Chinese brands have come a long way since the days of Mao where coats and boots came in two colors and consisted of dubious quality. Rising in complexity and caliber, brands such as Haier and Chery are not content to rule the middle kingdom and instead seek to invade new markets. Forget bringing your brand to China, are you prepared for the onslaught of Chinese brands in your home market?
With increasing consumer incomes in China–not to mention more miles of highway constructed every year, US brands like McDonald's, Starbucks, KFC and Pizza Hut are exploding in China. In fact, McDonald's has over 800 restaurants in China and has plans to open 5,000-10,000 outlets total.
"The opportunities are endless," says Jeff Schwartz, CEO of McDonald's China. A blue ocean of opportunity for sure, but McDonald's should be very wary of seeing Malan Noodles or Lihua Fast Food in its home markets in the near future.
China, it seems, isn't content to simply be the factory to the world. In fact, Chinese companies have ambitious plans to move up the value chain and reach past providing the physical products behind global brands.
Case in point, a recent New York Times article mentions Taiwanese company Asustek's efforts to build its own global brand. Asustek laptops are currently built under their own brand name and also under those of acquired brands Gateway and Packard Bell. In addition, Asustek is no stranger to innovation as the NYT article notes the company practically created the netbook category with the launch of Eee PC.
Chinese brands are also coming alive in B2B markets. According to a Business Week article on top 20 Chinese brands, Huawei Technologies is giving Cisco Systems all they can handle competitively.
The article mentions that Huawei "is spending heavily on research and development–in the global market for routers and other telecom gear. So far it has made great strides in developing countries, and it's going after more developed markets such as Western Europe." Broad Air Conditioning in China is also another brand to watch as they penetrate markets with natural gas powered air conditioning and are also testing solar powered units.
To be sure, a brand is much more than just a nameplate. Chinese companies wishing to compete in Western markets must not only create awareness and adopt a customer mindset, but also match very sophisticated operational (i.e. packaging, sales, customer service, daily routines etc) and strategic processes (i.e. brand management) already in place for most Western companies. In addition, talent management will also play a significant role in whether Chinese brands can successfully penetrate Western markets.
A final consideration; flush with cash, some Chinese companies are forgoing organic brand building and instead buying global brands such as Thinkpad and possibly Hummer.
Chinese brands are coming to a market near you–in droves. Meanwhile, complacency is no longer an option for Western brands.
Sun Tzu once wrote, "Invincibility lies in the defense; the possibility of victory in the attack." Brand managers in Western countries would be wise to heed his advice.
* Chinese companies are moving up the value chain and building global brands. Should Western companies worry, or is this much ado about nothing?
* Brand experts, other than those listed above, what processes must Chinese brands adopt to fully compete in Western markets?
* What global brands–perhaps on the decline–are fodder for Chinese purchase and invigoration? Which Western brands should be wary of Chinese brands?
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