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China: No Brands No Cry. What Does Peoria Say?

By Dan Harris and Steve Dickinson

Since my using references to Bob Marley songs seems to play so well (see here and here)..... Anyway, just read an excellent and blunt blog post on Chinese brands over at the perpetually insightful Silicon Hutong Blog, entitled, "Brand Reality Check." The post uses a Tom Doctoroff article in AdAge (subscription required) as the starting point for arguing China will "not be producing a bevy of global brands at any time in the near future." I completely agree. Silicon Hutong convincingly makes the following argument against those those who might list the few fairly well known Chinese companies as proof that China can develop great brands:

Those who disagree with Tom (and manage to eschew ad hominem attacks) point out that Haier has managed to build a global brand entirely without marketing. While that point would be debatable (if you could buy a Siemens fridge for the same price as a Haier fridge, which would YOU buy, and why?), let's not go there. Instead, let us grant for a the sake of argument that Haier is indeed a global Chinese brand. Let's even grant that Lenovo, Tsingtao Beer, and Li-Ning are global brands. When you look across China's landscape of millions of companies, could it not be said that these companies are at best the exceptions to prove the rule? That China has so few international brands in so few industries that what we are witnessing is not a trend but a statistically irrelevant series of accidents?

Silicon Hutong rightly notes that great brands "are built; they do not happen by executive fiat or by government edict. And the sooner China's companies learn the rules of that game, the better off China will be." So why are China's companies behind in their branding and what will change this and when? Why are Chinese companies behind in their worldwide branding? In the last year or so, my law firm has begun to represent a number of very large, very successful, and very well run Chinese companies. Without exception, these companies are doing an amazing job in building their businesses outside China and, for the most part, they are doing an amazing job in figuring out the landscape in places like the United States. But, also without exception, they spend (and I am admittedly making a wild, shot in the dark guess here) about one one hundredth of what their comparable American counterparts on advertising and public relations. And it shows. I have asked friends of mine in the same or related industries as my Chinese clients if they have heard of my clients and, almost without exception, they have said they have not. Then when I tell them more about my clients and the scope of their operations in the United States and/or their market capitalizations, they look at me like I am totally joshing. They say things like I must be wrong. I must be using a different name in the United States. My client must be lying. In other words, they cannot explain how a company can be doing in the United States what I say my clients are doing without their knowing about it. Or go ask 100 people at random in Peoria to name two Chinese companies. I'm betting less than a handful (if any) could name two and less than half could even name one. Until Chinese companies start realizing (and by realizing I mean more than just paying lip service) the critical importance of name recognition and reputation, Chinese brands are going to remain mired in relative anonymity. Does anyone think even five people will be able to do it? What will change this lack of Chinese brand recognition and when will that happen? I do not know but I am certain it will happen eventually (ten years?) and when it does, it will probably come pretty much out of nowhere. I base this prediction on how Japanese (Sony, Honda, Toyota, Nikon) and Korean (Samsung, LG, Hyundai) pretty much all of a sudden went from nowhere (or even disrepute) to reputed. What do you think?

Full post as published by China Law Blog on August 22, 2009 (boomark / email).