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Going Global

Brand building essential part of overseas expansion 

by Scott Kronick
CEO, Asia Pacific
Ogilvy Public Relations
Scott.Kronick@ogilvy.com
 
China’s outbound investment continued to grow rapidly in 2016, drifting away from the previous heavy focus on natural resources and real estate M&A to embrace all sectors. We can see China following the same path pursued by major multinationals in the first wave of globalization many years ago. As they expand overseas, Chinese companies are also paying greater attention to the importance of brand building, with 2016 seeing several key trends emerging in this regard.
 
First, both big and small and medium-sized enterprises are starting to engage in or strengthen brand building initiatives in the countries they are entering or plan to enter.  But a lack of strategic planning and sufficient budget have held them back from realizing their full potential.
 
Second, companies that formerly engaged as purely original equipment manufacturers (OEMs) are starting to create their own brands. As China’s slowing economy and tepid recovery have shrunk OEM manufacturers’ profit margin and market share, they have begun to discover the wisdom of setting up their own brands in the markets they are already familiar with. 
 
Third, both Chinese companies and local governments have realized that their traditional communication strategy – relying on billboard advertisements in Chinese media outlets – is not effective. They have begun to experiment with new media channels, cooperating with leading foreign agencies to create their message and distribute content online.
 
Finally, with the rapid development of the hi-tech sector and other rising industries, a new breed of Chinese companies is set to enter the global market and build a strong presence.
 
With all signs pointing to a rapidly changing and unpredictable political and business climate in 2017, and as the Chinese government continues to promote industrial transformation and going global, numerous factors may negatively impact the growth of outbound investment. Nevertheless, we will likely see a continuation of the same trends that dominated in 2016.