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China 2015: THOUGHT LEADERSHIP | Brand China

1. THE ADVANTAGE GAP

There are many gaps between how consumers from various countries view Chinese brands and how Chinese consumers view Chinese brands (See chart). But there are also several areas of agreement. For overseas consumers, Chinese brands offer three main advantages: they provide value for money; they’re international; and

they’re innovative. That’s how Chinese consumers see the advantages of Chinese brands, too. Brands that offer these three advantages include Huawei, the telecommunications equipment provider, the Internet search brand Baidu, Great Wall Motors and the skin care brand Inoherb. They’re in a good position to take advantage of these perceptions and shift the image of Brand China and Chinese brands.

Conversely, Alibaba’s globalization efforts benefit small- and medium-size businesses all over the world that want to sell their goods and services in China. Alibaba’s English language website, AliExpress, is already the top ranking ecommerce platform in Russia in terms of monthly users. Alibaba’s recent IPO (Initial Public Offering) on the New York Stock Exchange helps improve the image of Brand China and publicizes the three perceived advantages of Chinese brands.

2. THE AGE GAP

The gap between how Chinese consumers and overseas consumers view the advantages of Chinese brands changes according to consumer age (See chart). The gap is narrowest among the young. Younger overseas consumers are digital natives in a hyper-connected world. They have been exposed to more cultural diversity and are well traveled at a younger age. They are more open-minded and less bound by the stereotypes

of China that older consumers might harbor. They are also the generation that is more willing
to experiment and consume. One way for brand marketers to leverage this opportunity is to target these younger consumers with the newest and best products, then turn whichever products do well with these younger consumers into low cost versions that older consumers may welcome.

WeChat has a stronghold among younger consumers who love many of its features, such as cartoon emoticons. In its overseas expansion strategy, WeChat localizes by using celebrities as brand ambassadors. In India WeChat caused a sensation by featuring well-known Indian film stars as cartoon emoticons.

In terms of Chinese brands being innovative, 73 percent of young overseas consumers 24 years
old and below (versus only 55 percent of those 25 years old and above) believe that Chinese brands have an innovative image. The smartphone brand Xiaomi is a successful case of leveraging the higher levels of acceptance of Chinese tech brands among younger users to ignite a limited user base and then to grow.

3. THE HIGH-TECH GAP

Another gap is that 46 percent of overseas consumers believe that Chinese-made products have a high level of technology; only 41 percent of Chinese believe that. And while this may seem counter- intuitive, it is precisely through an understanding of a perceptual gap like this that a Chinese brand can find opportunities abroad by meeting the expectations for technological expertise that overseas consumers have for Chinese brands.

Xiaomi is a good example. The smart phone maker comes up with an innovative business model to crowd source product improvements for the user interface of its handsets. Some of its overseas fans even translate Xiaomi software into local languages for different overseas markets. These suggestions and improvements are then incorporated into weekly software upgrades, a speedy feedback loop that only makes fans come back for more. It is approaches like these that can change the positioning of Xiaomi from the “poor man’s iPhone” to an innovative technology upstart brand that challenges the status quo.

And it’s approaches like these that illustrate how Chinese brands can differentiate and gain competitive advantage with technology. 

4. THE TRUST DEFICIT GAP


Bad quality and fake products, while concerns for Chinese consumers, become serious impediments when speaking to overseas consumers. Only 32 percent of overseas consumers (versus 63 percent of Chinese consumers) have faith in Made in China products. Chinese brands first moved into the international arena with low cost as a point of differentiation in order to get into the game in a significant way. They now need to move toward the high end of the value chain. In this process, Chinese marketers need to address the bad quality and fake products issues. When the Chinese cosmetic brand Herborist expanded to Paris, it tackled the trust deficit gap by cooperating with Sephora, a trustworthy and credible retailer. Goodbaby, a maker of infant products, sets up R&D centers around the world to leverage international technology to innovate and to boost consumer confidence. The appliance brand Haier actively participates in international quality and standards agencies in its field. It designs products to meet and surpass standards, thus making its products reliable and efficient. These activities help increase trust for the Haier brand, the appliance industry and Brand China.