The Hurun Report covers new ground with its release of the Most Valuable Chinese Home-grown Brands List 2011. As we posted earlier this year, creating brands is official Chinese government policy. Chinese leaders recognize that the big profits are in selling brands, not making products. Since opening their markets in 1990, the Chinese have made fast progress in learning how to brand.
Most Chinese brands are still unknown in the US Market. There is simply so much potential in the domestic Chinese market that companies don’t need to face the risks of exporting. It makes sense to go after a local market of 1.3 billion people you know well before taking on the logistical and cultural challenges of the United States with just 312 million people.
The top ranking brands were built on state-owned enterprises. The ICBC (Industrial and Commercial Bank of China) leads the list, followed China Mobile and China Construction Bank (CCB). Baidu, China’s answer to Google, is the most valuable privately owned brand. Indeed, digital brands are doing well in China. Tencent QQ, a social networking/instant messaging company ranks seventh.
Chinese businesses still struggle with the concept of branding. Most don’t get past the name and logo to understand what truly creates value. They are much better at mastering the pragmatic nuts and bolts concepts of process efficiency, accounting, and distribution logistics than they are at the art of branding and marketing. Chinese companies sell almost exclusively on price. In talking to Chinese businessmen, it is not unusual to hear the complaint, “I have a new logo, but I still can’t charge more than my competitors.”
Branding agencies in China struggle to sell the value of brand strategy, design and execution. When I visited a Chinese based branding agency, their process of brand creation involved asking client company executives what colors they liked. The few exported Chinese brands like Haier and Lenovo truly struggle against much savvier competitors in the US market.
Still, Chinese businesses are famous for learning fast. Branding is in its infancy in China, but it won’t stay that way. The value of Chinese brands is up 27% from the 2010 list. And at a value of US$403.8 billion, is more than double the value of the 2009 list, which was US$186.9. While more than half of the top 100 Chinese brands are state-run, the number of private, nimble businesses on the list is growing, as is their value. And twenty-one brands on the list are entrepreneurial first-timers.
Lisa,
Consumer Brand management is making headway in the domestic China market and developing countries,even in Europe, with apparel, appliance, computers, white goods, blacks goods, autos, etc. You would be surprised to at the number of Chinese brands in Africa, SE Asia, Latin America and Eastern Europe.
The U.S. is the toughest consumer brand market to enter, and they want to get their brand management ducks in oder so they don’t lose the shirts make a premature plunge.
There are strong Chinese brands in the B2B industrial sector. Huawei is now the world’s second largest telecommunications company. Sany heavy duty vehicles is building a plant in Georgia to compete with Catepillar in the Y.S. home market. Yutong bus is making a brand deal with Greyhound. So there is movement.
The key thing is that brand management takes time to learn how to do well. So China vigorously tries it in China and patiently waits for scale entry into the U.S.market, so they don’t lose their shirt with a premature entry. Meantime, let’s not forget that Chinese companies are acquiring well known Western brands, like Volvo and what ever elese in manufacture, desitribution and retail that they can get their hands on.
Best wishes,
Milton Kotler