Chinese Need to Build Local Brands Before Expanding Overseas

Local Firms Can Learn From Challenges Faced by Japanese Agencies, Says Ogilvy & Mather's T.B. Song

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BEIJING ( -- The next phase of China's economic development will be closely tied to the globalization of Chinese brands and corporations -- if they meet one important criteria. For a brand or company to go global, it must first be successful at home.

To debut in international markets, local marketers must first attain a certain level of experience, own technically proven products, establish mature teams, acquire substantial capital and, last but not least, have built strong, powerful brands.

T.B. Song
T.B. Song
That also applies to advertising agencies with global ambitions. In China, agencies must first build successful brands in China before they can take their battle to the international stage.

How marketers view agencies and how they work with them lays the all-important foundation for the partnership. In China, we often see marketers hiring agencies to do very simple things such as organizing an event or designing a brochure. They invite several agencies to pitch for a small piece of work and eventually select the one with the biggest discount. When the task is finished, the relationship ends.

Turning to agencies for brand development
In cases like these, there is often no sound brand-development strategy in place and no established targets against which to measure success. Many clients say they conduct annual pitches to keep agencies on their toes. But that is a narrow view. The truth is, over the long term, stable relationships matter most. Only when the relationship is strong and stable can the agency work in a client-centric way and invest in the client for the long term.

At the same time we have also seen more Chinese companies offering agencies full-service contracts, though the terms are typically prudent. They may only be willing to sign contracts for one year, then 12 months later the business is up for pitch again. It is time for Chinese advertisers to think about building long-term relationships with agencies, trust them and give them a chance to deliver better returns. Marketers need to measure the effectiveness of their advertising and think in terms of long-term brand health and short-term effectiveness.

High brand awareness does not guarantee strong brands
In China, all marketers acknowledge the importance of brands and their impact on a company's bottom line. But they are often bemused when it comes to the how -- how do we build brands and how do we make them global brands?

First, take the right approach. Some marketers equate high levels of brand awareness with the brand. But this is a mistake. While brands are not products they can form emotional and long lasting bonds with consumers. In other words, every brand has a product, but not every product has a brand. Think about it. Many Chinese brands operate on a mass scale and their names may be familiar but few of them have developed strong emotional relationships with their consumers. And this is a shame.

Second, examine the organizational structure to see if it is conducive to brand building. If there is no clear structure in place for how branding decisions are to be made and little motivation from within the organization, brands will not thrive. This is especially prevalent in large Chinese companies where there is little consensus among the leadership team as to how to approach branding. In such cases, internal communications is the first priority.

Third, be determined. Branding is not for the faint of heart -- it takes a long-term investment and the courage to stick to one's guns in the face of short term sales challenges from one business unit or another. Even when there is a change in leadership or agency, the brand's long-term strategy should not waver. Only by addressing these three issues can advertisers get the most out of their agencies and help everyone to go home happy at the end of the day.

Japanese agencies have also struggled to dominate globally
Examples from Japanese ad agencies offer some insights into the path of globalization. Going back a couple of decades, Japanese automobile and electrical-appliance brands were topping sales charts around the world. Dentsu and Hakuhodo were the two agencies serving these coveted clients and both had excellent prospects for becoming truly global agencies.

Unfortunately for those companies, global domination was not in the cards. To understand why they didn't succeed as we might expect, we must consider the fundamental nature of this business. Advertising is closely tied to culture, and creative output is deeply rooted in local customs and ways of life. At the end of the day, advertising is part of popular culture. And like it or not, Western or American culture has always been the mainstream.

For a Chinese advertising agency to truly go global, it must align itself with an international agency that possesses a deeper understanding of mainstream Western culture, as Dentsu eventually did after years of careful consideration.

T.B. Song is Ogilvy & Mather's chairman, Greater China based in Beijing.

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