2007-03-20

China's dream for brand

Yes, brand means high margin, obscene profit, easy money. China wants it. It wants to create international brand. It supports its enterprises to expand overseas.

We have seen Lenovo, Haier, CNOOC, TCL, all expanding overseas, dreaming of building a global brand, with mixed success.

This is not to say one should not try. Many European and American enterprises have suffered the TCL style fisaco. The problem with China is, as Premier Wen pointed out in his recent essay, do the other ("non-brand") Chinese companies receive fair treatment from the goverment and the Chinese banks? Are these deals fair to the banks and the shareholders of the bank?

What the Chinese bureaucrats need to know is, perhaps, what does brand really mean?

Terry Guo of Hon Hai precision, famous for the iPOD manyfacturing and the Foxconn "scandal" and success (the share price increased more than 4 folds in less than a year after IPO), has this to say (source: Fong Cheuk Yu)
  • 「 沒 錯 , 我 們 沒 有 品 牌 , 但 製 造就 是 我 們 的 品 牌 。 我 們 不 是 大 眾 的 品 牌 , 但 我 們 是 供 應 商 的 品 牌 。 其 實 我 認 為 品 牌很 難 做 , 尤 其 是 中 國 大 陸 , 誰 還 記 得 那 麼 多 牌 子 ? 」
  • Right, we do not produce a brand, but manufacturing is our brand. We are not a consumer brand, but we are a brand among the OEM/ODM...

Hon Hai is indeed a brand owners' brand. McDonald is a consumer brand, as all the consumers know that what McDonald means and know its quality. Hon Hai enjoys exactly that among all the brand owners, Apple, Motorola, Xbox, HP, Dell, etc.

So are TSMC, Wanxiang, Johnson Electric, and many factories in the Pearl and Yangtze delta.

A brand does not have to be recognized by an average consumer, it just has to be recognized by its customers.

3 comments:

Emmanuel said...

Sun Bin--the trend appears to be for Chinese firms to buy up Western brands that are not doing too well instead of developing their own.

Fearsome Worrier said...

I find Guo's comment revealing, and frustrating: "I think brands are hard to make ... who can remember all of them?" How would he explain how Westerners do it?

I think there's a belief among Chinese business leaders - more of an excuse, really - that brands are some kind of mystical thing that take a lot of money and time to grow, and better left up to Westerners. Bullshit. New brands are introduced everyday in the U.S., and they take no time at all to take on an image in the public mind. You can think of your own examples. But you have to be willing to take on a persona (i.e., to the exclusion of other possible personas), you have to be willing to do something different, and you have to be willing to do something well. All those things require a concept of what is good - having tastes and ideals. And that is exactly what the Chinese do not have.

Bertrand Russell, who was a deep admirer of China and taught at Bei Da, described the Chinese as "lazy". Not lazy like sit-on-our-ass take-a-siesta lazy, but lazy as in the concept of doing something for its own sake is entirely foreign to us. We'll work harder at something than anybody else, but we won't do anything unless we can get some kind of tangible material benefit from it. Westerners are not like that. They’re willing to do something even if they lose money doing it, for the simple reason that they like doing it, or it’s worth doing. That's why their towns are prettier, their laws are more rational, and yes, why they have products and services that people get emotional about.

And you know what’s worth doing for its own sake? Having a brand everybody knows and we can be genuinely proud of for what it stands for.

Anonymous said...

i agreed that it was a hard job to establish a brand, however once you have your own brand, then your company can grow along with the cusotmers, all need each other. Nowadays, OEM/ODM can be changed immediately once the cusotmer has found another new lower price companies. On the same token, for example, Xbox, Apple, etc they won't place an order to one OEM only, it is very difficult for OEM to keep their customer for long term actaully.