Brand building

Chinese companies trying to make breakthrough in overseas markets

Does China need global brands on its seemingly inexorable rise to become the world's largest economy?

In the Interbrand Best Global Brands rankings for 2010, the United States, the only economy currently larger than China's, had 47 brands in the top 100, headed predictably by Coca-Cola. No China brand made the list at all.

Nonetheless, the Chinese economy marches on with near double-digit growth whereas the United States has near-zero interest rates to breathe life back into its economy.

Major European countries all register a number of hits in the top 100. Finland has the only non-American brand in the top 10 with Nokia. Germany has no fewer than 10 in the top 100, the biggest being Mercedes Benz; France eight, mostly in luxury goods such as Louis Vuitton and Cartier; and the United Kingdom five, headed by banking giant HSBC.

Even Switzerland, with a population of 7.8 million compared to China's 1.3 billion, has five brands in the listings, the biggest being Nescafe and food giant Nestle.

Mike Bastin, visiting professor of brand management at China Agriculture University in Beijing, says China has proved it can develop to the level it has without major brands.

"They have got to this point but I think it will not be sustainable in the future. All major economies in the past, right back to the Industrial Revolution in Britain some 200 years ago, have done so by developing brands of some sort, " he says.

"I think one of the problems China has is that there is little heritage of branding. There are very few national brands with many just being regional. In such a tea- drinking nation as this, there is not even a national tea brand. I do think over the next five to 10 years, some Chinese brands will break through."

In Lausanne, Switzerland, Dominique Turpin, professor of marketing and strategy at IMD, the international business school, is skeptical about whether this will actually happen.

"I remember giving a talk on brands in Shanghai around 10 years ago and someone from the Chinese government mentioned the Interbrand rankings and said by the time of the Olympics (in Beijing, 2008) there would be five to 10 Chinese brands in the top 100. It was wishful thinking; there were none, " he recalls.

However, while certainly not Coca Colas, Googles or Microsofts, a number of Chinese brands are beginning to make appearances on the global stage.