WPP Group's Ogilvy & Mather Worldwide interviewed senior managers late last year at 47 major Chinese companies with sales over $100 million in categories such as telecom, consumer electronics, food, pharmaceuticals and airlines. Looking at the results, John Shaw, Ogilvy's Hong Kong-based regional planning director-Asia/Pacific, predicted that China could develop seven or eight homegrown global brands within 20 years by emulating Japan and Korea's biggest successes like Sony Corp. and Samsung Electronics.
"Enough brand development has taken place for large Chinese companies to be ready to look abroad," Mr. Shaw said. But citing a second survey by WPP sibling Millward Brown of U.S. and European consumers interviewed about their attitudes toward Chinese brands, he said, "For consumers, getting the right brand is more important than where the product comes from. It's crucial for Chinese companies to start building clear brands with a perception of quality."
Ogilvy declined to name the 47 companies surveyed, but they are believed to include household appliances maker Haier, Lenovo (which recently acquired IBM's PC division), TCL Mobile Communication and Cisco rival Huawei Technologies.
Of the companies interviewed, 85% said they already market branded products outside China, mostly to other Asian countries, excluding Japan, and 67% of those said they have a corporate strategy in place for international growth. About two-thirds of those surveyed export brands to enhance their company's global reputation; only 28% said they do so to increase sales.
However, Chinese marketers aren't in agreement about the challenges they face in building brands abroad. They cited a wide range of different issues, including competition and understanding sometimes bewildering foreign consumers.
When Chinese marketers were asked which brands they most admire, the only Chinese brand that respondents named is household appliances maker Haier, although that company topped the list at 40%. Seven of the next 10 most-admired brands are American: Coca-Cola (33%), General Electric (23%) and Microsoft (12%), followed by Procter & Gamble, Nike, IBM and McDonald's. (The other three brands are Sony, Samsung and Nokia).
Millward Brown interviewed 300 people in the U.S., U.K. and France about Western consumers' attitudes toward China and Chinese brands. Most American and British consumers associated China with low-priced products and value for money, while the French often cited the country's large population, rapid economic expansion and repressive government. In all three Western countries, quality was cited as the "major hang-up," said Mr. Shaw. A lot of consumers "realize we now live in a global market and are prepared to accept Chinese brands, but Chinese companies still have a long way to go. Success won't happen overnight."