The big boys' club
Guangxi LiuGong Machinery, a Nanning-based Chinese building equipment maker, set up its European headquarters in Poland by acquiring a local counterpart in the eastern European country in early 2012.
For Sander Gesink, marketing manager of LiuGong Machinery Europe BV, "it's not about products only, but more about brand".
Gesink, who has been in the European industry for more than 10 years, says: "LiuGong is a new brand in the EU, and there are challenges to build the brand here. The biggest is the perception of the Chinese brand ... People don't think the Chinese brand is good and worth buying."
For many Chinese brands like LiuGong, another big obstacle is the stigma attached to the "made-in-China" label, which is traditionally associated with sweatshop labor and cheap products.
According to Li Minyan, managing director and chairman of China Certification & Inspection Group Europe BV: "Many Chinese manufacturers are not inferior to their Western rivals in technology and design, but unfortunately, a majority of them lack global recognition. "They need to accelerate their efforts in branding and marketing to raise their awareness. It is time-consuming," she says.
Narrowing gap
Despite the gap, Chinese brands are strongly motivated to improve and compete on the same level as the top global industrial players.
"China is well on its way. But it could take 20 to 30 years for the nation to become a globally well-known manufacturer like Germany," says Wang Weidong, commercial counselor of Chinese Consulate-General in Frankfurt.
"China needs to join hands with European counterparts through mergers and acquisitions and learn from them," he says.
A slew of Chinese companies, including Sany, Xuzhou Construction Machinery Group and Hebei Lingyun, have invested in extending their reach in Europe and they hope to absorb new technologies by recruiting German engineers and getting closer to more customers around the continent.
"We get more technical ideas from our counterparts, and they can expand sales in China and Asia. It's win-win deal," says Chen from Zoje.
As sagging global demand hurts Chinese exports, the Chinese government has repeatedly promised to encourage domestic manufacturers to improve technology and make investments on design and innovation.
In China, there are a number of manufacturers who have a list of clients that enjoy a worldwide reputation, and now, many of them have decided to work on their own brands to target high-end customers.
Bosideng Corp is one of them. The world's largest downcoat manufacturer has been an OEM for various famous foreign fashion brands, about which Zhu Wei, CEO of Bosideng Corp UK, declined to elaborate.
"It's not a small business, worth 140 million yuan ($22.47 million) annually, but the problem is the Bosideng brand is quite new globally, especially in the European market," Zhu says.
In July, the company announced plans to open a three-story menswear store in the busiest commercial area in London, its first-ever store abroad. The store targets high-end customers.
And Bosideng has other ambitious overseas expansion plans. It intends to expand into high-end shopping malls in London, probably early this year, and it is also in talks with some European counterparts, probably from Italy, on acquisition deals.
"Numerous Chinese manufacturers don't have strong brands abroad, and they have to work for others as OEMs, reaping tiny profits. They need to change the situation with the help of think tanks," says David Feng, special assistant to the president of the Aigo Entrepreneurs Alliance.
The alliance, which was set up in 2011, aims to help Chinese companies expand overseas, establish sales networks, conduct market investigations and promote brands. "We have assisted more than 20 domestic companies, and in 2013, that number will be 50 to 100," Feng says.
dingqingfen@chinadaily.com.cn
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