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Remake, Remodel, Rebrand
August-1-2011

Every day, tens of thousands of Chinese products are exported to almost every corner of the globe. However, in the eyes of foreign consumers they all simply have the same label, "Made in China".

So far, few Chinese brands have managed to leave a real imprint in the minds of Western consumers, prompting the nation's business owners to reconsider their international branding strategies.

Last year, Lenovo Group Ltd, the biggest computer-maker in China, delayed launching a large-scale brand promotion campaign in the United Kingdom (UK), because of depressed sales of computers in the UK, a country where the company's brand awareness is lower than it would like.

"Not everyone has heard of us or knows what Lenovo is. So when you go into retail in a country, you have to make it go together with branding," said Milko van Duijl, Lenovo's president for all "mature" markets outside China, in a recent interview with the UK-based Daily Telegraph newspaper.

By the end of June, Lenovo had become the world's third-largest producer of personal computers, ranked only after the global giants Hewlett-Packard Co and Dell Inc.

Lenovo's global market share increased to 12.2 percent in the second quarter, according to a report from International Data Co, a provider of information technology advisory services.

However, the key market for Lenovo is still China. Reading its cryptic logo,"For those who do", foreign consumers may be hard pressed to realize that Lenovo is a provider of laptops, desktops and tablets. To improve its brand awareness in the UK retail market, the company needs to invest heavily in media and promotion, according to Van Duijl.

One recent positive for the brand was that it was cleverly advertised in a Hollywood movie called Transformers: Dark of the Moon. In the movie, a computer transforms into a robot friend of the hero, Shia Labeouf -and the name of the computer company is there for all to see: Lenovo.

"Chinese enterprises are looking for better opportunities to promote their brands in the global market, and Hollywood movies are good platforms for expressing brand image as Chinese companies embrace Western culture, which is familiar to the target audience," said Liu Siru, head of the advertising company Filmworks China Entertainment Marketing Ltd Co, which is operating in the US movie hub.

Besides the product itself, brand becomes more important for a company to build its core competitiveness and add value in the modern business world. The pace of overseas expansion for Chinese companies is often dictated by whether their brand image can be easily identified by foreign consumers, according to analysts.

"I like Chinese products, because they are inexpensive. But I remember hardly any Chinese brands," said Arjan Benit, a Dutch student of Business Studies at Luton University in the UK. A report from the brand consultancyInterbrand Co, failed to include even one Chinese company in its "Best 100 Brands for 2010" list.

Explaining the brand

Wangfujing Street in the center of Beijing is one of the world's most famous commercial thoroughfares, similar to London's Oxford Street, the Champs Elysees in Paris and Rodeo Drive in Los Angeles. Billboards and electronic advertising screens for Gucci, Burberry, Nike, Haagen-Dazs and other famous international brands are widespread, hanging from top to bottom of the tall buildings flanking the pedestrian walkway.

A large flagship store of the Chinese sports-clothing brand Li-Ning Co Ltd is located in the street, and its exterior walls bear a two-story-high poster advertising the company's new high-tech running shoes. In the picture Asafa Powell, a gold medal winner with the US 4400 relay team at the 2008 Beijing Olympic Games, is running with a big smile on his face and Li-Ning shoes on his feet.

The company was launched in 1989 and is named after its founder Li Ning, who is routinely referred to as "China's best gymnast."

Pocketing three gold medals at the 1984 Los Angeles Olympic Games, Li also won six out of the seven gold metals on offer at the 6th World Cup Gymnastics Championships in 1982, a record no Chinese athlete since has managed to surpass.

The company grew rapidly in China in the first ten years after its launch, thanks to Li's personal charisma. Li-Ning opened its international trade department in 1999 when it started its overseas expansion strategy. In 2004, the company listed successfully on the H-share market of the Hong Kong Stock Exchange, raising capital to strengthen brand promotion and enlarge its global sales network.

However, Li-Ning's "Going Abroad" strategy didn't produce the desired result. Its annual revenue from business outside China declined to 1.3 percent of total revenue in 2005 from 2.4 percent a year earlier, prompting the company to reconsider its international growth path, according to a report in China Management Magazine.

Zhang Zhiyong, the CEO, decided to slow down the expansion of sales overseas while improving the company's global advertising and rebuilding its brand image. "We try to be different from other Chinese companies that win market share by providing low-price goods. We hope to increase the added-value of the brand first," said Zhang.

Last year, "Make a Change" became the new logo for Li-Ning. The company's previous logo, "Anything is possible", was perceived by consumers as being too similar to the "Nothing is impossible" logo employed by Adidas AG. Meanwhile, Li-Ning chose internationally famous foreign athletes to be its brand spokespersons.

