The Fundamental Way Out for Chinese Brands

"Chinese brands should promise to deliver some modern values, rather than outdated historical values."
China has corporate brands but no product brands. Without product brands, corporate brands are just empty shells. The export profits of industrial products from manufacturing enterprises are continuously declining, while foreign brands are increasing their market share in China. Therefore, building Chinese brands to gain premium capabilities in both export and domestic markets has become the focus of discussion.
Products with good brands indeed obtain higher premiums compared to general brands and ordinary products. Large brand enterprises invest heavily in design, quality, product features, promotion, and brand management to ensure a high perceived value in customers' minds. These investments are rewarded with high prices and returns.
However, most Chinese enterprises are unwilling to make these investments, thus losing the opportunity to gain higher profits. These enterprises are oriented towards emerging industries rather than consumers. They believe they lack sufficient brand management experience to ensure returns after high investments. Therefore, they choose to advertise instead of building brands. Learning is important, but good brands come from bold practice.

1. Brand is a value promise
There is no quick solution to the unbalanced development between Chinese and foreign brands. In the long-term solution, we must consider several things. Most importantly, a strong brand must bear the deep imprint of its country of origin. Just as French wine represents the romantic image of France, Italian fashion represents Italian elegance.
A brand is a value promise to customers. A brand only succeeds when its promise is credible and has a unique value proposition. Two conditions must be emphasized: value and value delivery. What do these conditions mean to consumers?
Value promise is the key for customers to recognize, understand, and evaluate a brand. Shoppers consider many factors about the brands they buy. They learn about the products, who buys them, spend time researching usage and care, and compare the purchased brand's products with competing brands and ordinary products. They are willing to pay more for a brand because it means more to them—emotionally, sensually, and rationally—fully illustrating the brand's value.
The delivery of brand promise depends on the company's integrity. Consumers believe the company delivers an honest promise. To be trusted, brand companies must be large, stable, and subject to long-term public supervision to gain trust. This means your company must act to satisfy customers, continuously improve dissatisfaction points, make retailers willing to sell your brand, earn public respect, and ultimately, over time, successfully obtain legal protection for brand assets.
Conveying a credible promise is not done by words alone but through the test of time, successful promotion, and winning lawsuits. A global brand usually faces thousands challenging its value promise, and in these legal battles, brands with value promises often win.

2. The connotation behind the brand
A brand does not represent itself alone. Behind every strong brand lies profound connotation. A strong brand is provided by a strong enterprise. If the enterprise's strength weakens, the brand's power in its base market will also weaken.
The weakness of American car brands in the U.S. market reflects the weakening strength of car manufacturing enterprises. Customers believe in a brand's value promise because they trust the company's financial strength, capability, culture, market vision, and mission.
There is a deeper characteristic in this field: strong enterprises need strong base markets. Brands originate from their main national markets, winning in the fierce competition of base markets, then spreading elsewhere. Consumers worldwide firmly believe that brands successful in competitive base markets will continue to succeed in new markets. If it beats the most knowledgeable and experienced consumers in the base market, it must be excellent for new markets.
Behind every base market is a brand's country of origin. The country of origin must have a unique strength to support enterprises and the country's brands. The power of a national brand may come from the country's financial strength, attractive culture, lifestyle, education, national cultivation, and history.
Financially strong financial brands come from financially strong countries; famous luxury brands come from advanced countries; fine mechanical products come from countries that value higher education, and so on. French brands are based on French cultivation, German brands rely on German engineering culture, American brands depend on the allure of American lifestyle, Japanese brands rely on Japan's excellent manufacturing reputation. Global consumers have deep insights into these countries' different characteristics.
When people demand these characteristics, this recognition of national traits makes it possible for a brand to transfer from its base market to the global market. However, a brand in different markets must maintain its foundational national heritage while making some localized changes. The brand's country of origin heritage is the basis of the brand's represented viewpoint because national heritage itself is also a brand.

3. The fundamental problem of Chinese brands
The success of Chinese brands depends not only on the brand itself and the enterprise behind it but also on the value of the country of origin and base market, that is, the image of Chinese brands. The U.S. has long been committed to building its national brand; France, Germany, the UK, Japan, Italy, and other countries are doing the same. But China has not shaped itself into a brand with new things; it still uses the old brand image of China's long history and culture, disconnected from new technology, quality of life, entertainment, and fashion.
Let's start with the strength of Chinese brands in the domestic market. This is the first difficulty brands face because the domestic market has both traditional consumers and high-income modern consumers. China's ancient heritage is a good brand culture for traditional products, such as cultural products, clothing, food (recently completely changed by the milk scandal), household and home products, packaged goods, and medicines.
However, it is different for some modern products, such as consumer electronics, automobiles, durable consumer goods, educational materials, and so on. To defeat foreign brands in these fields, Chinese brands need to present a modern, high-tech, fashionable, and affluent brand image. The rising middle class and wealthy groups want a modern, globalized Chinese brand image, along with some Chinese consumer brands, while the general public desires a traditional national brand image and its associated brands.
The grand and spectacular opening ceremony of the Beijing Olympic Games depicted China's transition from tradition to modernity. However, consumers will not pay for transformation; they want to purchase a consistent image that combines both tradition and modernity. Successfully injecting traditional characteristics into modernization is a difficult task (the brand Shanghai Tang is an exception). This can cause emotional confusion among consumers.
Nowadays, most Chinese companies promote their brands by positioning themselves as either "Western" or traditional, which is why there are so many Western faces in Chinese commercial advertisements. If China does not have a clear modern brand image, even using Western faces to promote Chinese brands will not be convincing. I look forward to the day when China uses its own faces in advertising to confidently present its modern image to both domestic and global audiences.
Now, let's look at the international market. China's history is exotic and attractive to the West, but it has not yet truly influenced contemporary consumer tastes. In the international market, Chinese tradition can no longer support Chinese brands; in contrast, the conservative image and tradition of the West can support Western products in Western markets. If China is ready to enter the international market with its brands, it must establish a modern national image of China.
I believe that China's transition from a traditional industrial image to a high-tech, lifestyle- and entertainment-oriented modern image is essentially a cultural issue, a contradiction between rural areas and the traditional mass market, and the modern tastes of the middle class. This issue makes it difficult for the country to support global consumer brands. Because of these contradictions, I often advocate that Chinese companies establish a modern brand image recognized by everyone, rather than trying to develop brands without national support.
Haier is a very successful trade brand in the United States because people think it is a German brand made in China. Shanghai Tang is a Hong Kong brand that has now been acquired by an American company. Lenovo is trying to shed its Chinese alliance in the Western market through Western management, but Lenovo is not doing well in the U.S. market.
If China chooses to cultivate a modern national brand image, I firmly believe it will find a way to achieve it. The whole world admires China's ambition, pursuit of learning, technological acuity, economic growth, national wealth, and the diligence of the Chinese people. These values stand out prominently in global modernization. China's modern image can be depicted through these values as a modern and attractive social blueprint.
I am confident that if China wants to present a modern Chinese brand image to the world, with its vast wisdom and rich media resources, and with the help of global branding experts, it can certainly craft a compelling story and showcase an influential image. Marketers have methodologies for such matters, which we call city marketing, and these principles are applied in national and city brand campaigns worldwide to achieve desired goals. If implemented with government resources and talented individuals, the national brand can become the cornerstone for the development of Chinese enterprises and product brands both domestically and internationally.

Keywords: China Way out Fundamental