China’s Big Brand

Mark RitsonMay 13, 20083 min

According to that notable macro-economist Frank Zappa, you aren’t a real country unless you have a beer and an airline. It also helps if you have a decent football team and some nuclear weapons, he added, but at the very least you needed a beer.

Perhaps Western thinkers have exaggerated the influence of Mao on China and in doing so overlooked the influence of Zappa. For it is indeed a beer brand, Tsingtao, that will usher in the new era of Chinese capitalism.

Tsingtao is more than merely a good beer to accompany your spicy dumplings.

It is quite simply the most important brand on the planet because it is the only great Chinese brand.

China and branding are the sexiest concepts in modern business. At the moment, however, the two have almost nothing to do with each other. The growth in China’s economic power, its developing infrastructure and the rise of its production capabilities are now widely known.

However, among the hyperbole, mind-boggling market sizes and extrapolation effects, there is a glaring weakness in the nation’s business model. For all their economic scale and prodigious production, the Chinese have not got a clue about marketing; 50 years of communism is not the best preparation for brand-building.

While the Chinese are making and consuming an increasing proportion of the world’s consumer goods, they are doing so using other countries’ brands.

As assiduous students of Western capitalism, the Chinese know that their current role as a manufacturing resource for other countries, or as the weaker partner in trade deals in which Western brands patronize them with a share of the spoils, is not the way forward.

Economically, the Chinese are well aware that it is the brander who ultimately reaps the profits. Culturally, the Chinese are uncomfortable playing second fiddle in the branding orchestra. China is a proud country filled with ambitious people. If you work in the country, the first big cultural learning that hits you is that the cultural stereotype of the respectful, diminutive Asian businessperson is totally inconsistent with the modern Chinese entrepreneur. They came to the 21st century to win, and they are not shy of stating the fact.

The importance of Tsingtao in this context cannot be overstated. It is the leading domestic brand in its category in terms of market share and gross profit. It is also the leading export brand, earning more foreign currency than any other Chinese brand.

In many ways, Tsingtao is also a microcosm of capitalist China. Like much of China, it has a strong European connection: the brewery was founded in 1903 by an Anglo-German team to supply German soldiers who occupied the Eastern city of Qingdao and the surrounding Shandong peninsula. After World War II the brewery was nationalized and, backed by the communist regime, it became the leading beer in China.

As China opened itself up slowly to international trade in the 80s, Tsingtao benefited from a small but very lucrative export trade. Once China began to actively seek out partnerships with foreign firms it was again Tsingtao which led the way. US brewing firm Anheuser-Busch formed a strategic alliance with Tsingtao and the Budweiser owner now holds a 27% stake in the brewery.

Tsingtao has begun, like China, to flex its economic muscles. In recent years the brand has made successful forays into both the Taiwanese and Hong Kong markets, much to the surprise and dismay of the local incumbent beer brands.

So add a Tsingtao to your next order of Chinese food. When it arrives, scrutinize the amber liquid behind the red and gold label. You are looking at more than beer. You are glimpsing the start of the new Chinese revolution.

30 SECONDS ON … CHINESE BRANDS

– Founded in 1995, SVA began as a traditional TV manufacturer. While the company continues to produce cutting-edge digital displays, it also makes domestic appliances such as phones, air conditioning units, fridges and microwaves. SVA is also involved in the development of online radio, film and TV technology.

– Haier was founded in 1984 as a refrigerator vendor, and last year was ranked by the World Brand Laboratory as the world’s 95th most-recognized brand. Following years of massive expansion Haier Group now boasts a range of more than 15,000 electrical products that it exports to about 160 countries.

– With more than 200m customers, China Mobile is China’s biggest telecoms company.

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Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Licensing and Brand Education

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