chinese herbal drugs, Ruifuxiang, in clothing, and Buliansheng, in footwear, are among the few ancient brands that have survived years of internal strife and foreign invasions.

But, with the exception of Tongrentang, the allure of these brands has been greatly diminished by outdated products and poor marketing practises.

Despite rapid economic growth in the past 25 years, China has remained a barren land for premium brands that can add value to products and services.

That is changing.

Intensifying competition from foreign manufacturers, as the Chinese market rapidly opens to imports under the World Trade Organization arrangement, is putting marketing at the top of many domestic vendors' agendas.

Pressure on domestic vendors to build their brands has also been heightened by the increasing domination of the retail sector by the few foreign-owned supermarket and department store chains.

Non-branded products, with minimal bargaining power, will have to accept ever-thinner profit margins in return for shelf space in sales outlets, which are controlled by retail behemoths.

From Page 1

For larger domestic manufacturers, which desire to expand overseas, branding is paramount to their success.

Although they are likely to have already established strong brand recognition of their products in the domestic market, they are relatively unknown in many foreign countries.

Meanwhile, foreign vendors, who have entered China's market, are also keen to spit-polish their images, because they, too, feel the heat of competition from many newcomers.

Some of them also feel the pressing need to update their images in a fast-changing market, to keep up with the often-short-lived trends in consumers' lifestyles.

"Branding is the most pressing task for many Chinese enterprises," says Frank Chen, chief executive officer of Interbrand China.

Headquartered in London, Interbrand is one of the world's leading branding and brand-management firms.

So, how can a firm succeed in building its brand?

"Creating an appropriate brand identity, or digging out the core value of a brand, plays the most important role." Chen explains.

That means companies should take "Who are my targetted consumers?" "What does my brand stand for?" and "What value and mission will be conveyed to consumers through branding?" into consideration, Chen adds.

Even for Haier, one of China's largest manufacturers of white goods, and which has established a sound reputation for quality and service in the domestic market, branding is "key," says Ji Guangqiang, the company's marketing manager. "We always keep in mind that it (branding) is always one of the most important aspects of our business."

How could the company forget about branding? It almost went out of business in 1984 because of its poor reputation, especially regarding workmanship and service.

"We have taken that lesson to heart," says Ji.

In a rather theatrical show of determination, Zhang Ruimin, Haier's chief executive officer, once in 1984, around the time the firm was established, wielded a sledgehammer and smashed in front of his firm's production staff 76 refrigerators that failed to pass the quality test when the company was set up in 1984

Right around that time, the company also made a strong bid to improve customer service.

"We keep improving and adapting our products to meet the lifestyles of our customers," says Ji.

In the early 1990s, Haier's customer relations staff reported many of its customers in rural communities were using their washing machines to also clean vegetables.

Such unconventional uses resulted in clogged machines, touching off in a deluge of complaints from consumers.

What could Haier do about it?

"We could not tell our customers it's their fault, that they abused the machines," Ji says. "We redesigned the draining mechanism so our customers could wash vegetables in our washing machines, without causing any problems."

The firm's management team considers house calls to be an integral part of the company's business.

Such after-sales services are of particular significance in China, where consumers are less prone than their counterparts in the United States or Europe to make their complaints known to vendors.

"If we don't take the initiative to contact our customers, we will probably never know there is a problem, until there is a drop in sales," Ji says. By then, "our reputation will suffer."

To be sure, State-owned enterprises, such as Haier, can always count on government support in difficult times. What's more, the plentiful supply of labour, at relatively low wages, will always remain a strength. But "that's not the point," Ji says.

He agrees being a State-owned enterprise comes with certain privileges. However, "those are not the main attributes of our success," he adds. "Quality and service are."

Having gained a dominant share of China's market, in terms of durable consumer products, particularly refrigerators and washing machines, Haier is stepping up efforts to boost overseas sales.

In the United States, for instance, it has cornered almost 50 per cent of the market for small refrigerators, which sell especially well among university students who live on their campuses. In the more developed countries, "we concentrate on the niche market," Ji says.

