Brand strategist Martin Roll talks about the state of branding in Chinese companies and strategies that will help build truly global Chinese brands.
Lenovo. Baidu. Alibaba. Huawei. Haier. Tencent. These are just some of the Chinese companies that have seen phenomenal growth over the past decade or so. But how many Chinese companies have really succeeded in building truly global brands? Not a lot, unfortunately. Martin Roll, a renowned business strategist and the author of the bestselling Asian Business Strategy, believes that the problem lies in how Asian—and Chinese—companies view branding. “Branding is tactical: so it’s advertising, it’s promotion, it’s pretty much communication run by a department,” he says. But to build a strong global brand the branding and marketing function needs to be elevated to a whole new level.
In this interview, Roll, who has had a rich experience advising, observing and studying Asian companies, talks about the state of branding in companies, lessons from the Korean experience, and outlines the issues related with country of origin and how to get around them.
Q. Japanese brands were big in the 1970s and 1980s and South Korean brands like Samsung, LG and Hyundai started to dominate the world in the 1990s. In most branding surveys even now, Japanese and South Korean brands rank much higher than Chinese brands. Why?
A. It’s a natural evolution. Japan came out during World War II and it’s been 40 years of industrializing. Korea went out in the 80s after Park Chung-Hee got assassinated and kind of industrialized as well. [That’s when] we saw the rise of Samsung. I think the reason why China is not there yet is the natural evolution of where China is coming from. It really came from a manufacturing economy. It’s now adjusting to a new paradigm where brands and marketing and much more market-driven measures are going to take place.
Q. What are your thoughts on the state of branding of Chinese companies nowadays?
A. Five years ago a brand for a Chinese executive or a Chinese business owner would be ‘nice to have’. But I think it has changed and become a ‘need to have’. They want to be a Coca-Cola. They want to be Apple. They want to create a Chinese global brand. But it’s going to take some time [to do that]. The aspiration is that, the mindset is that, but they just haven’t done it yet. There are a lot of things to learn in terms of competencies and experiences, looking what other people have done, and simply to read your own future and your own destiny. That takes some time too.
Q. What are some of the ways in which Chinese companies approach branding? What is wrong or right with that approach?
A. For a start, the way that branding is viewed in Asian corporations including the Chinese ones in particular, is that branding is tactical: so it’s advertising, it’s promotion, it’s pretty much communication run by a department. What Chinese companies have to realize is that branding has to be elevated to the boardroom level–you need to have a chief marketing officer. That person has to be very senior. That person has to sit at the table. Everything you are going to do in your company, in order to deliver on that brand promise, all your actions, all your touch points, everything that the company stands for has to be at top-led. It’s not going to grow up in the marketing department.
So first of all, the mindset has to be right, and then you are going to work on what it really is that Chinese companies are going to bring to the world. There is a paradigm change needed in order for people to understand that marketing is strategy. Branding is probably going to be one of the most important lessons for the company. Before they realize that, I don’t think it’s really going to work.
Q. Are you seeing companies make that change?
A. It’s almost like an old example by now, but Lenovo did a very good job even though you could argue that it did acquire IBM, a western brand. What you currently see is Huawei, which came out from a very sophisticated technological background. They are doing a pretty good job to say, “Wait a minute, we’ve got to understand it takes for the traditional western technological firms.” There are pockets of companies that are now trying to step out and make it a top-led exercise by the boardroom and the CEOs.
Q. As Chinese companies go global, they are faced with two sets of consumers: consumers back home in China, who they know very well; and global consumers, who they don’t know that well, and who are probably very different from the consumers back home. How should companies respond to this challenge of having two different kinds of customers in their branding efforts?
A. In the medium and long term, it’s going to be very important for Chinese companies to understand the global consumer if you truly want to be global. You are going to do exactly like all the western companies do when they expand their brands into Asia, like Louis Vuitton, BMW and a lot of western brands.
Samsung went through the exercise. They also felt that we can just bring a Korean product to the world. If you look at the evolution of Samsung, it has truly become globalized and has made many places in the world their home. Chinese companies are going to do the same thing. For many years there has been this kind of perception that what works in China is going to work anywhere else. That’s never going to be the case. The world is too sophisticated. Global consumers are very fickle and sensitive. They want things that actually work for them in their daily life. That’s why Chinese companies are going to connect in a different way to global market. It’s still going to be global, but they also are going to bring a slight localization to the global market. So you are going to balance the two somehow.
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Q. What are some of the things that Samsung did differently outside Korea? Also, is it a unified brand inside and outside Korea? Are the messages the same?
