Arun Sudhaman 17 Aug 2009 // 8:50PM GMT
Tom Doctoroff has an interesting article in AdAge, where he argues that a Chinese brand going truly global is still years away. It has already attracted some criticism on the comments, but will elicit little surprise from people familiar with this territory. Doctoroff expands on many of the points he made in this feature I wrote for Media Asia earlier this year, which effectively concluded that - while the recession bodes well for Chinese brands - it would be a mistake to assume that they are ready to emulate the success that Japanese names like Toyota and Sony have had around the world. For all of the reasons, check the stories above. Perhaps the best insight I received was from Larry Rinaldi, an adman who spent a tumultous few months as global CMO for Haier - widely cited as the most successful international Chinese business. Rinaldi was a little bitter, and understandably so, but he made some very important points about the structure, priorities and - crucially - budgets of big Chinese companies:
“Budgets are usually, if not always, insufficient, always vastly overstated and highly vulnerable to the whims of management. All to often they are slush funds for various purposes or simply re-allocated to margins when things go bad.”As if that isn't bad enough, and as Doctoroff points out, the focus on scale is another problem. At big companies it is rarely accompanied by innovation. Smaller players which are more open to innovation, lack the scale required to expand. A Catch-22, you could say. And that's before we consider the acquisition option, which appears to be flavour of the month right now. I imagine this will start to become a reality but Lenovo's experience is ample evidence of the inherent risks. Clearly, as we have seen from Haier, Chinese businesses can succeed overseas, albeit on the same commoditised terms upon which they rule at home. Whether they can take the step up to creating genuine brand equity looks unlikely to happen in the short-term at least, until this becomes a requirement for success in its home market. (Interestingly, one of the brands tipped for success in my feature is MSN clone QQ. In the internet market, you could argue that China's brands have displayed considerable innovation - and by targeting its overseas diaspora there may be the potential to export these models.) Neither does the 'Made in China' tag inspire confidence right now. On all fronts, it is the kind of marketing challenge that agencies should be queuing up to tackle, assuming they could eventually drive change. Update: David Wolf has a thoughtful view on this at his Silicon Hutong blog. Definitely worth a read.