Chinese prefer foreign brands

Top five most recognized products are from overseas, report finds

The five most recognized brands in China are all imported from overseas, the latest Campaign Asia-Pacific 2012 Asia's Top 1,000 Brands report shows.

Released for the ninth time, the report, jointly published by the monthly trade magazine Campaign Asia-Pacific and the global information and insights provider Nielsen, covered 14 major products and services categories across a total of 73 sub-categories among 12 key regional markets in Asia-Pacific.

In the Chinese market, the top 10 brands that successfully made themselves on to the list include Apple Inc, Nestle S.A., Chanel S.A., Sony Corp, Samsung Group, Uni-President Enterprises Corp, Panasonic Corp, Nike Inc, Canon Inc and Starbucks Corp. It is the first time the luxury brand Chanel was listed among the top 10.

"Its meteoric rise to land within the top three in the China ranking is a stark reminder of the exponential growth in wealth and increase in disposable income on the Chinese mainland," said Jolene Otremba, reports editor of Campaign Asia-Pacific.

While some other luxury brands such as Gucci, Armani and Louis Vuitton all saw their rankings rising up in the report, the homegrown Chinese brands saw their standing weakening on the same list.

Eight out of the top 20 most recognized brands in the Chinese market were Chinese brands in last year's report. However, this year's report shows only three local brands in the top 20. They are the leading traditional Chinese medicine pharmacy Beijing Tong Ren Tang, which ranked 11th, instant noodle brand Master Kong Holdings Ltd, 14th, and the nation's home appliance giant Haier Group, 15th (technically a multinational).

Household brand names Baidu Inc and Mengniu Dairy Co, which appeared in the top 10 last year, both saw their ranking drop this year in the Chinese market, the former to 37th place and the latter to 89th.

Meanwhile, no homegrown Chinese brand was listed among the top 100 in the Asia-Pacific region. Otremba said it "reiterates the challenges Chinese brands are facing to gain consumer recognition beyond their home markets".

Chinese people who start and end every day of their lives using overseas brands should not find the result too surprising.

College student Song Wenjian, 20, from Shanghai University, a fan of Apple products who owns two iPhone 4S cell phones, one iMac, one MacBook Pro and two iPod nanos, had not heard of the brand name in 2006 while traveling in Japan. His enthusiasm for it grew from appreciation of the eye-catching appearance of its products and the "decisive leadership the brand is taking in terms of design and technology".

"Of course you can say that Jonathan Ive, the lead industrial designer of the MacBook Pro, iMac and MacBook Air, is a real genius. But what really leads to their huge success is that they know when and where to invest and what they can afford to lose at the same time. And all of these things are done to optimize the user experience to the maximum," said Song.

"I have used several different brands of digital products but seldom Chinese domestic brands. The homegrown brands lag far behind the leading international ones in terms of technology - and design, especially.

"Maybe they have some really brilliant ideas, but they do not know how to really work them out, or they work the ideas out in really lame ways," he said.

While young women may be less interested in digital products such as Apple's, they are as concerned about brand names while shopping for clothes or handbags. Huang Yingwen, 24, a public relations specialist working at a Beijing PR company, finds most of her personal belongings in the closet are Western brands such as Marc by Marc Jacobs or H&M.

"Actually, the product quality of some Chinese domestic brands is as good. But their design and marketing are always flawed. The patterns and the after-sales services always let me down," sighed Huang.

Gao Aidai, 22, a researcher at a Shanghai-based information technology firm, also stressed "quality" when asked for the reason for her preference for Western or Japanese brands.

"Chinese brands can easily fall into the trap of being a copycat due to a lack of their own ideas or creativity, as I understand. But that does not exert as much influence as the quality issue. I seldom buy any domestically produced food or dairy products nowadays due to health concerns," she said.

"The Chinese people remember the quality issues which they experienced until the 80s with Chinese products. This often resulted in a credibility issue for Chinese brands vis-a-vis the consumers in their own domestic market," said Pascal Armoudom, a partner with A.T. Kearney China management consultants in charge of consumer, luxury and retail for Greater China.

Explaining the success of these international brands, Armoudom said that it is largely because "they have accumulated decades of experience in building image and value".

"For example, the difference between value perception (the sum of functional and emotional benefits that a brand can deliver in a consumer's mind) and price perception (how much is paid to buy a brand relative to comparable brands) is being taught in every Western university," said Armoudom.

"As a consequence, companies like Apple, Nestle, P&G and obviously the luxury players have today a 360-degree approach to brand value building: They continuously invest in product design and innovation. They spend a vast amount of time in defining the brand by 'story-telling' (i.e. the overall story which will make consumers buy the brand beyond product and price, also regarding emotional aspects), and on in-store experience, etc," he said.

But the homegrown Chinese brands should not be disheartened about their future.

"Although facing the challenges above, Chinese brands have been working hard to turn this around since the year 2000. They know that the time for delivering mass production at optimal cost as a guarantee for success is over," said Armoudom.