David Aaker thinks that it will be decades before Chinese companies are ready to develop strong brands capable of competing on the global stage. While I do not agree with his blanket assessment, I can personally vouch for one of the reasons he cites for his point of view. Unless senior managers at Chinese companies value the power of branding, then investment in brand and advertising will likely be wasted.
One thing that interests me about Aaker’s assessment is that it apparently ignores the fact that Chinese brands do not need to go global in order to scale.
China is a big market now, and McKinsey estimates that the number of households with an income over US$16,000 will increase by a factor of five in the next 10 years. However, many Chinese brands do aspire to go global, so let’s have a look at Aaker’s rationale for why they are unlikely to succeed.
First, Aaker asserts, existing multinationals have a set of brand management systems and tools that are lacking in Chinese firms. This may be true, but in high growth markets like China, even multinationals are struggling to attract people who can utilize those tools effectively. Another important point is that working from a Western playbook does not always work in China, and it would be wrong to assume that Chinese companies lack creativity when it comes to marketing.
Second, Aaker suggests there has been little motivation for Chinese firms to develop branding capability because current or ex state-owned enterprises owe their success to government support. Funnily enough, I was in China a few weeks ago working with one of these companies and let me tell you, there was plenty of motivation to develop a strong brand. Even if it is like re-engineering a Boeing 777 in mid-flight, people are working hard to strengthen bonds with their consumers because they recognize that if they do not, someone else will.
It is when we turn to Aaker’s third point that he and I are in agreement. He suggests that Chinese firms lack not only talent to develop and implement brand strategy, but also the will to do so at the top. In my experience, I would suggest that many Chinese companies have employed smart senior marketers who gained experience abroad with the very multinationals against which they now need to compete, but the same is not necessarily true of senior management. Aaker suggests most top managers have a purely functional and trading mindset with little understanding of what it takes to develop a strong brand. If so, that is a huge stumbling block.
So what are your thoughts on the likely global success of Chinese brands? Please share them below.
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