Chinese challenge: locals brands more copycats than creators

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If you haven't yet been to mainland China, put down this column and board a flight to Shanghai. I'll wait; you'll need plenty to read on the way over.

Although I've just returned from a three-city Asian tour, I'll spare you the eyes-wide account of my travels. You've already seen photos of Shanghai's futuristic skyline, heard tales of its Wild West spirit. Instead, I'll focus on an issue that came up time and again in meetings with marketers, agencies and media makers in this thriving corner of the world: the coming battle (and shrinking disparity) between multinational and local brands.

This is separate from the debate over whether Chinese brands have the potential to go global (some do). The more immediate question is whether local products can compete at home against the Western, Japanese and Korean marques preferred by China's 1.3 billion brand-friendly consumers.

Chinese products have differentiated themselves on price and distribution rather than quality or brand attributes that engender loyalty and fatten margins. Patriotic pride-growing as the Beijing Olympics near-is offset by consumer savviness. "The real question [Chinese consumers ask] is, `What's best for me?"' Richard Tan, executive partner in Euro RSCG's Shanghai office, told me over a Chinese banquet lunch at a restaurant overlooking the Bund.

Just days earlier, Hong Kong's Home Affairs Secretary, Patrick Ho Chi-ping, blasted China for "copying brands from the West" rather than creating and nurturing its own. (Ironically, the South China Morning Post noted, he made the comment while at Disneyland in Hong Kong.)

On the road to Shanghai from Pudong International Airport one of the first billboards is for Hooters. Michael Jordan smiles from a Hanes ad in taxis under the tagline, "The American leading underwear brand." IPod's white wires are as ubiquitous on the streets as they are in New York.

"China is a story of international brands, not local ones," said Gavin Heron, managing director, TBWA/Shanghai. "As soon as a local brand has any traction, they're bought out by a multinational." His office avoids local clients since most don't appreciate brand-building. That's changing as entrepreneurial Chinese companies compete with state-controlled ones bogged down in their own bureaucracies.

Ask around about which Chinese brands "get it" and the same names come up-Lenovo PCs, Haier appliances, Tsingtao beer, Li Ning sports apparel, Ningbo Bird mobile phones, TCL TVs.

Euro RSCG Worldwide does court Chinese brands, but Asia Pacific CEO George Gallate admitted, "It's hard to have long-term relationships with local clients because of the lack of sophistication."

"They're communicating rather than marketing, but beginning to embrace brand management," said Richard Tan.

J. Alfonso A. De Dios, associate director of Procter & Gamble's Greater China Media Department, agrees with Dr. Ho: "We need to innovate, to move from `made in China' to `created in China."'

General Motors, like P&G one of the biggest spenders, and believers, in China, agrees. "If their level of quality of products doesn't get to where Western brands are, they won't succeed," said Dale Sullivan, Chevrolet brand director for GM China Group.

Getting there requires overcoming cultural challenges, many of which are explored by Tom Doctoroff, Greater China CEO for JWT, in his forthcoming book, "Billions: Selling to the New Chinese Consumer."

"You need discipline to build a brand," said Huang Hung, CEO of China Interactive Media Group, voicing one of those challenges. "Speaking as one of them, the Chinese are not disciplined. They're in it for the money."

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