Chinese Companies Set To Develop Brands Overseas: Ogilvy & Mather Brand Report

According to the latest brand research, Chinese companies are committed to building brand identity overseas, despite poor Chinese brand recognition among Western consumers. Daragh Moller talks with John Shaw, regional planning manager of Ogilvy & Mather Asia Pacific that commissioned the research.

"Impossible is Nothing" shouts an advertising billboard on Wangfujing Dajie, Downtown Beijing, sometime last summer.

On the hoarding, a larger-than-life David Beckham, appearing twice as strong as in reality, towers over passers-by. Roaring triumphantly on a soccer pitch during a match, Beckham is a victorious modern-day gladiator, fists clenched, teeth barred.

Recognize the brand?

Capitalizing on the universal themes of football and athletic hero worship, a global "brand" advertising campaign like this one can change consumer habits and move them to identify with brand values and buy products associated with the featured lifestyle. 

Unlike the words of the advertisement, this is no easy accomplishment.

While global brand advertising is ubiquitous on the streets of China's more affluent cities such as Beijing and attracts a relatively fresh consumer demographic to identify with and buy the brands it sells, new research shows Chinese companies are becoming increasingly committed to building brands in overseas markets.

"There's increasing evidence that Chinese companies and brands are making their presence felt in overseas markets," said John Shaw, regional planning manager for Ogilvy & Mather Asia Pacific, the advertising and public relations (PR) giant, with offices in Beijing, Shanghai,  Guangzhou and Hong Kong.

"Lenovo, Haier and TCL have been leaders in going overseas," he said.

Ogilvy & Mather, whose mission is "to be the agency most valued by those who most value brands," commissioned the research following a meeting of minds on the overseas branding needs of China's top companies.

Ogilvy & Mather entered an "opening up" China in 1979, initiating its first advertising campaign on the Chinese mainland by taking space in the Shanghai press on behalf of Rado watches. Setting up on the Chinese mainland in 1986, Ogilvy & Mather joined forces with Shanghai Advertising Company to form a joint venture.

Last winter, Ogilvy & Mather brought a number of Chinese company executives together with top international branding experts at Chateau de Touffou in France's Loire Valley, former home of company founder David Ogilvy, in order to share experience in global brand building.

From the meeting, Ogilvy & Mather identified research needs in the area and commissioned two reports.

The first surveyed senior managers from 50 large Chinese companies and focused on their plans for brand presences in overseas markets. The second, carried out by Millward Brown, investigated Western consumer attitudes to China and Chinese products.

The research identified potential among Chinese brands to build on consumer "right brand" preferences abroad, particularly in sectors where Chinese products were thought innovative, making use of Chinese companies' long-term commitments to develop overseas markets through corporate reputation building.

"The findings of the research underline that Chinese companies and their top managers have quickly come to appreciate the value of brands," Shaw said.

The research shows that top management is also taking a long-term, strategic approach to developing their brands overseas.

While Chinese companies may have limited experience in overseas brand-building, it seems evident they look to global success stories for guidance.

"Chinese companies are in the fortunate position where they can benefit from the experience of other multinationals that have gone before them, including those from Japan and Korea," Shaw said.

"They need not follow the same models, but they can certainly learn from them."

One of the problems facing Chinese companies attempting to build brands overseas is the understanding of local consumer markets and trying to match Chinese products with overseas' consumer values.

Martin Lindstrom, author of Brandchild, a marketing research publication that looked at the consumer habits of children in Western consumer markets and how they build relationships with brands, explains: "If a brand achieves an ostensibly uniform identity all over the world, is it recognized by consumers from country to country in the same fashion? Would respondents to a market survey in Moscow identify the same key values they associate with the brand as the Sydney consumers would? Probably not, our ideas and perceptions being inextricably related to the culture with which we identify."

While it may seem obvious that brand giants such as Coca-Cola, which have universal appeal, are understood in the same way the world over, it isn't so.

"Coca-Cola has international recognition, but is its image perceived by all consumers in the same fashion? Not by a long shot," said Lindstrom.

Ogilvy & Mather's research shows that only 20 percent of Chinese CEO respondents said understanding the foreign consumer was, in terms of brand building, "the most important challenge facing their company," while 39 percent said they considered overseas competition most important.

How can effective branding take place in overseas markets without fully understanding the buying and lifestyle values of the local consumer?

Shaw said, "First, the responses don't necessarily mean 'understanding foreign consumers' is not important to senior management. Rather, it suggests that Chinese companies are most commonly concerned with competition, and may feel relatively confident about their ability to understand consumers in overseas markets."

Thus, the importance of seriously understanding foreign consumers cannot be overlooked by Chinese companies if they intend to build long-term brands in overseas markets.

"Without real insight into consumers, it will be a challenge for Chinese brands to build emotional bonds with consumers," Shaw said.

The research also shows that 82 percent of Chinese CEOs surveyed felt China's reputation was very important to their companies' success overseas.

In a separate survey, research conducted on consumer attitudes in the United States, United Kingdom and France found that respondents had "varied and weak" associations with China and Chinese products, and a low awareness of Chinese brands.

On whether the stress by Chinese company management on national reputation is likely to negatively affect overseas branding strategies in markets where consumers have little or no association with China, Shaw explains: "Depending on the category, brand owners will need to decide what aspects of being Chinese are relevant to their potential consumers, if any. Often it is the values suggested by being Chinese that will be important, rather than just the basic fact of being Chinese."

As not all multinational brands are closely identified with their countries of origin, in fact it is hard to clearly identify those that are, Chinese companies will have room to develop brand identity beyond those identified with their country of origin.

"Certainly, Chinese companies seeking to build brands abroad should ask themselves searchingly whether they really understand how their brand will tap into certain consumer motivations better than those of the competition," says Shaw.

While only further research will show exactly how Chinese companies fare in overseas' brand building, the research by Ogilvy & Mather goes some way to building a picture of the developments taking place in the thinking of  China's top companies.

"The research helped give us some insight into Chinese companies," says Shaw.

"It will certainly help Chinese companies better understand Western consumers and their preferences. So far as we know, there's been relatively little research done in these areas," he said.

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Ogilvy & Mather Asia Pacific China Brand Report (2005)

Sample: Senior management from 50 large Chinese companies

• 61 percent say companies plan brand presence in foreign markets
• 67 percent say a strategy is already in place to do so
• 65 percent say primary intention to build brand overseas is to enhance corporate reputation rather than increase revenues
• 85 percent already market branded products outside China