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Branding and China

Brand Strategy For The Chinese CEO


Brand Strategy For The Chinese CEO

Chinese organizations have unique challenges and advantages in their home market. Here are 10-steps specifically designed for Chinese CEO’s to successfully channel their resources to build powerful brands.

1.) Build a strong corporate board of directors: Board of directors can be one of the most important strategic resources for any company. By including directors who are well connected to different strategic resources such as investment banks (to help in funding), regulatory authorities (to obtain permissions), media (to create favorable perceptions), and politicians (to help in lobbying), Chinese companies can further strengthen their ties to multiple stakeholders. Such a move not only erects entry and mobility barriers but also would allow them access to scare resources thereby creating a credible source of competitive advantage.

2.) Develop a powerful local, regional and national distribution system: China is a vast and widely spread out country. Distribution systems in China are not consolidated as they are in much advanced countries such as the United States, United Kingdom or Europe. Given the strategic importance of having a wide spread and well managed distribution system for reaching customers, Chinese companies should invest in creating a well managed, far flung and well coordinated distribution system. Mere reliance on existing fragmented distribution channels will not be sufficient.

3.) Tap the local human capital of customers, collaborators and competitors: As is widely acknowledged by now, China is a very different market from those in the Western world. Chinese companies should leverage this difference to their advantages. In addition to using market research firms, Chinese companies should tap into the human capital across the spectrum and across markets. Local customers, business partners and collaborators would have a wealth of information on local customer buying habits, the local regulatory policies and other strategic information. By establishing a formal network to enable information flow, Chinese companies can create a strong advantage over foreign companies that may not have access to their market information.

4.) Create a strategy to reach the mainland, interior, smaller markets: As has been discussed before, it is not merely the affluent coastal cities that are lucrative. Even the many smaller cities and rural cities that are in the heart of the country are becoming very lucrative markets. As such, Chinese companies would greatly benefit to penetrate these markets and create early brand preferences and build first move brand equity. Such a move would not only enable them to expand their brand’s growth but would also ensure a leg-up over later competitors.

5.) Defend the domestic territory: In the quest to conquer far-off markets, Chinese companies seem to be oblivious to the tremendous potential of the domestic Chinese market. One result of such oversight has been the gradual ascent of global companies in the Chinese market. As such, Chinese companies should vehemently guard their domestic territory before venturing out to global markets. Leadership in domestic markets not only helps create a strong base for the brand’s bottom line but would also act as an essential buffer (in the case of decline of global markets) and an essential test market (where Chinese brands can first be tested before a complete roll out in global markets).

6.) Aggressively globalize: Along with defending the domestic territory, Chinese brands will also have to aggressively expand globally. Given the inherent cost advantages that Chinese companies have (both because of relatively cheap labor and favorable lending conditions by the State), they can not only enter multiple markets but also can undercut many of the entrenched players in those markets. In going global, Chinese companies should carefully assess among the three strategies discussed before – mergers, acquisitions and alliances – and design their corporate strategies in line with their overall branding strategy.

7.) Engage the local, regional and global media to create positive China perceptions: As discussed earlier, one of the biggest challenges faced by Chinese companies is the “Made-in-China” effect. Regional and global media have had a very prominent role in the conveying the many shortcomings of Chinese companies to the global audience. Although there can be no alternative to diligently work on these shortcomings to meet up the global standards, Chinese companies should also actively pursue a proactive media strategy. Such a strategy should aim to achieve three broad objectives: (1) convey the identity of their brand that is based on superior product quality, exciting value propositions and engaging customer experiences, (2) recreate, redefine and refine the historical associations that different stakeholders might have of the Made-in-China effect and (3) build a bridge with important players in the global market place with an intention of finding eventual endorsers, collaborators and brand champions.

8.) Align the corporate business strategy with brand strategy: The alignment of the corporate business strategy with the overall brand strategy should be the guiding strategic blueprint for Chinese companies. Such an alignment would enable companies to instill the guiding brand philosophy internally with employees and also allow them to (1) effectively derive strategic plans, (2) efficiently allocate strategic resources and (3) project a unified front of the company to the external world of customers, competitors and collaborators.

9.) Prune unrelated diversification and focus: One of the historic strategic challenges of South and South East Asian companies has been the rampant and unrelated diversification in all segments and all industries possible. Such examples can be found in India, South Korea, Singapore, Taiwan and China. Chinese companies that are striving to build a solid competitive advantage that would allow them guard their turf in the domestic market and carve out a niche in the global market would do good if they prune many of the unrelatedly diversified firms. Such a focus would allow companies to cut down the number of competitive fronts, compete more aggressively on the chosen few fronts and most importantly build a brand around a core positioning in the marketplace.

10.) Constantly innovate: Probably one of the most important aspects of any company competing in today’s hyper-competitive global environment is the ability to constantly innovate on multiple fronts – innovation in product development, innovation in customer engagement, innovation in initiating collaborations, innovation in managing multiple markets effectively and so on. Some of the best known companies in the world have been consistently innovating on all or most of these fronts.

Chinese companies have a unique advantage on this front from two perspectives: (1) the domestic Chinese market is a tremendously advantageous real time brand laboratory, especially given the distant markets, the diverse make up of customer profile and the rampant global competition and (2) the enormous resources – managerial and financial – that is made available to many Chinese companies through the State allows them to constantly experiment with different aspects of their brands. As such, Chinese companies should take this opportunity to create a culture of innovation that could eventually allow them to gain a huge leap on many competitors in the market.

These ten steps are intended to guide Chinese CEOs and corporate executives to take stock of their current position in the market place, chart out their eventual path and constantly challenge the status quo.

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