There’s a lot riding upon the China Effect this year. For one thing, as Publicis’ Maurice Levy was reminding us this week, the Beijing Olympics are virtually single-handedly expected to reflate our economy. Or, at least, offset the consequences of a potentially severe downturn (see the latest Bellwether Report).
Less remarked, though no less consequential, is the potential for Chinese brands as they take their first stumbling steps in international markets.
We’ve had the advance guard, so to speak, with the Terracotta Army marching into the British Museum. It’s a reminder not only of China’s long history and resurgent power, but a token of its newly confident international posture. Indeed we might go further here in noting that – probably no coincidence – China’s sovereign wealth fund has recently taken a $5bn stake in the exhibition’s sponsor, global financial powerhouse Morgan Stanley.
But it is the 16 days in August that will provide an unmissable opportunity for showcasing Chinese brands to the wider world. We have focused on five in particular which have the muscle to exploit this unique situation. Best known, and already successful, is Lenovo. This, though set up in 1984 as Legend, is essentially a recast version of IBM’s personal computing business, which it acquired in 2005. Among the others is Chery Automobile which, though only China’s fourth-largest car manufacturer, already has considerable experience in export markets. Similarly, Tsingtao Brewery (est 1903) owns the world’s 12th largest beer brand, which it exports to over 50 countries. In the telecoms sector, there is Huawei Technologies, which claims its products are used by 1 billion people. And in white goods, there is the innovative Haier, the only Chinese brand to be ranked in the top 100 brands for three consecutive years by World Brand Lab. It’s also an official sponsor of the Beijing Games.
There may seem an element of Manifest Destiny in all of this. Just as Japan had its ‘brand epoch’ with, for instance, Sony and Toyota, and Korea has been experiencing the Samsung effect, so now – the argument runs – it is China’s turn. But dynamism and market power are not the only issues here. Over the past year or so, Chinese-made goods have been acquiring an unenviable reputation for shoddiness, which the country needs to address less by means of bullying and more through thorough reform of its industrial practices.
And then there is business culture. It is not sufficient to market cheaper, or even better-made, products than everyone else: the brand has to fit with the market it is selling into. That’s why Landwind, the first Chinese car marque to launch in the UK, will be an interesting test case. It has to be said the omens are not good. In 2005, Landwind pulled its European launch because the cars were not up to spec. Even if their safety features have improved immeasurably over the past three years, we now have to find out whether the ‘Daewoo’ market for retreaded automobile technology still exists. Experts rather doubt it.