Browsing through the 2019 edition of the BrandZ Top 100 Most Valuable Global Brand list, which is probably the best known annual report of its kind, one will find 15 Chinese brands – a threefold increase from just a decade ago. This should not come as a surprise to anybody who has been paying attention to an economy that has rapidly grown to become the world’s largest (and by some measures is already the biggest); naturally, a country that boasts such a massive domestic market should expect to have some valuable brands.
The list doesn’t disappoint. Several high-profile, state-owned companies from the traditional financial and industrial sectors are listed, including Bank of China, ICBC and China Mobile, as they were a decade ago. Crucially, however, most of the Chinese brands now on the list come from the emerging consumer and tech sectors – e-commerce behemoth Alibaba, gaming and social media developer Tencent, ride-hailing service Didi, food delivery provider Meituan, liquor group Moutai and tech gadgets maker Xiaomi.
This diversity highlights the huge gains that Chinese brands have made over the past 10 years in terms of their innovative capabilities (does anybody still only refer to China ‘the workshop of the world’?) to their branding and marketing skills, racing ahead in digital and technology trends to become world leaders. Huawei mobile handsets are commonly seen on the streets of London and Paris, Didi has invested in partnerships across South-East Asia and even baijiu is becoming a hipster drink in the cocktail capitals of the world.
China Inc., the collective term given to Chinese brands, is now firmly established. In recent years, flush with cash from a booming domestic market, leading local brands across all sectors made a huge overseas push, snapping up brands and assets and opening up offline and online stores to sell their products. The initial reaction was enthusiastic: local consumers lapped up cheaper but still good quality televisions and mobile phones, while business buyers were impressed with the lower costs and accelerated delivery times for everything from farming equipment to telecoms lines.
But then the China Inc. brand started to become tainted. The reasons for this are multifold and too many to explore in detail here, yet suddenly lingering concerns ranging from everything to the connections of industrial enterprises to the state and the subsidies they received to the quality of Chinese brands and their customer service overseas went mainstream. In 2019, hardly a day has gone by without a critical news or opinion story of Chinese brands – Huawei and the US-China trade conflict; the withdrawal of bike-sharing services Mobike or Ofo from overseas markets; the potential security risk posed by a Chinese company that builds train cars in Boston, USA.
The impact of this situation is very real – for example, Huawei is expecting a 40-60% decline in mobile shipments this year. Consequently, the widespread perception among Chinese brands is that they are facing a negative climate in terms of public and media opinion overseas, and that just because they are Chinese, they will come under unfair scrutiny of the product quality or business practices. While there is some merit to this theory, it is also a dangerous generalisation.
When the first big Chinese brands pushed overseas from the early 2000s, they were mostly state-run industrial enterprises building dams in Southeast Asia, trains in Africa and roads in Latin America. The subsequent second wave saw these same firms start to make acquisitions. Chinese oil giant CNOOC paid USD15 billion to acquire Canadian oil firm Nexen in 2013, while State Grid invested in power grids in Portugal, Brazil and Australia. Ask any journalist who sought to cover these companies and stories (me included) and they will likely give you the same response: beyond official and dry press releases, it was almost impossible to gain access to these brands or their spokespersons. You were likely to be faced with attempting to deal with an unresponsive PR person sitting in China, if you could find any contact point at all.
The roots of this unresponsiveness are partly cultural – especially given China’s unique domestic media environment – as well as partly sector-related, as even multinational industrial companies are not known for their particularly open media strategies. Yet when these companies started to face questions or criticisms from local stakeholders, they shut down. In a challenging media environment, silence from the brand side will be filled with unchallenged options from detractors, and in the social media age these criticisms can spread rapidly.
So when the second generation of Chinese brands started to go global, targeting consumers more that procurement managers, it was expected that they would have learned some lessons. To some extent they did – hiring local PR partners, presenting a friendly and open face, and, in the case of bigger brands like Huawei, paying a lot of money for celebrity endorsements. Many of these consumer brands have been successful abroad. Yet they still often face media crises that are partially of their own making.
A general analysis of how Chinese brands run their PR and marketing operations and the PR problems they can face overseas leads to some broad conclusions. Here is a summary of what they are and how to address them:
Transparency: Not disclosing key corporate information, avoiding the media and only engaging in one-way conversations is not compatible in a world where consumers care greatly about the source of products and the ethics of brands. Openness is crucial.
Localisation: It is to be expected that brand communications are planned and overseen from a central location, however, only managing communications at this level and not hiring local PR partners or not listening to on-the-ground conversations only makes any problem worse, not make it go away. And if you hire a PR agency, it would help to listen to their advice.
Build trust: Many Chinese company founders avoid giving any media interviews, which does not help in the process of building trust, especially in times of crises. As any PR expert will tell you, once the story is out it becomes much harder to shape or have any input over the direction of the narrative if a brand has not already got on the front foot.
Don’t generalise: The perception that foreign media has an inherent anti-China bias is not the foundation for a good PR strategy. Media in every country is different – foreign media are not homogenous. Within individual countries, different media outlets will have different views, and even inside the same media organisation the consumer and political desks will also have their own agendas and opinions. Study local media landscapes carefully and seek out objective and balanced reporters to share your story.
Build advocacy: A common response to pressure situations is to issue forceful statements or opinion pieces from a brand spokesperson to strongly convey the brand position on an issue. This one-sided approach is less effective in an increasingly skeptical world. Identify and work with local third-party advocates who can build your case for you.
Leverage positive sentiment: China and its companies, thanks to their investments over the past decade, are seen very positively in many parts of the world. Even in the US and Europe there are many supporters of Chinese companies across government, public and the media. Chinese brands should engage these stakeholders and take advantage of any positive sentiment.