LexisNexis(TM) Academic - Document
Financial Times (London, England)
August 30, 2005 Tuesday
London Edition 1
SECTION: BUSINESS LIFE; Pg. 9
LENGTH: 1236 words
HEADLINE: China's companies count down to lift off GLOBALISATION: Richard McGregor examines some of the most successful Chinese brands, which were ranked on innovation, quality, management and trustworthiness in an FT survey
BYLINE: By RICHARD MCGREGOR
DATELINE: BEIJING
BODY:
Along with targets for power output, coal production and the like, laid out in the country's five-year economic plans, China's leaders now set themselves benchmarks for establishing global brands.
The message from the top is that the work of cultivating and building brands in the modern economy is not just one for the enterprises themselves, but for the government as well.
Lin Zongtang, director of the National Commission for Brands Promotion, has stated publicly that the creation of top-brand products is in need of government guidance and support, adding: "I believe we will eventually bring up our own international brands, just as we successfully launched the Shenzhou-5 spaceship."
Today, the Financial Times publishes the results of a survey, conducted with McKinsey, the management consultancy, to find out what business people around the world consider to bethe strongest corporate brand among Chinese companies. Readers were asked to rate companies in categories that included quality, trustworthiness, innovation and management as well as branding.
Many of the companies that topped the survey may have had a leg up from the government, but their trajectory has not been nearly as spectacular as that of China's first space flight.
Haier, for example, the Qingdao-based white goods and home appliances company voted the survey's number one brand by readers worldwide, is no longer the shooting star of the Chinese corporate world that it was in the late 1990s.
Haier has struggled to maintain profitability in the face of competition from Chinese and foreign rivals in the consumer goods market. It has also become embroiled in a dispute with the central government over its ownership, which has hampered management flexibility.
Haier has been effectively privately managed for many years, under Zhang Ruimin, its legendary, long-time chairman, but has not been able to escape the clutches of state ownership under the local city government.
Nevertheless, its pioneering emphasis on quality in China and its early ventures overseas, especially into segments of the US white goods market, still gives it great traction as a brand.
Haier says it established its brand image in three deliberates stages, the first two at home, between 1984 and 1998, when it went from being a favourite of consumers to what is known locally as a "Chinese famous brand", officially recognised by the government. In plain English, this means that Haier became a household name at home, before venturing abroad in 1998.
Haier calls its overseas strategy "difficult first, then easy". In other words, it decided to start in developed countries such as the US, before targeting poorer developing nations that might have been a more obvious initial fit for its cheap products.
The next step is to become a "mainstream brand" in developed countries, a strategy that was set back when it withdrew recently from the bidding for the well-known, but fading, US whitegoods company Maytag.
Haier is a well-known enterprise, but awareness of a company alone does not make it a successful brand, according to the survey's parameters. Indeed, many companies such as the Bank of China and Shanghai Auto - recently a bidder for MG Rover - rated ahead of Haier in awareness, but lagged it in innovation, trustworthiness and other metrics used by the survey.
Yu Mingyang, the director of the research institute of branding strategy at Jiaotong University in Shanghai, called Haier China's "most internationalised company".
"Unlike Petrochina and Baosteel (China's largest oil and steel companies respectively), which are expanding overseas through virtue of political power, Haier develops its brand according to market practice," says Professor Yu. Its main challenge now is to wean itself off reliance on Mr Zhang's leadership and internationalise its management. "Haier has only opened a window in the international market," he says. "It is lagging way behind in integrating global resources compared to Samsung and the like."
The company rated second in the FT survey, Lenovo, the first Chinese company to acquire a global technology business, might be forgiven for thinking that it will soon surpass Haier in the minds of foreign managers and consumers as the flagship Chinese brand.
Lenovo has almost bedded down last year's brave purchase of IBM's personal computer division, and is now drawing up a new global brand strategy that will use both the US company's Think trademark and its own corporate name for mainstream offerings.Lenovo intends to advertise in the US and elsewhereto establish a recognised corporate name, Yang Yuanqing, the Lenovo chairman, said in an interview withthe FT.
