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Can China's Time Honoured Brands be Saved?

[Note: This article first appeared on brandchannel.com and is used with the permission of the author.]

As multitudes of international brand names clamour to get into the China market, China's Time Honoured Brands, or laozihaos, are quietly struggling to compete for a share of consumers' mind space. Pitting themselves against higher product quality and brand standards, are these heritage brands destined for a slow but certain death in the face of tougher international competition?

It's a common misconception that China has few brands to boast of due to its communist background and its former closed market economy. In fact, China is home to thousands of home-grown brands, with some more than a few centuries years old. However, many are in danger of disappearing from the market forever.

According to China's General Chamber of Commerce, over 1,600 enterprises have been put on China's Time Honoured Brand list since 1990. About 20 percent are facing a threat of bankruptcy; only about 10 percent are making profits, while the rest are struggling to stay afloat (China Daily, August 10, 2004).

What are these laozihaos and why are they worth saving? Do these heritage brands have any place in modern China?

Worth Their Weight in Gold?
China's laozihaos, like all heritage brands, are inextricably tied with the history, culture, and traditions of both the country and the people. Their glorious brand histories often correspond with key social and economic developments of the nation and reflect the priorities of those times.

The Zhang Xiaoquan brand of scissors, for example, had been conferred the honour of Imperial Palace Scissors, worthy of use by the emperor himself. This is a testament to the craftsmanship and material quality found at the brand's birthplace, Hangzhou.

Laozihaos also find their place in historical events; the popular White Rabbit brand candy, from the 88-year old Chinese food empire Guanshengyuan, was presented as a national treasure gift to US President Richard M. Nixon during his visit to China in 1972.

Beijing Tongrentang, a 337-year-old Chinese pharmaceutical brand, still dispenses centuries-old medical remedies along with other modern and improved formulations. Inherent in these brands are the traditional techniques and skills used in producing the products.

In short, what would be lost with the demise of heritage brands are more than just familiar faces in China's marketplace. We would also lose pieces of culture and history that are part of China's national identity.

What's Wrong with the Picture?
Lack of trademark protection has often been cited as the key reason for the decline of these laozihaos.

Indeed, the recent bankruptcy of laozihao Wangmazi Scissors, established in 1651, was attributed to the more than five million fake Wangmazi scissors that flood the market annually—three-fold the output of the original brand.

"We are being defeated by fake and inferior ‘Wangmazi’ products," said a Beijing Wangmazi Scissors Factory spokesman in the Beijing Review (July 8, 2004).

But a closer examination of these laozihaos reveals that they may have little more than reputation and nostalgia to rely on. Many belong to antiquated enterprises with outdated management structures and practices. Quite often, these enterprises produce single products or limited ranges that no longer hold relevance to consumers.

It is a common belief among Chinese companies that brand name recognition alone is enough to build a brand. However, as international brands and modern local brands jostle for consumers' mind space with flashy images, sleek products and engaging brand relationships, China's heritage brands need to build up more of a brand experience, than just legal protection of their names, to survive.

This calls for a concurrent revitalization of the brand itself to strengthen its legal case.

How Can Heritage Brands Be Revitalized and Saved?
So how can these laozihaos move from old to classic cool? There is no sure-fire way, but here are some key principles to help them along.

Going back to the brand legacy. Heritage brands have the distinct advantage of history on their side. They obviously have done something well in the past. The trick is in identifying where that magic lies and building on it.

While this may sound relatively obvious, it is hardly straightforward. All too often, the temptation is to rely too heavily on nostalgia as the key pull factor in drawing consumers back to the brand. But that "warm and fuzzy feeling," which is associated with the brand, still needs to be pinned down, substantiated and articulated. Otherwise, it remains a fuzzy, unclear emotion that does not help define the inherent brand strength.

Consider an example outside of China. The Singer brand of sewing machines has been used by generations in Asia. Singer sewing machines were often included as part of dowries—an essential tool with which to start a new home. The nostalgia in this case lies not just with the product, but with the brand's role within families in Asia. This role may need updating to keep up with trends and needs but would serve as a strong foundation to reintroduce the brand to new consumers or in new product categories.

