Branding becoming a necessity as Chinese companies expand abroad
October 8, 2019 Category Foreign trade, Weekly
As Chinese companies extend their reach abroad after achieving success at home, effective branding is shifting from a “nice to have” to a “business necessity”. To achieve genuine global influence, Chinese enterprises need to translate their tangible strengths – be they manufacturing scale or innovation capabilities – into soft power that is able to impress local consumers and make an impact on business operations, according to marketing experts.
A recent survey by global marketing agency Ogilvy of Chief Marketing Officers of 40 high-profile Chinese companies showed a growing appetite for branching out overseas. The study identified the key drivers for Chinese enterprises’ outbound expansion as “seeking new markets for growth, easing domestic competition and acquiring advanced technologies”. But relatively few were driven to look overseas for branding reasons.
However, branding is increasingly becoming a game-changer in shaping consumer perceptions, especially as a growing protectionist sentiment looms over the global economy, said Chris Reitermann, Asia and China CEO of Ogilvy. “I do think a lot of companies have underestimated the value of a clearly defined brand in getting people to understand what a company is, what a company does and what its values are,” Reitermann said. The transformed macro-economic environment is pushing companies to shift from traditional merger and acquisition-based growth to more organic, green-field investment, and that makes a “clearly-defined brand” a necessity, he added.
Deng Delong, President of Trout & Partners, which specializes in brand positioning, said he believes global distribution of assets will be conducive to the world economy at large. Deng also supports Chinese companies’ goals of seeking new growth opportunities abroad. But instead of recklessly expanding overseas, brands should first identify local needs, position themselves and prove their relevance, he noted. “Especially against economic uncertainties, a strong and unique brand proposition will give companies unparalleled pricing power. This would put them in an advantageous position even amid trade disputes,” Deng said. Due to the costs of branding, many Chinese companies are taking a gradual approach by working with overseas partners to make an impact. “We don’t want to just rush into the global scene before we are fully prepared, especially on the branding front. Branding isn’t simply about helping sell products to a global audience. It’s about conveying the brand DNA, concepts and our unique characteristics,” said Han Boming, CEO of K-Boxing, a Chinese manufacturer of menswear.
Chinese businesses have increased their understanding of branding, Reitermann said, but there is still a discrepancy between the grand vision held by senior executives and various entities within the organization handling day-to-day business, he added. “That’s why it is so important to get the right management model in place and provide the right resources.” Reitermann believed learning the value of brand building takes time: “It will probably take Chinese companies another 10 years to get there,” the China Daily reports.
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