Mr Yang said some colleagues had been concerned that marketing IBM's Thinkpad laptop computers as made by Lenovo might put off buyers, "However, re-search showed that such doubts were not removed by just using Thinkpad without making clear what company produced the product, so it's better to be clear that the company's name is Lenovo."
The third-ranked brand on the list, China Mobile, seems a curious choice initially. How does a company with no operations in western countries be rated as a top Chinese brand by foreigners?
In some respects, this reflects the survey's biases - including its focus on a company's overall corporate brand, not just its products or services - and the developing view of China's economy among foreign executives and fund managers.
CCTV, the national broadcaster, also ranks in the top 10, not because foreign executives avidly watch its English-language channel at home in the US, but because they recognise its power in the local media market.
There are only two private companies in the top 10, Sohu and Sina, two of China's top internet portals, tied at tenth place. But despite the government's role in companies and Mr Lin's determination to help steer them to the top, a majority of the enterprises in the 30-strong list has taken in foreign investors, or raised money in overseas capital markets, or both.
For many, the phenomenon of Chinese brands is closely tracking the development of companies and products in Japan and South Korea.
However, Miles Young, Chairman of Ogilvy & Mather Asia Pacific, says the conventional wisdom that the Chinese will follow the path set by the Japanese and South Koreans in some kind of "apostolic succession" understates the power of Chinese brands.
He sees Japanese and South Korean brands as representing those countries' distinctive huge conglomerates as much as they do individual products. As a result, he says, those brands do not have the "emotional connection" that brands do in the classic western sense.
"The Chinese have bought into the western concept of brands hook, line and sinker, from the early days," says Mr Young, who adds this instinct has been reinforced by the opening of the economy under World Trade Organisation rules.
"They reason that if you can't be protected by laws (post-WTO), then maybe you can be protected by consumer affection," he says.
China's weakness, even in its home market, remains the refusal of companies to spend money on qualitative research - in other words, getting to know consumers better. "Foreigners win by using better research so they better understand consumers," says Mr Young.
This is something that Mr Lin might contemplate, as he and other government experts prepare to launch the next Chinese brand through space and into global markets.
LOAD-DATE: August 29, 2005
August 30, 2005 Tuesday
London Edition 1
SECTION: BUSINESS LIFE; Pg. 9
LENGTH: 1236 words
HEADLINE: China's companies count down to lift off GLOBALISATION: Richard McGregor examines some of the most successful Chinese brands, which were ranked on innovation, quality, management and trustworthiness in an FT survey
BYLINE: By RICHARD MCGREGOR
DATELINE: BEIJING
BODY:
Along with targets for power output, coal production and the like, laid out in the country's five-year economic plans, China's leaders now set themselves benchmarks for establishing global brands.
The message from the top is that the work of cultivating and building brands in the modern economy is not just one for the enterprises themselves, but for the government as well.
Lin Zongtang, director of the National Commission for Brands Promotion, has stated publicly that the creation of top-brand products is in need of government guidance and support, adding: "I believe we will eventually bring up our own international brands, just as we successfully launched the Shenzhou-5 spaceship."
Today, the Financial Times publishes the results of a survey, conducted with McKinsey, the management consultancy, to find out what business people around the world consider to bethe strongest corporate brand among Chinese companies. Readers were asked to rate companies in categories that included quality, trustworthiness, innovation and management as well as branding.
Many of the companies that topped the survey may have had a leg up from the government, but their trajectory has not been nearly as spectacular as that of China's first space flight.
Haier, for example, the Qingdao-based white goods and home appliances company voted the survey's number one brand by readers worldwide, is no longer the shooting star of the Chinese corporate world that it was in the late 1990s.
Haier has struggled to maintain profitability in the face of competition from Chinese and foreign rivals in the consumer goods market. It has also become embroiled in a dispute with the central government over its ownership, which has hampered management flexibility.
Haier has been effectively privately managed for many years, under Zhang Ruimin, its legendary, long-time chairman, but has not been able to escape the clutches of state ownership under the local city government.
Nevertheless, its pioneering emphasis on quality in China and its early ventures overseas, especially into segments of the US white goods market, still gives it great traction as a brand.