A. Samsung at home and Samsung outside are two things. Korea is very proud of Samsung and at the same time Samsung is everywhere in the Korean society. Mobile phones are called Anycall, they are not called Samsung. And their air-conditioning units and refrigerators are called Samsung. So somehow they are trying to differentiate the different brand portfolio.
If you look at what Samsung did outside, they somehow came across as much more globalized after a couple of years. They decided to move some people outside. They moved their regional headquarters to Singapore. They set up a lot of R&D centers worldwide. They are really trying to learn and capture the spirit of the global consumer, not just trying to do it the Korean way. The Korean way works very well in manufacturing and quality control. Nobody would dispute the Korean quality. Today, compared to maybe 20 years ago, what they have done is that they have been out there in all corners of the world.
If you look at the signs you see from Samsung today—the advertising, the marketing tactics—that has evolved dramatically in the past 10 years. Samsung has become much more of a global citizen compared to the Korean citizen that we saw 10 years ago. They have learnt, and they are still learning. They are very humble about it—if you want to take on Apple, if you want to venture to be the No.1 technology brand, you’d better be good.
Q. How about the country of origin of brands? In the past it’s often been a deal breaker for many Asian brands when they go global. They find it very difficult for themselves to dissociate themselves from where they come from. How important a factor is that today?
A. It’s very important. Many brands that globalize kind of forget about the roots. Samsung also for a period of time tried to be very global. They almost disconnect themselves from Korean culture and the Korean heritage, which I think is wrong because if you eventually are going to establish your bond it’s a bit like two people falling in love: I need to know where you come from, your roots, your culture, how you grew up and what really made the person you are. It’s exactly the same like a brand. I need to know where you come from.
Nobody will dispute a German car brand. Nobody will dispute cosmetics from Paris or fashion from Milan and so forth. So you got to look why is it that a Korean firm for example, would have a seat at the table. That is because nobody disputes the science capabilities and the quality aspects. It’s going to be the exact same thing for a Chinese brand. Originally it doesn’t matter too much and it also depends on the product category. So if the risk is very low and the product doesn’t cost more than $50-200, it doesn’t matter too much. If you are going to buy a mobile phone or if you are going to buy a Chinese car, it does matter a lot where you come from.
Q. What are Chinese companies up against here because ‘Made in China’ is often seen as low-cost and low-quality. How do you build the perception of a quality brand coming out of China?
A. I can’t see why they shouldn’t be able to do it. But I think they are going to go beyond the baseline because they are up against some fairly negative perceptions related to food and all those categories. It’s not going to affect their business but nevertheless global consumers are going to distinguish between the two. They can learn from the rise of Samsung and all the companies in the region. When Samsung rose, Korea was not a brand known for quality.
So you also have this government-private partnership because it’s not only the government that’s going to clean up its act, it is also the private enterprises. One of the reasons why Korea is so well-known today is partly because of Samsung, LG and Hyundai combined. So it goes a long way with what the private enterprises do as well. It doesn’t mean it’s going to leave the government out. The government has a huge responsibility. The Korean government has been very good at it. We have seen initiatives in Hong Kong because Hong Kong knew it’s going to step up. So it’s really an exercise about country of origin that you have seen Asian governments taking on. I’ll be very surprised if I don’t see the Chinese government involved in moving this forward.
Q. On their own, what can companies do?
A. Reach for the sky, be very aspirational, and simply decide that they partly are going to change the world, so the quality they are going to bring to the world will be world-class. They should be demonstrating that, they should be transparent about it, and they should prove to the world that the quality is there. They should define what the brand should be, why their brand will be different, why they’ll be daring, why they’ll be bold. They are going to think very hard about their brand identity, their purpose and their vision of the company, and they should dare to be different. They should not necessarily just copy what other people have done. They should bring something that would enlighten the consumers tomorrow. What is really going to be the taste they have for tomorrow? That is the opportunity for the Chinese firms.
Q. What’s the prognosis for Chinese brands? Will we see the next iconic brand—the next Apple or Coke—come out of China?
A. It would be so. It’s just a matter of time. Twenty or 25 years ago, people would have never thought about Korea bringing any global brand to the world. I think in the next 5-10 years you are going to see a new generation of Chinese brands taking on maybe not the world at first, but trying to reach out to other Asian markets and then finally having a global footprint. In the next 5-10 years you are going to see maybe a handful of very strong Chinese enterprises which are strongly-led, run very professionally and have a lot of ‘longevity’,… meaning that they can not only surprise the world once, but they also have what it takes to take on the future. I can’t see why China shouldn’t bring that to the world. And I think it is happening as we speak in the Chinese boardrooms.