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Branding and China

How Copycats Leverage Brand Equity In China

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I suspect that everyone knows that copying is big business in China. Copying can range from specific products to entire stores (as in the case of Apple). But it took a visit to Qingdao to remind me that sometimes all you need is to leverage an existing brand’s equity to make money. You can just take a well-known brand name and stick it on your own product and package.

Intriguingly, the copycats are something of a brand themselves in China. They are collectively known as “Shanzhai.” Historically, shanzhai refers to a mountain stronghold and was used as a metaphor to describe bandits who evaded corrupt authorities to perform deeds they saw as justified. Today, the word refers to manufacturers who copy existing products and seek to evade taxes and legislation.

Many Chinese feel a sense of pride when they see a cheap copy of a Western brand. They believe it reflects well on the ingenuity and resourcefulness of the Chinese people. And if you can buy something that looks like the real thing but with more features and at half the price, why not? So the Shanzhai are respected more than they are reviled. But as I noted above, you don’t have to actually copy a product in order to benefit at someone else’s expense. Sometimes all you need to do is leverage their brand equity. Chinese companies have become very clever at mimicking more successful brands.

Sometimes the imitation is borderline. Qingdao is located near the famous and beautiful Laoshan District. Home of both the Taoist and Laoshan spring water. above  you can see a Laoshan Cola that looks remarkably like the Chinese packaging for Coca-Cola (on the left). It would be easy to mistake one for the other.

Sometimes, however, you find something far more iniquitous. Browsing through the shelves in a corner store in Qingdao, my colleague Derrick Dong and I came across the shampoo brand shown below. At first glance I assumed that Gillette had entered the hair care category in China. But a closer look suggests that this is not a Gillette product at all, since the name actually reads: GITTELLC.

While not directly copying the Gillette name, this clever piece of passing off does initially fool the eye. It is a salutary reminder that a familiar and distinctive look is an important brand asset. Irrespective of the fact that people will eventually realize that the shampoo is not made by Gillette, the initial impression is undoubtedly more positive than it would be otherwise.

Funny enough, this is a lesson that many Chinese companies seeking to build their brand abroad are struggling to deal with. Without an initial familiarity with the brand and what it stands for most, Western consumers will look askance at any brand made in China. Even when the product appears to give them what they need, they will be concerned about its quality and reliability. For many Chinese products this is now a needless concern, but in the absence of brand name recognition, the product must speak for itself or let price do the talking.

So what do you think? Does copying prove the value of a brand?

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3 Comments

Sandra Pickering
Twitter: opento
on September 30th, 2013 said

Great thinking as always from Nigel.
I have managed, researched and lived brands for decades so, perhaps unexpectedly, I shall add: if the copy product performs at least as well as the original – including safety, quality and reliability – the management of the original brand should be asking “Why have we made it so easy? Why have we been so lazy? Why have we made our brand so weak it can be copied?”

Sam Glassoff on October 06th, 2013 said

Really interesting piece, Nigel. Thank you.
Sandra, I am currently a college senior, Marketing major, and aspiring CPG brand manager. I don’t know if I agree that having a brand copied means that it is necessarily weak. Many companies leverage brand equity that is based on the brand’s history or story, which can even be more important than the product itself. Just because a copycat tries to offer a similar product in similar packaging does not mean it was too easy. As strong as a brand can be, there are always ways to duplicate.

Coca-Cola is one of the strongest and most storied brands in the the world. They keep their recipe on lock down so nobody can reproduce their product. However, in a blind taste test in my class last year, nobody was able to tell the difference between Coke and Wal-Mart brand cola. This shows the psychological value a consumer feels when sipping cola from a bottle with a red and white label. A Chinese brand can offer a sugary concoction in a red and white bottle and do a great job in leveraging Coca-Cola’s brand equity, despite the product itself.

Niko on October 22nd, 2013 said

Dear Mr. Hollis
I slightly disagree with your first example.
First, like it happened in many countrys all over the world with “cola”, the chinese equivalent “可乐” (kele) became something like a generic term. The use of a generic term like “可乐” is not deemed to infringe the exlusive rights of others.
Second, comparing coca-cola’s chinese name, which is 可口 (kekou), with your “copycat” laoshan cola, which is 崂山 (laoshan), you have to admit that they are hardly to confuse. Neither does 可口 and 崂山 look similar to each other, nor is it likely that someone would confuse the sound(kekou and laoshan) or the meaning of those two names.
Third, the overall appearance of those two bottles isn’t very similar and it is hard to argue that there might be confusion between the two of them.
By the way, although the coca-cola company never (legaly) protected their formula and therefore it is not deemed as infringement to create a “taste-alike”, laoshan cola tastes different in a way that it is completely unplausible to assume that the “copycat” tried to imitate or even just condones any confusion between the two products.

So how is it that you can find products like afri-cola, pepsi-cola, etc. all over the world without being marked as a copycat, but a chinese company which chose to name their drink after a nearby mountain is criticized like that? What if a German company for example starts to sell a product named Mt. Everest Cola?

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