China Brands, What China Brands?

In Can Chinese Firms Build Globally Competitive Brands? Joel Backaler talks of how Chinese companies are generally unwilling to do what it takes to create a global brand. And Backaler, who wrote the book, China Goes West: Everything You Need to Know About Chinese Companies Going Global on Chinese companies expanding internationally, knows these things.

Backaler starts off by saying how he likes to start his talks on Chinese companies going overseas by borrowing the following joke from China public relations veteran David Wolf:

For many Chinese firms, “branding” means designing a new logo, “marketing” is the equivalent of purchasing ads on China Central Television (CCTV), and “P.R.” does not stand for “public relations” but rather “pay the reporter.”

Though conceding that this joke is a “generalization,” Backaler sees this joke as illustrating how for many Chinese companies, “marketing is still considered to be an expendable expense:”

Rather than a series of strategic activities that strike the right balance between driving short-term sales today while building a brand that’s a long-term strategic asset for the future, it is all too often focused on the next product launch. This is in part due to the fact that China’s business environment has historically rewarded a singular focus on short-term sales without needing to concentrate on the intangible aspects of branding and marketing. The result is a series of firms that are very large – 95 companies on the Fortune Global 500 ranking originate from China – yet relatively unknown outside of China.

But Backaler sees this changing and he notes how in his book he dedicates “an entire chapter to Chinese firms building globally competitive brands, either through their own efforts or by acquiring long-established brand names from the West.” He then declares himself “optimistic Chinese firms will build global brands through their own efforts.”

A couple weeks ago, I attended a book opening for China’s Superconsumers: What 1 Billion Customers Want and How to Sell it to Them, by Michael Zakkour and Savio Chan, at which these two authors noted how no Mainland Chinese company is among the world’s top 500 international brands.

When will a Chinese company break the top 500. One year? Three years? Five years? Ten years? Never?

What do you see as the factors militating against China developing top brands? What do you see as the factors that will lead its companies to do so?

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China Business