Building Brands In China
Craig Branigan, chairman and chief executive of San Francisco-based branding consultancy Landor Associates, was recently in Beijing to attend the BusinessWeek CEO Conference. He sat down with Asia Correspondent Frederik Balfour to discuss the evolution of branding in China, ranging from the marketing of potato chips to the design of the Beijing Olympics logo. The following are edited excerpts from their conversation.
Is there something essentially Chinese that companies should portray in their branding?
The image they need to portray is based on what makes them most successful in their own marketplace; so, if they believe having a Chinese heritage and background gives point of differentiation and leverage, they should play that up. For example, Shanghai Tang has built a brand based on "made in China," with well-designed, quality products, and the whole Shanghai Tang is a niche fashion brand (see BW, 7/21/03, "Richemont in a Rut").
But how important are a company's origins in its branding appeal?
Where companies are from is not as relevant when they are global as when they are in their home base. Where multinationals have their headquarters, people don't know. People in the U.K. think Ford (F ) is a U.K. company. In China, people think [French yogurt maker] Danone (DA ) is from China. When you are a multinational company, you are a multinational company.
What do you mean by that?
[Multinational companies] truly have to have a global perspective, and can't be driven by the home market, but by the multitude of markets they're in. They need a management team made up of people all around the world. You can't have a China-based company only run by Chinese, and it's the same thing with a U.S. company.
What do Chinese companies trying to go global have to do?
The first thing is to figure out why they are successful already -- what are equities they have in their brand and products and services -- and then take that learning to look at different markets and ascertain if a product or service of that type, and those types of equities, will have success or failure. [They must ask,] Am I going to do it similar to home base, or do I have to adapt to market realities?
What Chinese companies have worked with Landor?
Lenovo is a key client; we have been working with [it for] about two years. TCL is another, and we're working with China Construction Bank, but I can't get into specifics -- what we're doing has not been launched. These companies are looking to have a world-class brand. In the end, that's what they hire us to do; it could be our service offering, identity, or whatever.
Are some of the Chinese names somewhat intractable when translated into English?
Yes, it is more difficult, and we would seriously look to see if a name change is warranted. It's a lot easier and less expensive to do a name change earlier, and we would say upfront [that] we don't think this name is going to work. Midea [a white-goods manufacturer] is a case in point. The Chinese name is Guangdong MD Electrical Company. We said to them, "Don't go there. We can help you," and we came up with something that's memorable, and [the company] can use that name locally as well.
What advice do you have for international companies trying to sell into China's heterogeneous market?
Many are coming in with a global brand at a price and, perhaps, quality premium that will be consistent with how it's marketed around the world. But companies are realizing they're missing a big piece of the market by skimming the top, so they're coming up with new brands related to the master brand, but at a lower price point. Then these brands are formulated to be consistent with local tastes and requirements.
Can you give an example?
PepsiCo (PEP), with Lays potato chips and a local brand called Poco, with Chinese flavoring suitable with Chinese tastes; it has strong Chinese characters [on the packaging] and is being built as a standalone brand that is cheaper than Lays, but priced at a premium to local competitors.
What about different mediums used in China, such as cell phones, which are so ubiquitous?
In terms of branding, it's a new medium; it will become another point of touch and something we have to look at for clients to portray their brand in the new media. The difference is we really focus on phones here, and not try to do cookie-cutter from the States. Technologies are leapfrogging [in China.]
Landor has designed several Olympic logos. What do you think of Beijing's?
It's tastefully done, attractive, ties to the country's heritage, has the sports connotation by the runner, but maybe it's a bit of a lost opportunity in that it's a bit retro and perhaps not progressive enough in terms of where the country is headed...the Olympics [should be] looking forward, not backward (see BW, 3/14/05, "China's Real Sports Contest").
Has China found its own modern design vernacular yet?
I haven't seen it happen yet. Over time, as more and more branding programs take place and it becomes a bigger element for companies coming to market, you will see some consistencies in vernacular. These are early days; it's only been a few years that branding has become part of people's business vocabulary in the marketplace -- how far it's come in the last few years is phenomenal, but [it] still has ways to go (see BW, 11/21/05, "China Design").
What's the next step in design?
Probably a hybrid. As the country gains more confidence, you still find progressive modern design, but with more highlights reflective of China and Chinese culture. You see that in Dubai and other markets, where they start by emulating [the West], and then get more confident. Look at the Lenovo phone, a multifunction PalmPilot with an MP3 player. It was surprising to see something so unique and progressive coming out of China already. That phone could have come from Samsung or Sony (SNE ) or Nokia (NOK ), and you would have thought it was terrific, and [it's] certainly on par with anything you would expect from a global player.