Mike Bastin, an academic who specializes in branding and marketing at Tsinghua University in Beijing, said that Li-Ning's new logo fails to express the true spirit of the company. "Consumers may not understand what kind of changes the company can make through its new logo. Maybe it is because of the difference in language between Chinese and English," he told China Daily.

Meanwhile, for many overseas observers the company is still an unknown quantity. "I didn't know that Li-Ning was a sports-clothing brand until I saw my Chinese classmate wearing one of their T-shirts. I am not sure whether the brand suits mebecause I know nothing about the culture or spirit behind it," said Benit, the UK-based student.

"In my opinion, Li-Ning's new brand promotion didn't achieve the desired effect after one year," said Ding Jiayong, a professor of advertising and consumer behavior at Nanjing Normal University.

According to Tsinghua University's Bastin, Chinese companies need to reconsider their methods of gaining recognition from foreign consumers through their brand names, logos and billboards. "For example, 'Meters/bonwe' is a brand of sports clothing, but the name seems too long to remember. Moreover, it has no meaning in English or any other language, which is confusing for foreign consumers," he said.

Ding said that brand internationalization is the only way for a company to accelerate its overseas development. The lesson to be learned from some of the more successful campaigns is that communicating the brand's spirit in line with a global zeitgeist - such as happiness, bravery and energy - to the target consumers is the most important thing, he said.

For example, Nike Inc's "Just do it" logo exemplifies a mixture of confidence and power that satisfies the psychological needs of young people. "Li-Ning doesn't have clear brand-positioning, and they are losing consumers under the age of 25," said Ding.

Building the brand

Chinese companies have a long way to go before they can become global titans with a shining brand, even the larger operators which have sufficient campaign funds, according to analysts.

The low-cost manufacturing experience, allied to a focus on increasing sales volumes, has resulted in Chinese entrepreneurs neglecting effective brand-building. That is likely to become a huge hurdle to business development across different cultures.

The problems that Chinese companies face today are similar to those experienced by those in Japan and South Korea in the period after World War II, wrote Kevin Taylor, Asia-Pacific president for British Telecom Group, in a recent article published in the Wall Street Journal.

Japan and South Korea both gained a global reputation for "low-cost manufacturing" with concomitant low quality in the 1950s and 1960s. After a change in business strategy and an aggressive brand-building campaign, some companies from those countries changed consumer perception of their products and helped them to become well-known on an international scale, according to Taylor.

Li Xiang, executive director of the Hong Kong-based Spring Capital Co, an independent private equity firm, said that the key to the "Going Abroad" strategy for Chinese brands is to "give a good impression" to foreign consumers by providing high-quality products and services.

"Chinese companies have the ability to expand overseas, because they have enough money, a large labor force and a variety of products," said Li. "The weakness was that we didn't effectively communicate our brand image in other countries."

In response to the interview with Van Duijl, many readers wrote on the Daily Telegraph's online message board that they only use computers from Lenovo's ThinkPad range (which was acquired when the Chinese company bought IBM Corp in 2005) at work, and that the computers were purchased by their companies. It seems that Lenovo needs to work hard and improve awareness among consumers outside its home market.

Wang Yuquan, China president of the business research & consulting company, Frost & Sullivan Inc, said that Lenovo should accelerate its technological development to ensure that its products are top of the range in order to ensure a breakthrough and become a top global brand.

"To sell low-end and low-cost computers in emerging markets may be an effective method of enlarging Lenovo's market share in the short term. But it is dangerous in the long run if it doesn't improve brand awareness in developed economies," according to Wang.

Li-Ning launched its online store on eBay.com in July, 2010 in order to broaden its sales channels overseas. In the aftermath of the 2008 financial crisis, e-business helped Li-Ning reduce its marketing costs and improve its brand awareness internationally.

The company's former Chief Financial Officer, Chen Weicheng, said that future international competition may not depend on the increase in product sales, but rather on quality and brand influence.

Haier Group, a Chinese "white goods" manufacturer whose products include refrigerators, washing machines and air conditioners, won the largest market share for major appliances in the fourth quarter of 2009 after a promotional campaign as a sponsor of the US National Basketball Association. Haier was also one of the main sponsors of the Beijing Olympic Games in 2008, which broadcast the company's name to audiences on every continent.

The company is now focusing on building its brand around an image of tech-savvy awareness.

"Haier aims to create a world-famous brand in the age of the Internet, which features 'satisfying the personalized needs of users in a short time,'" according to its website.

According to British Telecom's Kevin Taylor, a global branding campaign will also require Chinese entrepreneurs to improve after-sales services to handle customer queries, complaints and feedback in many languages, which is "a demanding and complex task".

"Chinese companies will ultimately overcome these challenges, and the world's consumers will be richer for the choice Chinese brands will offer," said Taylor.