Chinese Branding and Perception

This is a collection of random thoughts about the Perception of China through Chinese Brands from both inside and outside of China.First, China as a final destination.  This is about business opportunities, or maybe it isn't.  If you had less than 30% of your foreign exchange students and over seas professionals returning home, would that be a good thing or a bad thing?  For China, 30% the highest number they’ve had since they started letting people out in the 80’s.  And it’s only this high because of predictions that more will be coming back due to the current recession.  (All numbers are from a Straits Times paper article last Sunday, that I couldn’t find online.  Sorry).My question then, is this: If capitalism is irresponsible (Mr. Hu’s words) and the US/EU is the Great Satan (Islamic and communist propaganda) and the Chinese economy and culture are the end all beat all of life thus far on earth (general attitude in China), why are an overwhelming majority of Chinese who leave NOT coming back?  Even my wife, who is Chinese, plans on “ending up” in the US, not China eventually.I know, you’re thinking, “What a loaded question!”  But I’m really curious as to the answers.   Remember, I left the US and live in China, albeit temporarily (10 years and counting…).   I think that the better business opportunities (for me) are here, not back home.  So really, what’s the draw of the West for educated Chinese?Another, less loaded question about Chinese power abroad.There has been a lot of news lately about the Chinese increasing ability to project power abroad, both militarily and socially.  And while the military question doesn’t really even need to be asked until China can transport a significant number of people/equipment farther away than an adjoining country or permanently scare the US patrol boats off the coast of Hainan, the social question is, I think relevant.  Or can they actually do something about North Korea (which only even exists because of China)?How many people in (pick your home country) can name 10 Chinese brands and know where to buy them?  (To be fair, I doubt I could name 10 English, 10 French or brands either.  But I’m not thinking that any of these countries are going to become world military or social leaders (again) either.)  Ten Japanese or Korean brands, no problem.  Maybe even 10 German brands.  1 Canadian brand?  Nope.When I was last in the US in March, I decided to see what Chinese brands I could find in Salt Lake City Utah.  Nothing scientific, just a conscious decision to make notes in my phone as I shopped and was out in public for two weeks.  This is what my ‘research’ turned up: Lenovo (barely), Haier, LG, and Tsingtao Beer--yes, even in Utah.  (I am also aware of COSCO and Changhong, TCL and Galanz in much of the electronics and white goods that I saw.)  That’s it.  Any one else not living in SEA seeing any more?From a good Businessworld online article:

“The World Bank says that more than 30,000 Chinese firms have invested more than $35 billion in over 50 countries, and China's top five domestic brands are already worth more than $15 billion. Fiona Gilmore, the editor of Brand Warriors, predicts that in ten years at least one of the world's top 10 brands will be Chinese.Most of this growth has been focused in South-east Asia, but Chinese firms are increasingly penetrating the highly valuable and highly competitive US market.The message seems clear - Chinese companies are determined to become global players. Indeed, China's leaders say they aim to have 10 Chinese companies in the Fortune 500 list of the world's largest firms by 2010.”

So the perspective questions here are these:First, is this ability to sell volume but not successfully create brand awareness good for China?  Does moving tons and tons of goods with a reputation for bad quality in the world market help any brand from China?  What’s the general opinion of anything “made in China" in or out of China?Second, I’m of the opinion that China would rather have the “face” that comes of having recognizable Chinese brands than the profit that comes from successful businesses.  The govt funding for these few big players would confirm that, in my mind at least.  Is this a sustainable business model—will these unprofitable brand names be around in 20 years?So then third, which of these companies could be “successful” or at least recognizable without direct government ownership/financing (which is not the same as tax breaks that all major brands get from their home countries)?  And then doesn’t imply that companies from China really are “made in China” and deserve the bad rap?And fourth, which of these companies are leaders in R&D or innovation in their fields?  The implication being, can sales of follow on products alone sustain high international rankings or recognition?I read in a report from the Shanghai auto show last month that while there are quite a few Chinese auto makers striking out into foreign markets there are two steep mountains to overcome before any of them see any success.  The first being “the made in China” brand name.

SIDE NOTE: The fallout from the melamine milk fiasco last year is affecting even auto sales abroad.  Do you realize what a big deal that is?!  Did the California pistachio recall affect your perception of Dodge this last month.  No.  Of course it didn’t’.  Will pig flu make you think twice about buying Mexican avocados?  No.  But in China—everything is China.  This is the unintended consequence of tying everything back to history and nationalism.  Everyone and every brand in China all rise and fall together.  Well, not everyone, but you know what I mean.

And the second being the inability of Chinese auto manufactures to attract top talent and the subsequent inability to lead out, innovate and be creative.  The lack of international level talent is really limiting the Chinese at home and in the US and the EU markets.  Like the China market forcing foreign brands to adapt, Chinese brads must adapt to the various world markets they enter into—but without R&D, they just can’t (unless they can copy what’s already been done).For more on these very questions (I read this after I wrote the post), see this great interview Tom Doctoroff gave.  Interestingly, the Businessworld article and the Doctoroff interview and 4 other articles under the Google search “Chinese brands in the US” are blocked in SZ (at least they're blocked in my house, my office and Starbucks).But, then again, if you question China’s ability to project its might abroad, there is this: “We have become a province of China.”A couple of final shots at why there are not more Chinese brads despite the size/influence of the Chinese economy.  First, the Chinese economy is not as big as the US or Japan so for me to compare them is a bit unfair to begin with.  There really shouldn't be as many.  Second, while there may not be a large number of identifiable Chinese brands because there are so many unidentifiable ones.  Let me explain.  China is so huge and there are so many regional players and so many factories outsourcing labor for "technically" foreign brands that they just keep the entire visible Chinese presence in the world market repressed.  Third, the idea of independent brands is still in its infancy in China.  As noted above, even the current Chinese world players are heavily invested in by the Beijing govt.  Capitalism in China, as we see it now, is at most 30 years old this year.  They haven't had the time to build yet.But capitalism in the US is 200 years old and Washington DC now heavily invests in autos, banks, insurance and many other global US brands, so who knows?!