Global Chinese Brands Divide into Categories
National Champions are home grown corporations that have beaten international competitors to become domestic leaders. They often tackle niche segments that leading brands in overseas markets are not participating in. They then use their production prowess in China to develop specialty benefits, drive down production costs and grow volume businesses. A successful example is Haier making compact refrigerators and wine coolers.
Dedicated Exporters mainly go into international markets to gain global economies of scale. When they first enter a market, they tend to work with retailers or distributors. Once they develop market expertise and scale the business, they migrate to high value products. They are aggressive in striking partnerships or acquiring smaller companies in order to move up the value chain. BYD started out supplying rechargeable batteries to Apple, Nokia, Motorola and Samsung. It evolved into an electric vehicles manufacturer. The company sold a 10 percent stake to Warren Buffet's Berkshire Hathaway in 2009, and formed a partnership with Daimler in 2010. The company expects to export its plug-in hybrid to North America.
Competitive Networks are groups of small, specialized companies that exist separately in close geographic proximity but operate as a single, interdependent yet unofficial entity. To minimize internal rivalry, they organize production into specialties, with the smaller manufacturers making components and the larger ones doing the assembly. Examples are entrepreneurs in Wenzhou manufacturing cigarette lighters or in Shengzhou making neckties. In this way, China has already taken huge shares in the global market for watches, socks, shoes, precision electronics and Christmas decorations.
Technology Upstarts use technological innovations to enter commercial markets. For example, a group of scientists from China's Institute of Computing Technology started Legend, Lenovo's holding company. "Technology Upstarts" challenge the conventional wisdom that hi-tech is restricted to high-end products. They often acquire foreign brand names and the technology and market access that come with them. "Technology Upstarts" also enjoy the benefit of being closely related to computer and electronics, home appliances and computer games—three of the top five "Made in China" product categories that overseas consumers are most likely to consider purchasing, according to research by Millward Brown. In addition, many of China's e-commerce companies, such as Alibaba.com and Ctrip.com, like to enlist cooperation and support from individuals in Chinese diaspora. These individuals often have technological knowledge and international business experience, providing these companies with a resource for world-class capabilities.