Innovative Chinese Brands Ride Digital Wave to Greater Global Reach, Prominence

Changing “Brand China” perceptions will require insight, communication

Doreen Wang
Global Head of BrandZ
Millward Brown
Doreen.Wang@millwardbrown.com

What brand is the Number 1 online retailer in Russia, Brazil, and Israel? What brand is equivalent to the term “e-commerce” in these three fast-growing markets? Hint: It’s not Amazon. It is AliExpress.com! Owned by Alibaba Group Holding, Ltd., the AliExpress marketplace provides international access to a wide range of Chinese products, drawing consumers with a strong value proposition, price advantage, and wide product selection.

What brand will own the future of short-distance transportation? Hint: It was started only five years ago. In fact, most people have not heard about Ninebot – yet. Pioneering technology and speedy innovation in personal robotics give the brand an edge over its competitors. And with its recent acquisition of the Segway brand, Ninebot is present in over 80 country markets worldwide.

Alibaba and Ninebot, along with the consumer electronics leaders TCL and Huawei – and many other Chinese brands – are increasingly building revenue in overseas markets and at the same time changing long-held consumer negative perceptions about the quality and originality of Chinese products. This change is happening in part because of the speed with which many Chinese brands are able to rapidly digitize products, services, and communication.

Chinese brands also enjoy several other competitive advantages compared with their western peers. First, because of China’s rapid economic expansion, many brands launched as digital brands, skipping the analog stage completely, and leapfrogging western competitors. Second, Chinese brands are accustomed to meeting the desires of consumers who have enthusiastically embraced digital and mobile. Consumers drive Chinese brands to act quickly so they’re not left behind.

In addition, Chinese brands are rapidly combining their digital expertise with innovation and strong consumer propositions. Smartphone brand Xiaomi has successfully repositioned itself from “the poor man’s iPhone” to an exciting, disruptive brand by crowdsourcing improvements to the product interface of its handsets – a strategy that has built an engaged and loyal base of fans.

Perception of Chinese brands lags reality

These competencies put Chinese brands in a strong position to meet the needs of an increasingly online global population, especially among young people, the millennials and post-millennials in fast-growing markets, such as Russia, Brazil, and Africa. But this emergence of global Chinese brands happened over time.

For decades consumers bought products made in China and branded in the West, and the out-of-date view of Chinese brands as makers of low-price, low-quality goods has not yet caught up with reality. According to a recent BrandZ™ survey, only 32 percent of overseas consumers say they have faith in products that were “Made in China.”

And although the revenue that Chinese brands gain from overseas has increased significantly over the past five years, western consumers’ awareness of and familiarity with them remains relatively low. Kantar Millward Brown’s “Going Global” study finds that only 23 percent of western consumers can name at least one Chinese brand – an increase of just 3 percent since 2012.

The key question Chinese companies need to ask themselves is how they can drive up brand familiarity with a sustainable localized brand strategy and persistent marketing investment.

Among the brands that have successfully established themselves in overseas markets are these technology leaders – Lenovo, Huawei, and ZTE. These brands derived over half of their revenue from outside China in 2015. All three brands have built a profound understanding of consumers’ needs and desires, and met them by leveraging their decades of production experience to make and market quality, value-added products under their own brand names.

Chinese brands take a different route to globalization

For Chinese brands going global, the journey will be different from the earlier experiences of American, Japanese, or Korean brands. Although those brands experienced great success, they usually confined their businesses within a category. In contrast, brands from China and other fast-growing markets are strong on digital innovation that often applies across categories. They define their expansion not by the limits of a category, but by the possibilities of technology.

These brands are also actively seeking merger and acquisition opportunities to ensure that their technology advantage will be leveraged at the global level. Many of these companies start their business with a globalization infrastructure in their company DNA. For example, Ninebot first developed the most cutting-edge robotic technology and applied it into short distance transportation vehicles. From day one, the founding entrepreneurs set up offices around the world. Also, by acquiring Segway, Ninebot was able to gain brand strength in America while at the same time adding product iterations to meet the needs of new market segments.

Ultimately, international acceptance of Chinese companies depends on brands working actively to change consumers’ perception of “Brand China.” Chinese brands must first gain insight to understand the gap between the quality of the products they produce and the overseas perception of those products. Then brands need to narrow the gap with communications programs that promote quality and build trust. For example, home appliance brand Hisense, which derives around 30 percent of its revenue from overseas, actively participates in the development of international quality standards, and designs its products to surpass them, communicating clear and powerful messages about their reliability and efficiency.

To be seen as more than just manufacturers or hot stocks, all Chinese brands must find meaningful and appealing points of differentiation. And telling a powerful story that plays on China’s unique cultural and social identity may be a highly effective way to do this. One thing is certain: A “me-too” approach will not build consumer brands that are accepted, valued, and desired in overseas markets.

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