By James B. Heimowitz
President and CEO, North Asia,
Chairman China, Hill & Knowlton

Chinese companies are beginning to understand the totality of brand concepts. This means they are starting to think about the transition from the manufacturing and sale of goods and products, to an experience that incorporates the intangible too. Chinese ‘brands’ are beginning to emerge - but the process has been, and will continue to be, fraught with setbacks and painful lessons.

We can better understand the challenges facing Chinese companies if we appreciate the context from which they are emerging. Most have a state owned enterprise (SOE) heritage and all are evolving in tandem with a rapidly changing Chinese society and government.

The role of government in China is moving from factory owner to industry regulator. At the same time companies are grappling with how they balance a powerful profit motive with ethical responsibility. Child labor was unthinkable when SOE’s dominated the economic landscape; now government is forced to oversee companies which would seek unscrupulous profit.

10 years ago when product choice was limited, consumers were happy to take whatever they could find. Today, in a highly saturated market, characterized by similar products and services, the Chinese consumer is awash with choice.

Companies that will succeed in this environment are those that are able to bring new experiences and innovation to market. Companies must understand that the brand experience extends beyond the product itself – to the packaging, the selling environment, the service delivery, the sales staff, the after sales service – and are able to manage this experience in a consistent and engaging way. Furthermore, the core of any successful brand is integrity and trust. Increasingly sophisticated Chinese consumers will hold manufacturers to higher ethical standards too. The companies who succeed on all these fronts, will emerge as the new scions of Chinese brands.

To date, however, Chinese companies have yet to successfully master how to harness the power of their brands to drive passion, commitment and loyalty. (How often do you hear consumers talking fanatically about the latest must have Lenovo or Haier?). Winning Western brands know that successful products resonate at both a practical level (brain) as well as an emotional (heart) level. The brand experience includes not only the product itself, but how the consumer thinks and feels about the brand. This requires marketers to consider many facets that at present may seem tangential to Chinese companies.

More and more, consumers look to brands as a reflection of themselves – or their ideal self. A purchase is also a statement of what an individual stands for or aspires to. As such, buying a brand that is seen as having good values is as important as being a good value. Brands that are linked to integrity, honesty and good ethics are those that resonate with consumers and drive commitment. As such corporate responsibility is the next great frontier for Chinese brands to conquer. Quality, service, and value-for-money are the price of entry in a global market. Chinese companies must ensure that they are not only following the highest standards of corporate governance (financial, management, and corporate behavior), but that they are also actively involved in, and contributing back to the communities in which they operate.

Ultimately, a brand is a promise – constant and unchanging – in quality, consistency and value. To fulfill against a promise, brands need to be actively managed like any other company asset. Chinese companies are starting to understand the importance of making a brand promise – and delivering on it. This bodes well for their future and for consumers globally.