Gaining trust on a global scale

Chinese companies are catching up with their Western counterparts in branding expertise, but considerable challenges still lie ahead

Cyril Camus is the fifth generation of his family to run what is considered one of the world's great spirit brands.

Camus Cognac was first produced in France in 1863, and today, led by Cyril, its products range from special cognac blends to wine, champagne and even coffee.

But that portfolio also includes arguably one of the most venerable names in Chinese liquor, the baijiu, or white spirit, brand Moutai.

Camus Cognac and China Kweichow Moutai Distillery Co set up a partnership in 2005 to market Moutai globally, and thanks to the work of the two spirits companies, Moutai is now listed among the world's top 15 luxury brands, according to a recent study.

"Moutai is my favorite baijiu, I love the taste," says Camus, adding that it was the Chinese spirit's 2,000 year s of history that persuaded him to handle its global brand marketing.

Camus said he considers many of China's top brands to be global leaders.

Traveling the world as he does, Camus says he often sees the famous beer brand Tsingdao, Lenovo computers, Li-ning sneakers and Haier refrigerators, and has used the services of Bank of China.

Many Chinese brands are becoming internationalized, and Western consumers are increasingly starting to recognize them. But there are difficulties.

According to an international survey produced in 2012 by the global market research company Ipsos and Chinese magazine Global Entrepreneur, more than 70 percent of those polled agreed "a number of competitive multinational companies have emerged or are emerging in China".

The survey interviewed 39 Chinese companies, including Lenovo Group, Haier Group, Huawei Technologies Co Ltd and ZTE Corp.

It covered seven countries - the United States, the United Kingdom, Germany, Australia, Japan, South Korea and Brazil - each of which had 200 respondents.

"The foreign public is increasingly aware of the progress of Chinese companies," said the report.

But what they are aware of varies from country to country, it found.

"Respondents from Brazil are more concerned about technology, while those from South Korea place more importance on the size of enterprises," added the report.

Chinese brand development in international markets is a long-term process and can take decades rather than years, says Doreen Wang, head of branding with the market research agency Millward Brown China.

Haier Group is a typical example.

Set up in 1984, the Qingdao-based company started as an equipment manufacturer. It initiated a self-branding strategy in the early 1990s and began its overseas expansion at the end of the century.

To become a multinational company with a global brand, Haier has concentrated not only on technology and quality, but also on establishing a unique Haier image.

Its branding strategy has been consistent and aggressive.

The electronics and appliance company recently announced a two-year sponsorship of the Science Museum in London to build its brand in the UK and get itself associated with technology and innovation.

To attract global attention, a Haier refrigerator was carried on China's spacecraft Shenzhou 9 during its 13-day mission in June last year.

In the US, Haier renewed its sponsorship of the Haier Shooting Stars basketball competition, an annual event where players from the National Basketball Association and the WNBA compete in a basketball contest.

"Ad and marketing activities associated with sports, innovation and big national events have helped build a sound and healthy brand image for Haier," says Wang.

Her company and WPP, the international communications group, jointly released a list of what they consider the top 50 most valuable Chinese brands in December, and Haier was listed at 30th.

The Ipsos/Global Entrepreneur survey had Haier among the top five recognized Chinese consumer brands in the US, Japan and South Korea.

But a lot of work still needs to be done to raise the international image of Chinese brands, say experts.

The Ipsos survey said the typical opinion about Chinese brands abroad is that their quality and technical content is still not high.

A recent Millward Brown study also found that although international consumers remain mostly uninformed about Chinese brands, they are at least willing to try them out.

Wang says three main challenges still face Chinese brands: "Achieving consistent quality, creating an emotional connection, and establishing trust" in a global economy where a product's provenance is often less important than its quality, design and value.

The issue of trust in Chinese brands has been stretched to the limit in recent months amid fears that some of China's high-end baijiu had been contaminated.

The country's largest producer by market capitalization, Kweichow Moutai, issued a statement in December saying the level of potentially toxic plasticizers - which can be used to soften plastic food and drinks containers - found in its products fell within China's permitted limit, after a local online report suggested tests in Hong Kong on bottles of Moutai baijiu found high levels of the chemical.

Camus, for its part, said it sells Small Batch Blend Moutai, which is specially designed and produced for the overseas market, and that its quality can be guaranteed.

As the case continues to be investigated, the link with Camus is likely to have had a beneficial influence on the public relations effort surrounding the whole issue. Experts have suggested that Chinese companies should well be seen to be working with well-known brand names in future, preferably by way of mergers and acquisitions, when taking their brands overseas.

Jane Liu, a researcher at Analytics & Insight MEC China, says brands are intangible assets that can be slow and costly to build, and that China, as a latecomer to the global marketplace, is at a disadvantage.

"A quick way to catch up is by M&As, an option that Chinese companies are now pursuing," she says.

Recent examples include Lenovo, which acquired a majority stake in Medion AG, a German home appliance, in 2011, and Haier, which acquired small and large appliance biomasses from Japan's Sanyo.

In cases such as these, the strategy for rebranding the newly merged or acquired companies is crucial because one of the greatest problems that M&As face is cultural integration.

liujie@chinadaily.com.cn

(China Daily 01/18/2013 page15)