China strives for its own global
mega-brands By Jayanthi
Iyengar
The Chinese are envied for excellence in
many fields. In the United States, however,
manufacturers are afraid of what they call the Chinese
"blight", which is sweeping their shelf space, flooding
it with value-for-money products. But still, if one were
asked to recall a Chinese brand of global standing, few
names spring to the mind in the league with Coca-Cola,
Microsoft or McDonalds. It is this failing that the
Chinese now hope to address as they relentlessly march
forward on many other fronts, leaving their footprints
on new-generation sciences, cutting-edge technologies,
the moon and the outer space beyond.
Two Chinese
companies are particularly at the forefront the Chinese
effort to go global. They are Chinese consumer
electronics giant Haier and China's biggest computer
manufacturing firm, Lenovo (formerly Legend). Both these
Chinese companies plan to use the 2008 Olympics as a
springboard to create a global recall and brand
recognition for their products.
In anticipation
of the Olympics, China's largest PC manufacturer Legend
has undergone the name change. Also, early this year, it
signed up as a sponsor for the 2008 Summer Olympics in
Beijing, "The change of our English brand name (from
Legend to Lenovo), and our participation in the sixth
generation of The Olympic Partner (TOP) Program of the
International Olympic Committee announced recently will
be of great significance in the group's international
business development and brand promotion," Yang
Yuanqing, president and CEO of the Lenovo group, told
Asia times Online.
Though wary of revealing the
surprises it plans to spring at the Olympics, the
company broadly indicated that it would like to use the
opportunity offered by the event to etch the company's
brand name on the international consumer consciousness.
Haier's CEO Rumin Zhang, who has equally ambitious plan
for his company, candidly told Asia Times Online, "We
know there is a long way to go." Haier, China's small
refrigerator brand, has been repeatedly rated as one of
China's most valued brands and was voted one of the
world's 100 most influential by World Brand Lab in
January.
What makes a global brand? It is
difficult to say what endears a product to consumers, or
why Asian brands have largely not been able to carve out
a place for themselves among global brands, but if one
looks at the list of top global brands, several things
are clear:
A global brand can be created out of any product;
It is difficult to predict the winning mix for a
global brand though it broadly seems to be a combination
of goodwill, quality and lifestyle;
Most global brands are from the West, with some
exceptions from Japan.
While many may like to
believe that a rose by any other name still a rose and
smells as sweet, global manufacturers know that branding
could make a difference between million- and
billion-dollar businesses. Coca-Cola, which is ranked as
the world's most valuable brand by Business Week and
global brand consultants Interbrand, is reportedly
valued at US$70.45 billion. Microsoft, the first
runner-up in the Top 100, is valued at $65.17 billion.
Other known brands include Nescafe, Kellogg's, L'Oreal
and Kleenex - clearly proving that there is no magic
prescription to deciding the winning product-branding
mix.
In Asia, though countries have been moving
forward in creating production bases for most of these
well-known global brands, they themselves have not been
able to generate names memorable enough for
international recognition. Japan is the only country
that has been able to beat this jinx, with names like
Nintendo, Canon, Panasonic and Nissan making it to the
list of top Asian brands on the international list. The
sole exception to the rest of Asia is Samsung, the South
Korean Electronics giant, which yet again goes to prove
that Asia needs to do more for brand promotion. Also,
the list highlights the fact that brand development may
in some ways be closely linked to the economic
development of the country in question as brand
promotion and creation are a function of advertising and
brand awareness budgets.
The Chinese
debacle Despite China's growing share in global
manufacture and its growing clout as Asia's most sought
after investment destination, there are many reasons for
China's inability so far to create products worthy of
global notice and recognition.. Professor Nan Zhou, who
heads City University of Hong Kong's marketing
department, refers to a paper he wrote nearly 10 years
ago to illustrate the point, saying what he wrote then
is still valid today.
In this paper, professor
Zhou refers to three broad reasons. China started out as
a socialist economy. Hence, for a long time, the focus
was on more on managing shortages and on the supply-side
rather than paying attention to product differentiation.
The Chinese industry was used to mass production at that
time, which did not help product differentiation -
important for brand creation. Most importantly, however,
the Chinese made as much money as being Original
Equipment Manufacturer (OEM) contractors abroad as they
would if they had been involved in developing products
and creating brands. Hence, there was little incentive
to chart this course.
This outlook has changed
in recent years. The Chinese are today fired by the
dream of being globally recognized. They would like to
make a place for themselves among global consumers
instead of limiting their reach to just their domestic
markets. Resurgent China is also marked by pride, and it
would like to shed the popular image of being a cheap,
low-quality producer and become known as a high-end
producer of goods for the global market. This is part of
the transition from being the low-cost factory to the
world to being a state-of-the-art producer of quality
products.
The Lenovo experience Let's
look at what Lenovo is doing to create a global position
for its brand. Lenovo has been China's largest-selling
brand of PCs since 1997. It commands 27% market share in
the Middle Kingdom (company's figures), while in the
Asia Pacific (excluding Japan), it has a market share of
12.6%. At the turn of the century, the company decided
to go global by creating a globally accepted name. In
April, 2003, it formally announced its decision to
re-christen its product Lenovo, forsaking the former
brand name, Legend.
There were many reasons for
this. One, of course, was the fact that the name
"Legend" was registered in many countries where the
group wanted to create a global presence. "On our way to
become internationalized, we needed to have an English
brand name that could be used unrestrictedly in markets
worldwide in the first place. However, the original
English brand name, Legend, had already been registered
by others in many countries, making it essential for us
to design and register a new English brand name.
Although our business focus is still on China, expanding
into the international market is an inevitable path with
the globalization of the IT industry and for Legend's
self-development. That is why we must take proactive
action in our preparation," explained Lenovo group
President and CEO Yang.
Thus the company settled
for Lenovo, which combined its product's old name with
its new aspirations and identity. "Le" was taken from
Legend to indicate connection and continuity, and
combined with the Latin word, "nova", which means
innovation and novelty. "The two were combined into
Lenovo, which represents 'an innovative Legend' and
captures our essence as a highly progressive and
innovative company," Yang said.
The company
today believes that name reflects four of its brand
attributes - trustworthiness, innovation and energy,
superior professional skills and ease of use. "Adopting
the basic tone of blue combined with a modern design
with simplicity, Lenovo is a vivid representation of
professionalism, technology, profoundness and wisdom,"
Yang said.
Following the positive response to
the new name, the company decided to formally change its
name to Lenovo Group Limited In April 2004. "The board
of directors believed the alignment of the English brand
name and the company name would help to raise the
recognition and popularity of the brand," Yang said.
The sponsorship of the Olympics is thus the next
milestone on the company's carefully orchestrated path
to create a global brand name. The company can be
expected to unleash unprecedented publicity in the
run-up to and during the Olympics as it intensifies its
efforts to develop international business and create
global recognition and memory for the Lenovo name.
Jayanthi Iyengar is a senior business
journalist from India who writes on a range of subjects
for several publications in Asia, Britain and the United
States. She may be contacted at jayanthiiyengar1@hotmail.com .
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