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August 20, 2003 |
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China-Made ø Low-Quality Image Chinese Companies Establish Brand Awareness in Overseas Markets By Lynn Furrow China exports a dizzying array of personal computers, DVD players, refrigerators, and consumer electronic goods… yet most people outside of China can’t name even one Chinese brand. As more and more Chinese enterprises push their goods into overseas markets, companies are now trying to change this. Be realistic: Understand overseas consumers Legend Group, the largest computer manufacturer and a household name in China, is shooting to increase overseas sales from seven to 25 percent of its total revenue. In expanding overseas, however, it encountered a branding dilemma: because other companies in many countries around the world have already registered “Legend”, the Chinese company was forced to devise a new English name that could be used unrestrictedly in markets worldwide. Thus on April 28th, Legend Group’s new English name “Lenovo” was born. Although it may offer a fresh start, the new name erases two decades of brand building in China and must stand up to the stigma that Chinese companies face overseas: “‘The biggest challenge is to build up people’s confidence about the product,’ says Annie Chung, and analyst with Gartner Inc. in Hong Kong. ‘They need to get away from the China-made, low-quality image.’” Netease.com, for example, had a bumpy entrance into the U.S. market. After listing on Nasdaq just as the Internet bubble was bursting in 2000, the company then faced an accounting scandal, a class action suit, and an order from Nasdaq to suspend trading. When Ted Sun took over as acting CEO, he brought sweeping changes to upper management and restated earnings in an effort to restore investor and customer confidence. A couple of years later, investors seem to have regained faith after the management shake-up: the company is trading again at a handsome $31 per share -- triple what they were just three months ago. Be Proactive: Improve brand recognition in overseas markets In recent years Singapore Exhibition Services, the organizer of well-known telecom events CommunicAsia and BroadcastAsia, has seen a steady rise of Chinese participants. In the months leading up to this year’s event, SES reported a 20 per cent jump in the number of Chinese companies signed up to exhibit, including famous companies such as Huawei and Putian. Although the June event was cancelled due to the SARS outbreak, the rise in Chinese participation is evidence that more and more Chinese companies are realizing the importance of overseas industry events as an effective way to build brand recognition outside their home markets. In one interesting twist for a Chinese company, China’s popular domestic beer maker Yanjing Brewing Company uses the US market as a means to reach audiences at home: when basketball player Yao Ming joined the Houston Rockets, the company signed a sponsorship/advertising deal that would place the company’s name on billboards in the Rockets’ stadium. The primary purpose was not to attract American beer-drinkers, but to grab the attention of avid basketball fans in China that watch live TV broadcasts of the games played by the Chinese basketball superstar. Creating, communicating and managing brand image is a relatively new concept for Chinese companies whose main experience with branding to date involves devising a logo and a catchy slogan. In order to build a positive brand image overseas, particularly because Chinese products are often perceived as low-tech and poor quality, Chinese companies need to be more transparent about their business practices and financials, establish positive points of differentiation, and communicate these effectively with their audiences. The author
is General Manager of The Hoffman Agency Beijing Office
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