This may not be the same for other heritage brands, which is why the equity of each heritage brand has to be explored thoroughly. The idea here though is to ensure that existing brand strength is capitalized on, and that the good isn't thrown out with the bad.

Finding your audience again. Let's face it, pushing your "grandmother's brand" may work if you're selling products required in traditional Chinese cooking, but this may not be the best approach if your intended audience is a younger, trendier segment or if you are in a more forward looking industry, such as fashion.

Every brand is different. While rejuvenation is necessary for heritage brands, how far to stretch an audience beyond traditional customer bases will depend on the industry, brand legacy, and how well the needs of younger customer segments can be met by the brand.

Being relevant again. Many heritage brands have simply fallen out of fashion. Reasons abound: products are no longer used in our modern times, there is an emergence of new brand or solution alternatives, product and brand styles may not have caught up with the times.

The end result: many heritage brands have lost their relevance with consumers today.

Brands promise to meet a need or solve a problem in a distinct and consistent way. As needs change or problems evolve, brands need to adjust their worldview and find new ways to connect with customers. In some cases, as pointed out above, it means finding new customers to connect with. This may require the brands to change mindsets about the industry, product and/or brand perceptions.

Innovation (moving forward, not going in circles). Finding new ways to connect with customers includes changing what, how and where they experience your brand. These involve rethinking the product, levels of customer service and even channel strategies.

The Flying Pigeon brand, China's biggest bicycle maker in the eighties, had primarily been selling single-gear bicycles in one colour when its fortunes soured because of stiff competition. Now it has turned things around by diversifying its product range to include more than 300 models of racing, road, and mountain bikes to meet new sports and lifestyle needs, not just transportation needs. It is also now found in more retail formats and in many colours, as reported in Businessweek (September 20, 2004).

Playing up the legend. Brands are built around stories. Stories help us understand and identify with a brand. They tell us who it is, where it came from, what it means to buy from it and what it means to work for it. This is a powerful way to bring brands to life.

Heritage brands have a wealth of brand stories to tap in to, but many heritage brands either tell their stories badly or dwell too much on past glories. They alienate potential new customers. A brand story should be told in the context of how it helps a brand deliver on its promise today. This helps establish credibility, signal progress, and inspire awe and mystery that could win more audiences.

Playing the China card. As confidence in the Chinese economy and identity increases, it may help some heritage brands to link themselves more closely to their Chinese origins.

China is the birthplace, and hence, the heart of knowledge and techniques for sectors such as traditional Chinese medicine, silk and Chinese cuisine. For these sectors, the China card could prove to be a trump card.

The history of Beijing Tongrentang, a traditional Chinese medicine-maker founded in 1669, is inextricable from that of China's. Tongrentang exclusively supplied medicines and prescriptions for the imperial clinic for 188 years; the brand also represents the best of China's knowledge and techniques in traditional Chinese medicine.

Brands like Beijing Tongrentang stand to gain from a closer association with Chinese values and its reputation for craft and skill, while at the same time, gaining distance from the outdated, parochial connotations of being a heritage brand.

A Final Word
There is much to be done to help Chinese heritage brands rebuild and rejuvenate. While a big part of it would still lie in a makeover of management and business practices, a strong brand is still what laozihaos can count on for future growth.

It would be a mistake to substitute real brand building with just trademark protection. Laozihaos need to craft their own distinct brand experiences at every touch point, from products to advertising, customer service to channel distribution, brand extensions to brand licensing.

This may prove to be too big a challenge for some laozihaos; and some may even be lost eventually. It is going to take both corporate effort and government support to ensure that some, if not most, survive. However, heritage brands are such great assets to countries, cultures and communities that they should never be allowed to go gently into the night.

Doris Ho is principal consultant at Sprout Brands (www.sproutbrands.com), a brand consultancy specializing in brand development and extension in Asia. E-mail info@sproutbrands.com for more on branding issues in China and other parts of Asia.