China is home to some of the world’s biggest and most profitable brands, yet despite their scale and high standing in China they often suffer from a lack of visibility and credibility in Western markets.
Take internet and messaging business Tencent. With more than one billion monthly users, it is China’s biggest and most valuable brand worth a staggering $85bn, according to Millward Brown’s 2016 BrandZ Top 100. That’s $5bn more than Coca-Cola and more than double the value of Nike. Yet most UK consumers have not heard of it.
Like many Chinese brands, however, it now has its sights firmly set on Western expansion and is masterminding an international push to promote its WeChat messaging app and gaming platforms.
Likewise, ecommerce business JD.com has ambitions to become a globally recognised brand, according to vice-president of international corporate affairs Josh Gartner.
Breaking through scepticism
“The domestic market is so large and has grown so quickly, so we are looking at where else we can find growth,” says Gartner, who acknowledges that credibility remains an issue for Chinese brands going global.
“There is no question that as a Chinese company you have to work harder to prove your intentions are genuine as there is scepticism, but that’s a challenge we’ve taken on and it is why we build our business on trust.”
As Gartner suggests, concerns over credibility and brand awareness could prove a stumbling block for Chinese brands looking to break into the British market. A survey for Marketing Week conducted by market research firm Qualtrics shows 38% of people have questioned the credibility and authenticity of a Chinese brand in the past due to a lack of trust as well as concerns over quality, counterfeiting and unethical production.
“There is no question that as a Chinese company you have to work harder to prove your intensions are genuine.”
Josh Gartner, vice-president of international corporate affairs, JD.com
The survey also suggests a general lack of brand awareness. Consumer electronics firm Xiaomi was the least well-known brand (unknown to 74% of respondents), followed by OnePlus (64%), Hisense (62%), Alibaba (55%), Huawei (27%) and Lenovo (17%).
Loo Wee Teck, head of consumer electronics at market research company Euromonitor International, has noted a shift away from negative opinion as Chinese companies become savvier in their marketing efforts, however.
“Companies like Huawei, [electronics business] Oppo and [smartphone brand] Vivo are trying to create their own brand identity. Huawei is pricing its P9 smartphone range on par with Samsung and Apple’s flagship models. Oppo harnessed the power of marketing to create brand awareness, whereas Xiaomi banked on its fans (MiFans) to help promote it.”
In order to boost recognition among western audiences Huawei enlisted Hollywood actors Scarlett Johansson and Henry Cavill to front the launch of its P9 smartphone in April, and its global expansion efforts are beginning to pay off, according to Loo, who says the smartphone maker is poised to overtake the likes of LG and Sony in 2016.
“[Huawei’s] collaboration with Google on the Nexus 6P and its own branded Huawei P9, which is co-engineered with German camera manufacturer Leica, created a lot of buzz and brought credibility to the brand,” he says.
Creating a global identity
Becoming a serious global player can often mean shedding a country-specific identity in favour of “agnostic branding”, as in the case of tech company Lenovo.
Founded in Beijing in 1984 as Legend, the company rebranded as Lenovo in 2004, a year prior to acquiring IBM’s personal computer business. Using high-profile acquisitions to build its international operations, Lenovo had already established itself as a major player by the time it purchased Motorola in 2014.
“We don’t make a point of being Chinese. We are a global tech firm and diversity is a big part of our success”
Jo Moore, executive director of worldwide brand, Lenovo
“We see ourselves as a global brand and we don’t want to be put in any kind of box,” says executive director of worldwide brand, Jo Moore. “We don’t make a point of being Chinese. We are a global tech firm and diversity is a big part of our success. We’re very proud of our heritage, but it’s just part of what defines us.”
The EMEA region accounts for 26% of Lenovo’s overall revenue compared to China at 28%, indicating the company’s global appeal. The marketing strategy is intended to be fun and focused on social media. In April, for example, Lenovo opened the UK’s first projection tattoo parlour pop-up in London’s Soho. The designs were mapped onto visitors’ skin using the projector in Lenovo’s Yoga Tab 3 Pro tablet.
Moore believes having a Chinese perspective on business gives Lenovo a sense of fearlessness and disruption, and she argues that credibility concerns are lessening.
“Having a Chinese background brings a never-stand-still spirit and whereas before products made in China perhaps carried the worrying label of being cheap or poor-quality, Chinese products don’t have the same label now,” she adds.
Earning word-of-mouth advocacy
Under its ‘Never Settle’ positioning smartphone startup OnePlus has built its profile over the past two years through word-of-mouth marketing, and until recently sold its phones exclusively to customers who requested an invitation to purchase.
“Doing traditional marketing didn’t make sense,” says global head of marketing Kyle Kiang. “We needed to be relevant to consumers and in the social space where we can talk to them on a daily basis.
“Going forward our campaigns will retain our DNA and we will never be about £100m ad campaigns. We want to be talked about in a meaningful way, keep our sense of community and be social first.”
