China lacks brand instincts

7 June 2013
BOSTON: China's rise to global business leadership is being held back by weaknesses in branding and marketing, according to a leading consultant.

David Aaker, vice chairman of Prophet, the brand strategist, noted a recent observation that the country lacked brand instincts because executives there were inclined to view business deals in transactional rather than relationship terms.

He argued that while this was true there were three other reasons why branding in China was weak.

One was that Chinese firms did not have the long and deep history of brand strategy and brand management that many global firms possessed.

"Approaches to brand management have been created, tested, and refined by decades of smart people from varied perspectives and context," he wrote in the Harvard Business Review.

A second reason was the absence of a competitive context for most of the top Chinese companies, such as China Mobile or Bank of China, which were or had been owned by the state. In addition, Aaker suggested that many sectors had been growing so fast that manufacturing and distribution had been more important than branding.

A third factor was a lack of will in top management, and he noted his own firm's experiences in China. "Most top managers in China are not trained in marketing and are more focused on operations, costs, and delivering functional benefits," said Aaker.

He saw a "different mindset", firms run in an autocratic manner and no effective program to communicate the business vision, if it existed at all.

He advised that Chinese firms either buy companies with extant strong brand management systems and talent that they could leverage, or rely on consultants and new hires to upgrade their capabilities in this regard.

Another US-based brand development firm, HD Trade Services, recently noted the need for Chinese brands to improve their image, after it found that a third of US consumers would actively avoid them believing them to be of poor quality.

And Millward Brown, the research firm, has noted that Chinese marketers have some common misunderstandings of the overseas view of China and its brands. 

These include their belief that the uniqueness of Chinese culture gives Chinese brands an overseas competitive advantage and that foreign consumers are interested in branded communications celebrating the growth of the Chinese economy.

Data sourced from Harvard Business Review; additional content by Warc staff
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