China's Brands: Damaged Goods

Food and toy recalls have created an image problem for other mainland exporters

By Dexter Roberts

Made in China. Those three words are shaping up to be a marketer's worst nightmare. After a year of massive toy recalls, tainted toothpaste scares, and poisonous pet food incidents, consumers around the globe are thinking twice—or more—before buying Chinese-made goods. Indeed, in a new survey of marketing and business professionals worldwide, 69% of respondents said the phrase "Made in China" hurts mainland brands. The word most frequently associated with Chinese products? "Cheap." "Conservatively, it will be five years before people will let go of their fear of made in China," says Jonathan Chajet, Asia-Pacific Strategy Director at consultancy Interbrand Corp., which carried out the survey for BusinessWeek.

That creates some big challenges for China's exporters, even those far removed from the current problem sectors of toys and food production. In its poll of 569 respondents outside China, Interbrand found that this year's recalls have dealt a serious setback to mainland brands. Although the respondents said Chinese products are "a good value," few labeled them "safe," "high quality," "prestigious," or "luxurious."

The good news for the Chinese is that some of their brands are becoming recognized far beyond the mainland. Interbrand also polled respondents on their awareness of 28 Chinese brand names, and analyzed financial data and marketing strategies to find those that have a chance to make it on the global stage. The five players Interbrand considers "already serious and recognizable" are personal-computer maker Lenovo (LNVGY ), brewer Tsingtao, appliance manufacturer Haier, telecom giant Huawei Technologies, and automaker Chery. These companies "want to rewrite the rules of their industry—to go beyond China," Chajet says. "That is visionary thinking" for mainland managers.

Overseas sales are growing at each of these companies, and several have launched marketing campaigns to build their names globally. Lenovo, for instance, is trumpeting its products via a pricey Olympics sponsorship deal. But for better or worse, the fortunes of all of these companies may now be tied to the image of mainland products and the efforts of the likes of Vice-Premier Wu Yi to clean up China's reputation (, 7/13/07). So for some time yet, "Made in China" may be more an insult than an endorsement.

Roberts is BusinessWeek's Beijing bureau chief

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