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Competing Abroad

Chinese brands lag
overseas competitors
in Brand Power factors
 
But millennials view Chinese brands more positively
 
Even Chinese brands that have established strong presence and consumer acceptance in China face challenges when expanding abroad and encountering global and local competitors that are already better known and accepted across many country markets.
 
Based on our study of the Brand Power scores of leading Chinese and non-Chinese brands, this challenge is pronounced in two established categories – mobile phone handsets and durables and white goods. Brand Power is the BrandZ™ measurement of brand equity, the consumer predisposition to select a particular brand.
 
In the 11 markets studied for mobile phone handsets, – Australia, Brazil, Germany, Italy, Japan, Korea, Mexico, Myanmar, South Africa, Spain, and the UK – we compared scores of the Number 1 Chinese and non-Chinese brands in the three ingredients of Brand Power: Meaningful (meeting functional and emotional needs in relevant ways), Different (being distinguished from the competition and trendsetting), and Salient (coming to mind quickly at the moment of purchase).
 
We found a large gap in scores. The gap was most significant in Different scores in the mobile phone handset category. Across the 11 countries, the Number 1 non-Chinese brand scored 185 in Different, while the Number 1 Chinese brand scored 65, a gap of 119 points. The size of this gap suggests that the leading Chinese brand in these markets needs to work harder at explaining how it is distinguished from the competition and trendsetting. An average score is 100.
 
The Salience gap was widest in the durable and white goods category, where we applied a similar methodology in two key country markets – Australia and the US. Non-Chinese durable and white goods brand in the two markets scored an average of 151 in Salience, compared with an average score of 74 for the Number 1 Chinese brands. The resulting gap of 77 indicates that the leading Chinese brands needs to do a better job of coming to mind when the consumer is considering a purchase.
 
These wide gaps can be attributed in part to the lower awareness scores for Chinese brands outside of China. And there is also a significant gap in the way overseas consumers perceive Chinese brands compared with non-Chinese brands. Overseas consumers view Chinese mobile handset brands as less trustworthy, desirable, and creative. And they view Chinese durable and white goods brands as less trustworthy and desirable.
 
But here is the good news. The overseas perception of Chinese brands is improving, and is likely to continue to improve because it is age related. In our BrandZÔ China National Image Global Survey we looked at consumer perceptions of Chinese brands across 18 countries. We found that younger people are much more likely to view Chinese brands as creative. Among the oldest respondents, age 51 to 65, 31 percent said that Chinese brands are creative. That favorable impression of Chinese Brands rose to 40 percent among the youngest respondents, age 18 to 35.
 
Implications
Being a well-established Chinese brand in China does not ensure success overseas. Chinese brands lag non-Chinese brands in being perceived as Meaningful, Different, and Salient, the ingredients of Brand Power. These shortcomings are a problem because higher Brand Power scores correlate with market share gains and brand value appreciation. Although consumer trust in Chinese brands is improving, brands need to address old perceptions that do not square with the current reality. Changing the old perceptions requires that brands not only create innovative, well designed products, but also effectively communicate those achievements to consumers.
 
The potential to positively influence consumer perception about Chinese products is best illustrated by Internet-driven categories, such as mobile gaming, where consumers respond positively to the experience Chinese brands provide. Most importantly, Chinese brands have an important ally in influencing consumer perception – young people. They are much are more likely to view Chinese brands as creative. Chinese brands need to reinforce the positive perceptions of young people and help them influence their parents and grandparents. 


Chinese brands lag overseas competitors in key Brand Power ingredients…
 
When Chinese brands compete overseas against global and local country brands in established categories, they score lower in the three ingredients of Brand Power. For mobile phone sets the gap is greatest in Different. For durables and white goods the gap is greatest in Salient. 


… Chinese phone brands face consumer perception challenge…
 
Overseas consumers view Chinese mobile handset brands as less trustworthy, desirable, and creative.


… And Chinese durables brands also need to improve image…
 
Consumers in the two important markets studied, the Australia and the US, view Chinese durable and white goods brands as less trustworthy, desirable, and in control.


… But younger people view Chinese brands more positively
 
The overseas perception of Chinese brands is improving, and it should continue to improve because it is age related. Young people are much more likely to view Chinese brands as creative.