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Ai Feng: The Necessity of Brand Revolution in China

Date:2013-10-29 Views:0

  This brand event held in the Great Hall of the People would be the first time, ever, in the history, and has the symbolic meaning.

  The theme of this year’s Brand China Festival is “Return and transcend”. If we look at the future, no matter what we have achieved before, we all need to face the coming tough road and start from zero.


  The Chairman of BCIU Ai Feng

  To combine return and transcend, I am going to talk about an important point which is also my topic for today’s presentation – “The Necessity of Brand Revolution in China”.

  The Brand Revolution will be the first launched on the festival and given to dear attendants as gift.

  Why a Brand Revolution is Necessary?

  The constant 12 jump suicides of Foxconn in the 1st half of 2010 grabbed public’s attention and thinking. A research from a market survey company of America shows that: every ipad from Apple would be sold in $499 with the cost only in $260, and Foxconn charges $11.2, which is just 4% of the cost, for assemblage. Because Foxconn can’t request charge increase to those famous outsourcers, what they have done is to generate profit from workers, which means using Taylorism which has been abandoned by developed countries. That is the root reason of this tragedy.

  The Foxconn incident reflects that China is the “manufacturing giant, but branding dwarf”. The smiling curve in the global economy is just reversed in China, because China now is famous in low-level manufacture rather internationally recognized brands. Every year, more than 90% of the goods exported from China are OEM, less than 10% are self-owned brands which unfortunately lack of awareness and added value. And meanwhile, foreign funded and joint venture enterprises take 55% of the exported goods, and 75% of profit.

  Would Chinese be the low-priced labour forever? It shouldn't, therefore, we need a brand revolution!

  Interestingly found by the research that, we are living in the environment that Chinese consumers look down upon Chinese self-owned brands.

  There is no Chinese brand in the fashion zones of exclusive department stores in Beijing, but full of foreign logos. However, it is a shame that most of the brands sold in those stores are just common foreign brands, and even few of them are the brands registered by Chinese marketers in foreign countries in order to pretend they are not Chinese brands, which are almost all made in China. We have proposed Chinese brands sold in those stores for several years, but disappointed. Those stores blamed consumers are in preference of foreign brands even in higher price, which, however, can benefit the stores a lot financially. One international brands street in Shanghai just accept foreign brands, and refuse Chinese brands.

  Sadly, that situation not only occurs in fashion industry.

  The self-owned brands have been extinct in cosmetic industry, but few in toiletry. McDonlad’s and KFC dominate the fast food. Although tea originated in China, there is still no Chinese tea brand being recognized world widely. There are in total more than seventy thousands tea factories, but still can’t beat Lipton from UK. Jianlibao is the only one of the well-known brands that survived in the soft drink industry. Nokia, Motorola, Samsung are taking 70% of the market, and in fax machine, copy machine and camera market, only few Chinese brands are struggling to live within the dominance of foreign brands. China became the top one auto market around the world in 2009 with reaching 13,640,000 vehicles sold, however, Chinese brands just counted less than 2% in the highly profitable vehicles whose displacement are more than 2.0L. Chinese consumers only consider to purchase Chinese self-owned auto brands when the quality are in the same level but price is 30% less than foreign brands.

  The phenomenon that “look down upon themselves” shouldn't be changed? Of course, it should. Therefore, we need a brand revolution!

  The core problem of Chinese economy is to change the pattern of growth, and using the least resource to create the highest economic value is essential.

  What the developed countries have done is consuming the less resources but generating the higher added value. The material cost of one Mercedes car is up to tens of thousands, but sold in millions. An LV bag costs hundreds, but sold in more than thousands. Contrarily, what we have made are just sold in one fifth, tenth or even fifteenth of the price tagged by the foreign dealers!

  Should we do the high consuming high polluted but low value rough work forever? No, we can’t. Therefore, we need a brand revolution!

  What is the Brand Revolution?

  Blame no one but ourselves.

  Chinese brands have been loading two bags on shoulder from historical perspective. One is the less developed old China has shaped foreigners’ conscious that Chinese brands are as less developed as the old China. Another one is the popularity of faked and low-quality products after China’s reform and open policy, which also have formed foreigners’ hard-to-change negative perception.

  The reality tells us that under that concept of “China”, there is actually a huge contrary between advantages and disadvantages. The enormous improvement that we have achieved in manufacture, quality and branding during 3 decades also accompany with another side of coin – a huge numbers of problems. One tiny spot destroys the pure white, and negatives travel far more than positive, those situations also affect the evaluation of outstanding Chinese brands. When the success of holding 2008 Beijing Olympic, which is the best organized Olympic Games ever in the history, has just been talked for a while, the public is buzzed by the “Sanlu incident” which had negatively influenced the entire milk industry of China. The newly noticed national brand image hurt again, which also hurts us.

  Brand revolution is not about defeating or rejecting foreign brands, not about complaining consumer are traitors, is about revolutionizing, changing and improving ourselves.

  The primary of brand revolution is about correcting three misunderstandings.

  The 1st one, “manufacture is more important than branding”.

  Mr Deng Xiaoping had suggested an idea in 1990s that “we have to create our top products and out top brands, otherwise, we would be defeated”. Unfortunately, many people just remembered the first half of the suggestion, but missed the last half. When approving joint venture project in automotive industry, authority just asks the proportion of domestic products, but doesn't care who owns the brand, which makes the situation that all the domestic-made vehicles manufactured by joint venture companies are all foreign brands. That is the reason why “using market exchanges techniques” didn't achieve expected effect.

  There is a metaphor to describe the relationship between manufacture and brand. There are three styles writing articles: common one is writing by and signing ourselves’ names; the sectary style is writing by ourselves but for others; and the leader style is writing by others but for ourselves. Writing stands for manufacturing, and signing means branding. For the IP point of view, the first style is no loss or benefit; the second one just suffers loss but no benefit; the last one is no suffer but all benefit. The main method we are using in our auto industry is the sectary style, and 90% of export is OEM, which means also implementing the same style.

  However, some of our companies have really good market sense and have adopted the leader’s style. Lenovo merge