Future of Multicultural Marketing

The recent hype around Western imitations in China (Apple, Ikea, Subway etc.) have stirred up quite the controversy in China's ability to build global brands.

My POV:

1.) China definitely has the ability to build brands
2.) Western consumers aren't aware of Chinese brands simply because they aren't the target market
3.) In the long run, the Chinese has the ability to not only build brands but INNOVATE brands
4.) China has a high pool of information workers, combined with skilled labour & lower production costs - this will enable them to go to market faster and more effectively than Western firms
5.) It's just a matter of time, the tides are set to change. Perhaps Western brands are reacting because they feel the emerging threat?


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A discussion on LinkedIn has led to this thought provoking article: http://blogs.forbes.com/panosmourdoukoutas/2011/08/03/why-china-imitates-western-brands/

Here is my response, that can be found on LinkedIn as well:

"I would beg to differ from the author of this article, perhaps the words of 'inability of Chinese business to develop their own brands" and "that's why Chinese brands flip" come too strongly and overgeneralized.

1.) Chinese businesses definitely have the ability to develop their own brands, more than you think they do.

Some of the top Chinese brands enjoy the same successes (if not more) than "western brands", i.e.) China Mobile, China Life, China Construction Bank, ICBC, Bank of China, Ping An, China Merchants Bank, TENCENT, MOUTAI, China Pacific, Lenovo, Tsingtao Beer ... and the list goes on. This is according to a brand value study conducted by Interbrand and Forbes China (really should question the degree of research that was placed into the article of our discussion here).

Many leading Chinese brands are not known to Western consumers simply because they choose not to enter the Western markets. To me, that’s smart business strategy – to focus on building domestic market share and penetration before stepping into someone else’s turf. Wait and watch how the tides will change when these Chinese firms finally decide that “the time is right”.


2.)"A supply side approach to entrepreneurship" - my understanding of this statement is that "Western brands are good at conducting consumer research while Chinese are known for supply of labour/finance, and this fundamental difference is the reason why Western brands succeed while Chinese brands fail."

If I understand correctly, then I must say I disagree with the statement. The success of western brands as they translate to ROI and sales revenue is largely related to the balance between production costs vs. advertising expenditures. Taking advantage of low wages and operation costs in China and other APAC countries enable Western brands to reap profits and hence, allocate more advertising budget towards brand building and research. This is not a matter of chicken vs. egg - it is simple, producing a viable product comes before building a brand, for what good is a brand that does not deliver on its core promise? China helps to lower production costs, which ultimately gives rise to advertising budgets and the ability to actually “build a brand”.

Conversely, if Western brands can take advantage of China's low labour costs and resources - then I dare ask: why is China in the midst of such scrutiny for leveraging the brand expertise of Western countries and customizing it to fit the local markets?


3.) To wrap up my comments, I urge everyone to read another article by Shaun Rein – “Chinese Companies Can’t Build Brands? Think Again.” http://www.businessweek.com/globalbiz/content/jan2010/gb20100126_512186.htm"