In many developing countries, particularly India, Haier has had considerable success promoting its products in the market's upper segment.

As a premium brand, Haier's products can be sold at higher prices compared with competitors' items. This branding advantage has helped Haier widen its profit margin, while staying competitive, Ji says.

Mengniu Dairy is the other Chinese mainland company frequently cited as a model in branding.

Mengniu, which began as a little-known firm in Inner Mongolia, has become one of China's three leading dairy producers in just five years.

The Hong Kong-listed company's revenues grew at a compound rate of 137 per cent a year in the three years to 2003. Its advertisements, dominated by the company's corporate colours of green and creamy white, can be seen on subway cars in Hong Kong and on large posters along many of Beijing's highways.

"It is fair to say our rapid growth has largely been driven by our success in branding our products in association with sports stars and astronauts," says Sun Xianhong, Mengniu's vice-president for marketing.

Mengniu's greatest publicity coup was its association with China's space programme. The dairy firm won the bid to supply milk and other dairy foods to the 14 astronauts in China.

Yang Liwei, the first Chinese astronaut in space, was featured in several of Mengniu's advertisements, which generated tremendous attention among consumers both on the mainland and in Hong Kong.

Other mainland companies big on branding are: Lenovo, the country's largest personal computer maker; Huawei Technologies, a large information technology company; and Galanz, which produces home appliances.

Huawei's planned IPO (initial public offering), on the NASDAQ, reportedly prompted one Wall Street analyst to quip "that is the biggest reason I know to sell Cisco."

Lenovo, already a well-established brand in the mainland, recently acquired the personal computer business of IBM in a high-profile transaction. IBM's highly recognized brand name in the personal computer market around the world can greatly boost Lenovo's global expansion efforts.

Galanz has adopted a rather different strategy in its overseas plan. After years of contract manufacturing for overseas brands, the company recently began producing goods for sale under its own brand. Since 1995, Galanz has gained a 40-per-cent share of the European market for certain lines of its home appliances.

Many foreign brands have been increasing advertising spending in China to raise recognition of their brands among consumers. For instance, General Electric, the US-based industrial and financial conglomerate, has mounted a major publicity campaign linked to its sponsorship of the 2008 Beijing Summer Olympics.

Procter & Gamble (P&G), the US-based home products and health-care giant, is the biggest spender, this year, in the bidding for advertising time on CTTV, the national television broadcaster.

Its total bid amounted to 380 million yuan (US$45.78 million).

Advertising spending by four of its brands Olay, Rejoice, Crest and Head&Shoulders ranked among the top 10 biggest advertisers in China last year, indicates a survey by AC Nielsen, an international market research firm.

"At P&G, branding is the main medium to communicate with customers," says Carles Zhang, a senior manager of P&G in China. "We have to maintain a high awareness of our brands at all times."

At P&G, the consumer is the boss. All P&G products are produced on the basis of wide and deep investigations of the market.

The company has established consumer-market-knowledge departments that conduct market research.

"High quality is a must at P&G. The company annually puts a great amount of money into innovation." Zhang said.

Other foreign brands, such as Adidas, have their own opinions about branding.

As one of the world's leading sportswear manufacturers, Adidas was among the first such firms to build their brands.

"Adidas, from the first day it was founded, began to connect itself with sports events, especially football events," says Tao Jin, manager of P&G China's marketing department.

"Adidas was the first to provide the best sportsmen with the best sportswear."

As early as the 1920s, Adidas began forming strategic partnerships with the World Football Union. Since 1928, Adidas has been co-operating with the Olympics. The firm has been providing the athletes with sportswear. It has also participated in several other big sports events.

Adidas' ad campaign 'Impossible Is Nothing' reveals the firm's understanding of the need for branding.

"First, it (Impossible Is Nothing) motivates sportsmen to challenge themselves to achieve good results in competition," Tao explains.

"More importantly, it encourages all Adidas' staff to try their best when contributing to the company, tapping more and more products."

(China Daily 04/04/2005 page1)