Chinese companies seek Olympic boost
TEXT OF STORY
Kai Ryssdal: The Olympics are going great guns, but Chinese investors have other things on their minds. The Shanghai Composite index gave up more than 5 percent today. There were some new numbers out showing inflation there is still rising, despite government efforts to cool things down. A couple of Goldman Sachs analysts said today they don’t think the Games are going to have much of an effect on the overall Chinese economy. But there are some up and coming companies trying to leverage the Olympics to get their names out. Here’s Marketplace’s Scott Tong.
Scott Tong: Quick, name a Chinese brand you like. Stumped? If you are, that’s the problem for Chinese consumer companies. This Olympic season, some of them hope to use sponsorships to vault themselves onto the world stage. Among them: beer maker Tsingtao, what some Americans call Tsing tao. The top domestic brewer is named for its home city on the Eastern Coast. Tsingtao’s international marketing efforts include a multi-lingual tourist trap, the company museum.
Museum tour guide: Good afternoon. Welcome to Tsingtao beer museum.
Today, Tsingtao city is hosting Olympic sailing, and Tsingtao the beer is sponsoring. Several other Chinese sponsors of the games also have global aspirations: Haier, the appliance maker, sneaker company Li Ning and Lenovo, which makes computers. They all hope to mimic the success of Japanese brands after the 1964 Tokyo Olympics and of Korean companies after the 1988 Seoul Games. Normandy Madden edits the newsletter Ad Age China.
Normandy Madden: It took Japan maybe three or four decades to really develop really high end products from companies like Sony and Toyota. It took Korea 10, 15 years, and China’s moving even faster. So, it’s definitely happening.
Happening, but not there yet. Madden considers many Chinese companies determined and aggressive. But they all suffer from what the pros call company-of-origin bias, i.e. the perception that made-in-China equals low end. Take Haier, the appliance company.
Madden: The problem is that when people go into a Wal-Mart to buy a refrigerator, they don’t go in and say, “I want a Haier.” They go in and say, “I they want the cheapest thing you have,” and they end up with a Haier.
The tin-can reputation is a hard one to shake, but Japanese and Korean car makers managed to do it. Another hurdle for Chinese companies: making innovative products. Tom Doctoroff is with advertising firm J. Walter Thompson.
Tom Doctoroff: If you have that type of hierarchical culture, where there is a great emperor at the top and everybody pays deference to that emperor, you’re not going to have a free flow of ideas up and down.
And, he says, Chinese firms often go for the quick buck, rather than invest in long-term brand and image building. The upshot: In his mind, there are no Chinese corporate Godzillas about to invade America.
Doctoroff: There is not one Chinese brand that is anywhere closer than light years, OK, from being able to export its brand to developed markets at a premium. And I don’t see any ships that are at the docks ready to sail.
The course many Chinese firms have charted is to stop first on the shores of emerging markets — like Russia and the Middle East — and eventually move on Europe and North America. That’s what Chinese automakers and consumer companies are doing. In the end, which brands will emerge as global competitors? Again, Normandy Madden of Ad Age China.
Madden: It’s too soon to tell which ones are going to succeed. It’s possible the biggest that the Chinese brand twenty years from now hasn’t even been created yet.
For now, though, every Chinese company with world-class aspirations is still toiling in the minor leagues.
In Beijing, I’m Scott Tong for Marketplace.
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