To promote the launch of the OnePlus 3 smartphone the team embarked on a European tour during July and August, taking the OnePlus bus to cities including London, Manchester, Rome and Amsterdam. The team also hosted pop-up events in select locations such as the Joshua Kane menswear store in Spitalfields.
Kiang explains: “As a young brand we want to be in the places where our consumers want to be, so it was a logical choice for us to use the Magnum ice cream store in New York or a fashion boutique in London. We like to take an unconventional approach.”
Unlike many tech rivals OnePlus is not reliant on a domestic customer base, with less than 20% of its customers living in China. OnePlus co-founder Carl Pei believes being an online brand has helped forge the company’s global identity.
“The beauty of the internet and social media is that it’s easier than ever to create a global brand,” he says. “We have always seen ourselves as one. Our first device, the OnePlus One, was available across the world. We also have offices and team members from all over the world, and are looking to expand.”
Despite the advantages of online, OnePlus took its product offline in March, teaming up with Finnish telecoms company Elisa to showcase the OnePlus 3 in stores. The approach worked and by August the device was Elisa’s best selling phone.
Two years into its European push, Chinese smartphone brand Honor has taken a disruptive approach targeted specifically at millennials, a different positioning from its ‘business elite’ sister brand Huawei.
Honor signed 17-year-old Brooklyn Beckham as global brand ambassador in August to front the launch of the Honor 8 smartphone to its 80 million worldwide users, 80% of whom are aged 18 to 34.
“All programmes must contribute to building the brand, rather than just product promotion”
George Zhao, president, Honor
Aside from celebrity tie-ups, Honor works with influencers such as 19-year-old French singer and actress Louane Emera, who boasts more than half a million social media followers. In March Honor teamed up with Amazon to host a concert at film, music and media festival South by Southwest (SXSW) in Texas and also became headline sponsor of Festival International des Sports Extremes (FISE), an extreme sports event.
“All programmes must contribute to building the brand, rather than just product promotion,” says company president George Zhao. “We are confident in our technology and products. But all technology will be constantly advanced and products upgraded. At the end of the day, it’s culture and values created by the brand that will remain.”
Zhao confirms globalisation is a key strategy for Honor, tapping into fan communities across the UK, France, Germany, Italy, Spain and the Netherlands.
“We were able to build the Honor brand with the support of our domestic fan base to whom we will always be grateful, however we look at the wider picture in our long-term strategy,” he explains.
Power of association
At Chinese consumer electronics company Hisense, big-ticket sporting sponsorships are key to driving international demand for its tablet and television business.
Currently a team supplier to Red Bull Racing, official sponsor of the Australian Open and premium partner of German football team FC Schalke 04, in 2016 Hisense also became the first Chinese global partner of the UEFA European Championship in the competition’s 56-year history.
Hisense scored third highest of these partners behind Orange and Hyundai in terms of campaign relevance, originality and engagement across news and social media, according to WE Communications’ Brand Agility Index.
The company experienced a “massive spike” in awareness and a sales uplift after Euro 2016, according to UK senior marketing manager Arun Bhatoye, who describes Hisense as innovative, forward thinking and pragmatic in its pursuit of new markets.
Bhatoye believes the credibility issues that have plagued Chinese companies are dissipating, especially as premium technology brands such as Apple manufacture in China.
“We are very proud of our Chinese heritage,” he says. “Look at where people produce goods now – they are producing high-quality goods in China. People are switching onto that and will open up to new and emerging brands as long as the product is good quality.”
Activating in the UK
With Chinese brands looking to crack the UK, opportunities are emerging for marketers to help less well-known brands in their transition.
“Western companies can help Chinese brands with their new business, user acquisition and experience. Chinese companies are really open to feedback and are keen to establish key strategic partnerships,” says Richard Downey, global new business director of mobile at media agency The Specialist Works.
“These brands bring a combination of experience and ambition. They also like to take learnings from data. The normal agency model of setting up a campaign and letting the client know at the end if it has worked doesn’t cut it with Chinese brands.”
Downey speaks from experience of working with gaming app developer Elex on the UK campaign for its Clash of Kings game. Aimed at attracting new downloads and raising awareness, the three-month campaign included TV advertising, a 360-degree wrap of Oxford Circus underground station and an experiential event at Tower Bridge, London.
Fellow Chinese game developer Rafotech plans to test the UK market before expanding into Europe, a solid strategy considering 50% of players of its Piggy Boom mobile game are British.
“For credibility it’s good to work with local partners”
Yin Long, project director, Rafotech
Rafotech project director Yin Long considers the UK an ideal territory to launch games due to its strong gaming culture and encourages forging local partnerships in order to overcome any lingering wariness towards Chinese companies branching out west.
“The important thing is to build a network of contacts and build trust. For credibility it’s good to work with local partners, to understand the way of doing things in different territories and work with good people to grow our reputation,” says Yin Long.
Whether it’s a pop-up event, full-scale TV campaign or high-profile sponsorship, Chinese brands are using their agility and financial muscle to crack the west, dispelling credibility concerns by building stronger brand stories.