Platform economy helps Chinese brands go global

The phenomenal rise of Chinese brands has taken the world by storm, prompting entrepreneurs and scholars alike to examine the source of China's newfound brand power.

Indeed, China's growing brand power has been a key theme of a recent high-profile forum organized by East China Normal University and co-sponsored by the school's Faculty of Economics and Management and the Institute for Nation(al) Branding Strategy.

He Jiaxun, head of the institute, said in his opening speech that the number of Chinese brands included in the top 100 list compiled by BrandZ, a global research agency tracking brand value, has edged up from 14 last year to 15 in 2019, with big names like Alibaba, Tencent, China Mobile and Moutai Liquor making the cut.

The aggregate value of the 15 Chinese brands totaled US$587.438 billion, or 12.47 percent of the combined brand value of all the top 100 players.

"The prevalent 'platform economy' in China has provided a perfect opportunity for Chinese brands to become global competitors," said He, who is also the Chinese dean of the university's Asia-Europe Business School.

In his opinion, Chinese scholars dissecting the rise of brand power should look beyond Chinese-centric cases or contexts to search for new concepts and theories that are not only rooted in Chinese culture, but also can enrich the global literature on brand-building.

Casarte is one among a handful of Chinese brands that have achieved global renown. Over the years, the home appliance maker and a sub-brand under Haier, a white goods consortium, has steadily moved up the value chain to become a premium supplier of fridges and washing machines at home.

Casarte appears set to dethrone Siemens, Bosch and a few others as the dominant player in the washing machine business, as it has grabbed a 76 percent share of the high-value segment (washing machine priced at 10,000 yuan, or US$1,429 and higher) in China.

"Chinese manufacturers used to be a non-entity in the premium market segment," said Ding Laiguo, general manager of Haier Wash & Care China Co. "With Casarte, we are now targeting the 0.3 percent high net worth individuals in China, or those with a personal wealth of over at least 6 million yuan."

As one of the chief architects who helped elevate Casarte to where it is, Ding shared stories about how he tapped into Chinese aesthetics to appeal to a global clientele, often with use of fairy tales, poetry and classics that resonate across geographies.

However, he lamented the fact that today many Chinese brands still function as mere labels or trademarks that hardly convey any spiritual values. And one cannot expect consumers to pay an excessive premium for these lackluster brands, Ding claimed.

The trends in marketing have been shifting over time, from an emphasis on product per se in the early days to the current obsession with digitization and increasingly with social media and values.

According to Cao Hu, president of Kotler Consulting Group China, changing dynamics in social values and movements have emerged as a main driver behind brand-building.

In the past, businesses occupied themselves with the task of generating value for shareholders. Now customers or stakeholders are the principal recipients of the value created.

Ours is an era where a company's brand vision and value are closely tied to customer loyalty. A brand will be judged intensively by its performance in, say, helping combat global warming, as part of a broader trend of so-called "brand activism." Brands losing sight of this development risk falling behind and being shunned by a new generation of consumers, said Cao.

Records in fulfilling corporate social responsibility in areas like healthcare, education and food increasingly matter for a brand's image in the eyes of its target audience, as many consumers choose to vote with their feet, punishing acts of perceived lapses by withholding their money from the "perpetrators."

Apart from "brand activism," another important factor shaping consumer attitudes toward brands is continuity in brand management and cultivation.

Shanghai is a cradle of a host of consumer brands with a history of half a century or longer. As these brands -- many of which belong to state-owned companies -- begin to gravitate toward social and digital marketing, the issue of continuity is looming large. Will brands be in safe hands as they are handed over from one generation of proprietors to another?

The successful handover depends on several conditions, says Xu Ming, an official with the Shanghai Municipal Commission of Economy and Informatization. To begin with, a brand manager must possess traits such as an entrepreneurial spirit and be given a relatively long reign to be able to leave a mark on the brands.

Speaking in the capacity of a researcher, Xu said this is because frequent replacement of leaders in the upper echelons of state-owned firms often puts consistent brand-building at risk.

Therefore, long, stable reign of true entrepreneurs is needed for sustained brand cultivation, just as Ren Zhengfei, founder and president of Huawei Technologies, and Zhang Ruimin, founder and chairman of Haier Group, have been the personification of their businesses, Xu noted.