Chinese brands face headwinds amid global growth ambitions

Chinese brands are pushing to go global, but many are still facing roadblocks in developed markets despite seeing an increase in resources.

According to Interbrand, the total value of the top 50 brands in China increased by 15% in 2018, making an expansion to other developed markets the next natural step for some of the larger brands.

But that is proving easier said than done, as cultural divides, pre-existing notions and a frosty global political climate stifle these brands' hope for growth.

One issue facing Chinese brands is an association with lower quality, due to China’s economic rise on the back of low-cost manufacturing.

"China’s economic growth has come as a result of a focus on asset-intensive industries and low-cost manufacturing, but this has also created an impediment as its reputation of Brand China is still associated with lower quality," reads R3’s report dubbed, "China Brands Go Global."

Practices such as paying for fake reviews have also harmed the reputation of Chinese brands in developed markets, as the technology to call out these reviews advances.

Despite being commonplace on Chinese e-commerce sites, many consumers in developed markets view the practice negatively.

A survey by Qualtrics (2016) of consumers in the UK showed 38% of people questioned the credibility and authenticity of a Chinese brand in the past over issues ranging from quality to ethical production.

Chinese brands also simply don’t care as much about branding, with the majority of brands being very much product-driven.

As a result, a report by BrandZ revealed that Millennial consumers (aged 18-34) were 26% less likely to recognize a Chinese brand now than when compared to the past three years.

However, there are success stories, two notable ones being Lenovo and Huawei, BrandZ’s top two global brand builders in 2018, respectively.

Lenovo, in particular, employed a global first strategy, which included agnostic - instead of country-specific - branding. The goal was to be viewed as an international technology brand rather than a Chinese one, despite being proud of its heritage.

Marketing also focused on customer engagement with the brand rather than experience with products themselves, and teams were reorganized to be customer-centric rather than centered around product groups.

Additionally, performance is partially assessed on key consumer metrics, such as timely delivery.

Huawei took it even further and decided to lean into the creative space, marketing its phone in Europe as the device for creatives. The initiative focused heavily on photography and customer-centric experiential marketing pushes.

This all helped the brand surpass Apple’s worldwide smartphone sales in 2017, showing that a Chinese brand can outperform Western ones on a global scale.