Chinese giants target US

31 July 2012

BEIJING: Lenovo, Haier and ZTE are among the major Chinese brand owners hoping to expand in the US, reflecting this market's vital strategic importance to their global aspirations.

Lenovo, the IT group, recently signed a deal to sponsor the National Football League for three years, furthering its efforts to attract younger customers to offerings such as the ThinkPad laptop.

"[This] gives us a tremendous new forum to introduce consumers to our products and brand," David Schmoock, president of Lenovo North America, told Bloomberg.

In the second quarter of 2012, Lenovo's share of the PC sector in the US hit a record 8% according to IDC, the research firm, as sales rose by 6.1%, at a time when the category logged a 10.6% contraction.

Haier, the appliances manufacturer, unveiled its first US factory in South Carolina in 2000. It now has 470 staff in America, including 220 working on sales and marketing, from a headcount of 80,000 worldwide.

Building items specifically for American buyers is a new priority, to be achieved by constructing a local R&D hub. "That will really open the door," said Shariff Kan, president of Haier America. "We had a few ups and downs."

ZTE, the telco, launched 11 mobile handsets in the US in 2011, and estimates it holds 4.8% of the category. The firm previously made devices for other companies, but currently sells 90% of goods under its own name.

Lixin Cheng, its CEO, said: "ZTE wants to be one of the top telecom vendors in the world ... We cannot have a top position without success in the US market.

"You cannot just look at ZTE as a China brand. The core technology in our product is from US companies like Qualcomm, Texas Instruments, and Google."

William Plummer, vice president, external affairs at Huawei – a wireless telecoms group working with MetroPCS and Leap Wireless, and in talks with T-Mobile USA – argued the reverse was also true.

"Whether it's an Apple device, a Nokia device, or a Huawei device … they're probably all built by Foxconn," he said.

Elsewhere, Li-Ning, the sportswear specialist, closed its American bricks-and-mortar operations last year, and is prioritising the web. "To be a global brand, you have to show up and be relevant in the US," Ray Grady, Digital Li-Ning's general manager, said.

Peak, the athletic footwear specialist, opened stores in California and Hollywood in late 2011, and plans to create a branded store network, alongside gaining a place in established chains like Foot Locker.

"Consumers want new brands.  They say everyday it's just Nike and adidas. It's boring. Consumers don't care where you come from," Su Jia, head of Peak's US division. "If you just focus on the China brand, people will think it's cheaper and the quality is not very good."

Data sourced from Bloomberg; additional content by Warc staff