Discussing the enormous potential for doing business in China has grown a bit passé. China is not the future, it is now. And for organizations already on the ground there, or those looking to enter, Chinese consumers are tuned in and waiting to see what your brand can offer them.
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One of the more experienced voices on branding in the PRC is Warren Wang, recently appointed CEO of Interbrand China. With a career that spans positions in both the public and private sector, in both China and in the west, Wang possesses wide-ranging insight into an increasingly diverse Chinese economy, where the importance of branding garners an expanding presence in boardrooms.
As for a thumbnail sketch of the current state of things, Wang compares it to what China’s neighbors to the east went through in decades past.
“This situation in China is similar to what Japanese brands faced in the 70s and the Korean brands faced in the 90s,” said Wang. “Japanese and Korean-made products were cheap, basic and often low quality and it took decades to make brands from these countries become household names, and the same is true for China.”
Branding in Asia recently caught up with Warren Wang to talk about the state of branding in China –the opportunities, the challenges and how brands there might actually develop faster than their predecessors.
What’s been keeping you busy lately?
My focus has been how I can continue to grow and strengthen Interbrand’s business and reputation in China. The mainland is still a developing country albeit on the fast-track to a developed one. While there is a big market in the major cities like Beijing and Shanghai, there is an even bigger untapped opportunity in the second and third tier cities.
There we find many companies that are looking to develop their products and want to create their own brand to compete stronger nationally. Many of them have ambitions to one day compete on the global stage.
Branding education is what we do everyday. Business owners start to realize the importance of having a strong brand, but still many of them lack an understanding of how to do it.
Who are Interbrand’s biggest competitors in China and how are you differentiating your offerings?
The market in China for branding services has become more competitive in recent years, especially as the importance and value of branding takes a more prominent role within the bigger Chinese companies. Corporations are starting to realize that brand value and brand image have an impact on their ambitions to truly become a global brand.
However, there is still some confusion in the market as to exactly what branding is and how to do it. So we often find ourselves in the middle; pitched against management consultants on one side and advertising agencies on the other.
The mainland is still a developing country albeit on the fast-track to a developed one. While there is a big market in the major cities like Beijing and Shanghai, there is an even bigger untapped opportunity in the second and third tier cities.
Fortunately, we occupy a unique position in the center. At Interbrand, we are the pioneers of brand value. We focus on growing businesses and brands, while connecting brand strategy to brand experience to engage with consumers.
Our Best Global Brands report was the first and is still the benchmark in the industry. We’ve since developed the Best China Brands report, which helps us raise our profile above the competition in China.
When you were hired to run operations in China, APAC CEO Stuart Green said that Interbrand aims to help clients “evolve and compete effectively”. Can you talk more about that?
New technology is continually evolving and has completely changed how consumers connect and engage with brands. Previously branding services involved more traditional disciplines around developing a brand strategy and positioning, then creating a logo, VI systems, and finally brand guidelines. These services are still very important in developing markets like China.
However, as consumers become more brand savvy and markets mature, clients are looking for more interactive ways to connect and engage with their customers. The brand experience is becoming more experiential and a two-way conversation, which is changing the dynamics of how brands communicate.
This is an area where we see a huge potential for Interbrand. More and more, we are partnering with our clients to develop strategic solutions, which connect consumers to brands through experiences whether online or offline. The important issue is to make that experience seamless, as nowadays there is no offline or online – just one the experience, as digital living is now fully integrated into people’s lives.
The percentage of people outside of China that can name a Chinese brand is still relatively small. How are things progressing on that front?
It’s a long process and something that doesn’t happen overnight. That said some Chinese brands are already building a well-deserved reputation as world-class global brands. The challenge is that building a global Chinese brand is intrinsically linked to building China’s nation brand. The two factors—whether we like it or not—go hand in hand.
This situation in China is similar to what the Japanese brands faced in the 70s and the Korean brands faced in the 90s. When Japanese and Korean made products that were cheap, basic and often low quality, it took decades to make brands from these countries become household names, and the same is true for China.
However, because of technology and the speed of change in China, I venture to guess that it will take less time for China to materialize. Watch this space as I predict 10 years from now Chinese brands will be household names for phones, washing machines, computers and even cars. I’m confident people won’t think twice about buying Chinese brands just because they are made in China.
What are some of the biggest challenges when planning and activating brand strategies for Chinese companies?
I’ve led many large scale strategic rebranding projects for some of China’s leading companies including Chinese state-owned companies during the past decade. The biggest challenge for Chinese companies is always internal issues around corporate hierarchy. This can make getting alignment and acceptance around changing a brand strategy or brand identity an uphill struggle.
It’s been my experience that if the initiative starts in the marketing department, it is much harder to drive it up to the boardroom and get is accepted across the company.
Which is why it is so important for Chinese companies to have support from the top down; head executives need to see the benefits in the risks of implementing new branding programs. If the Chairman or CEO is onboard and leading the new brand change, it is easier to drive the initiative down through the company. Conversely, it’s been my experience that if the initiative starts in the marketing department, it is much harder to drive it up to the boardroom and get is accepted across the company.
The second challenge is often structural, as many companies don’t have branding departments or professional branding managers; the PR or marketing department often handles the brand function. And they lack the right people, processes and systems to effectively manage a transformational change program. In this respect, part of the challenge and opportunity for Interbrand is to help create the systems and tools, and then train their people and teams to become expert branding managers.
You have extensive experience in the U.S. and in China. Are their distinctive differences that marketers should be aware of when entering China?
There is a big difference in how you brand and market in the US versus how you do it in China. While the principles may be similar, the market in China is still developing and is not as advanced and sophisticated as it is in the US. In some areas there are still restrictions, so the market lacks the true competition of a more open market, and the consumer often doesn’t have a choice.
However, the biggest mistake that marketers entering China continue to make, is that they see China as one country or 1.4 billion people, and think of it as a country united by a common spoken language, Mandarin, and common written language.
The biggest challenge for Chinese companies is always internal issues around corporate hierarchy. This can make getting alignment and acceptance around changing a brand strategy or brand identity an uphill struggle.
In reality, it is a much more culturally diverse and disparate country. In fact, each province has its own culture and dialect. Therefore, marketers need to realize that how you sell a product in one part of the country may be different to how people in another part. In that respect brands often need to localize the brand offer further, rather than think that one size fits all.
The other mistake that new marketers to China often make is that they think China is like Beijing or Shanghai. While these are the most developed and internationalized cities in the country, the rest of China is very different. There are huge opportunities for brands in the second, third and fourth-tier cities, which are very different.
As urbanization increases in China, the size, scale and growth of these places make it even more attractive for brands to enter there. The most obvious example of this is the luxury brands, which years ago could only be found in Shanghai or Beijing. Nowadays, it’s common to see these stores right across China in smaller less known cities.
What are some domestic branding campaigns you’ve seen that you admire?
There are very few domestic companies in China that produce great corporate branding campaigns in the way that a Coke, IBM or Nike do. This is partly due to the difficulty Chinese companies face, in trying to define proposition in the minds of the consumers. In addition, corporate branding is often still seen as an expense, rather than an investment in the future of the company.
The majority of domestic companies tend to focus their branding campaigns on a particular product or service. Therefore, the campaigns are more tactical and short-term in order to build sales rather than build the brand. Corporate brand building still comes second to product branding in China, but this situation is slowly changing. As many domestic companies start to realize the importance of a strong corporate brand, they will see it does indeed support their product sales. Especially if they have ambitions to become regional or global brands in the future.