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Tech firms keen on brand building
2004-03-30
China Business Weekly
Haier, Huawei, TCL, ZTE and SMIC.
These names sound more like obscure crossword puzzle clues than major brands, showing China's pre-eminent technology firms have a long way until they are recognized by consumers.
They will have to spend billions of dollars on advertising over the next decade to copy the success of North Asian giants such as Samsung Electronics and Sony Corp, experts say.
"Chinese brands going global are in their infancy," said Scott Kronick, managing director of Ogilvy Worldwide Public Relations in China. "There's a number of things they have to do to get their strategies right ... It will come over time."
Of the world's top 100 brands last year, none came from China, according to an annual list compiled by BusinessWeek magazine and Interbrand. Excluding Japan,the only Asian company to make the list was South Korea's Samsung Electronics at No 25.
But many Chinese companies hope to follow in the footsteps of the technology leaders from South Korea and Japan.
"The companies are beginning to really build brands," said Viveca Chan, chairman of the China division for the advertising firm Grey Global Group.
"The basic thing is understanding the need for an established brand name, but most local companies have surpassed that. Some companies are talking about brands, not only product brands, but corporate brands, corporate vision and the whole works," she said.
After years of making low-cost products which were exported to developed markets, often repackaged with known international names, China's tech firms are ready to invest in their own brands.
"A huge advantage for these companies now is most have started as manufacturers (for other major brands)," said John Woodward, regional planning director of Asia-Pacific for ad agency Leo Burnett.
"They've been able to get a high degree of technical understanding and some grasp of distribution and things like that while working with their partners."
The list of China's tech firms most often mentioned as global rising stars includes PC maker Legend Group Ltd, TV and cellphone maker TCL International, home appliance maker Qingdao Haier and telecoms equipment makers Huawei Technologies and Zhongxing Telecom (ZTE).
Others who may go global include cellphone maker Ningbo Bird and TV makers Skyworth Digital Holdings, Shenzhen Konka Group and Sichuan Changhong Electric Appliances Co.
Experts say firms have to develop distribution and support systems. They also have to spend a lot in an area China's State-owned mass manufacturers have little expertise in -- advertising and marketing.
Buying brands ready-made
Some choose to avoid the expensive and time-consuming process of building their own name-brands. Often, they buy established Western brands and remake them.
TCL has been among the most aggressive of the brand buyers. Earlier this year, TCL signed a deal to take control of televisions made by French electronics giant Thomson, including the Thomson brand popular in Europe and the RCA brand in the US market.
Konka also tried this in Europe when it recently bid unsuccessfully for bankrupt Grundig Group, Germany's largest maker of household appliances. Earlier this month, Konka said it was in talks to buy rights to another major western brand it would use to expand its US and Western European presence.
Many of the bigger brands are not only raising eyebrows in the advertising community -- which is aggressively pursuing the new business -- but are also turning heads at the highest levels of major multinationals.
Among the makers of heavier telecoms equipment, Huawei -- which has recently scored some initial sales in developed markets like France and Germany -- is considered a rising star and potential competitor in the global market.
"In China, Huawei is like Microsoft," said Bruce Claflin, chief executive of US telecoms gear maker 3Com Corp, which last year formed a joint venture with Huawei.
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