Haier says it established its brand image in three deliberates stages, the first two at home, between 1984 and 1998, when it went from being a favourite of consumers to what is known locally as a "Chinese famous brand", officially recognised by the government. In plain English, this means that Haier became a household name at home, before venturing abroad in 1998.
Haier calls its overseas strategy "difficult first, then easy". In other words, it decided to start in developed countries such as the US, before targeting poorer developing nations that might have been a more obvious initial fit for its cheap products.
The next step is to become a "mainstream brand" in developed countries, a strategy that was set back when it withdrew recently from the bidding for the well-known, but fading, US whitegoods company Maytag.
Haier is a well-known enterprise, but awareness of a company alone does not make it a successful brand, according to the survey's parameters. Indeed, many companies such as the Bank of China and Shanghai Auto - recently a bidder for MG Rover - rated ahead of Haier in awareness, but lagged it in innovation, trustworthiness and other metrics used by the survey.
Yu Mingyang, the director of the research institute of branding strategy at Jiaotong University in Shanghai, called Haier China's "most internationalised company".
"Unlike Petrochina and Baosteel (China's largest oil and steel companies respectively), which are expanding overseas through virtue of political power, Haier develops its brand according to market practice," says Professor Yu. Its main challenge now is to wean itself off reliance on Mr Zhang's leadership and internationalise its management. "Haier has only opened a window in the international market," he says. "It is lagging way behind in integrating global resources compared to Samsung and the like."
The company rated second in the FT survey, Lenovo, the first Chinese company to acquire a global technology business, might be forgiven for thinking that it will soon surpass Haier in the minds of foreign managers and consumers as the flagship Chinese brand.
Lenovo has almost bedded down last year's brave purchase of IBM's personal computer division, and is now drawing up a new global brand strategy that will use both the US company's Think trademark and its own corporate name for mainstream offerings.Lenovo intends to advertise in the US and elsewhereto establish a recognised corporate name, Yang Yuanqing, the Lenovo chairman, said in an interview withthe FT.
Mr Yang said some colleagues had been concerned that marketing IBM's Thinkpad laptop computers as made by Lenovo might put off buyers, "However, re-search showed that such doubts were not removed by just using Thinkpad without making clear what company produced the product, so it's better to be clear that the company's name is Lenovo."
The third-ranked brand on the list, China Mobile, seems a curious choice initially. How does a company with no operations in western countries be rated as a top Chinese brand by foreigners?
In some respects, this reflects the survey's biases - including its focus on a company's overall corporate brand, not just its products or services - and the developing view of China's economy among foreign executives and fund managers.
CCTV, the national broadcaster, also ranks in the top 10, not because foreign executives avidly watch its English-language channel at home in the US, but because they recognise its power in the local media market.
There are only two private companies in the top 10, Sohu and Sina, two of China's top internet portals, tied at tenth place. But despite the government's role in companies and Mr Lin's determination to help steer them to the top, a majority of the enterprises in the 30-strong list has taken in foreign investors, or raised money in overseas capital markets, or both.
For many, the phenomenon of Chinese brands is closely tracking the development of companies and products in Japan and South Korea.
However, Miles Young, Chairman of Ogilvy & Mather Asia Pacific, says the conventional wisdom that the Chinese will follow the path set by the Japanese and South Koreans in some kind of "apostolic succession" understates the power of Chinese brands.
He sees Japanese and South Korean brands as representing those countries' distinctive huge conglomerates as much as they do individual products. As a result, he says, those brands do not have the "emotional connection" that brands do in the classic western sense.
"The Chinese have bought into the western concept of brands hook, line and sinker, from the early days," says Mr Young, who adds this instinct has been reinforced by the opening of the economy under World Trade Organisation rules.
"They reason that if you can't be protected by laws (post-WTO), then maybe you can be protected by consumer affection," he says.
China's weakness, even in its home market, remains the refusal of companies to spend money on qualitative research - in other words, getting to know consumers better. "Foreigners win by using better research so they better understand consumers," says Mr Young.
This is something that Mr Lin might contemplate, as he and other government experts prepare to launch the next Chinese brand through space and into global markets.
LOAD-DATE: August 29, 2005
posted by Eastlaw at 11:37 PM
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