Observation 3: Consideration rises for Internet-driven brands
Awareness high for established brands, but so is competition
The BrandZ™ Top 30 Chinese Export Brands ranking divides evenly into two baskets of brands: 15 brands come from established categories, such as consumer electronics and home appliances, and 15 brands come from Internet driven-categories, such as mobile gaming and smart devices.
Because brands in established categories typically have exported for years, many score well in awareness overseas. However, when they compete against well-known global and local brands, a wide awareness gap results. Brands in Internet-driven categories entered overseas markets later, but grew quickly in awareness, often in markets with few local competitors, resulting in a narrower awareness gap.
A gap of 55 percentage points separates people aware of a local or global consumer electronics brand from those aware of a Chinese brand. The gap in the home appliances category is 57 percentage points. In contrast, a gap of only 5 percentage points separates people aware of a local or global mobile gaming brand from those aware of a Chinese brand. The gap in smart devices is only 10 percentage points.
When we studied consideration, the gap disappeared in one category – mobile gaming. We showed consumers a neutral list of mobile gaming brands and asked which they were likely to consider. The majority selected a brand that happened to be Chinese. The gap disappeared for several reasons.
In the mobile gaming category, both the local and global brands and the Chinese brands are relatively young. The ease of market entry for Internet-driven brands also helps explain the results. For the brands in more established categories, exporting a product and building a brand outside of China is more capital intensive and time consuming.
In addition, a generational factor exerted influence. Young, internationally educated Chinese entrepreneurs launched many of China’s Internet-driven brands. They are knowledgeable about the world beyond China and open to engaging with it. Similarly, the customers for these products are relatively young, receptive to new products, and less likely to hold negative preconceptions about Chinese brands.
The final factor is the unique character of Chinese games, evolved from the country’s long history of game development. The games require the deep strategic thinking that gamers like. Although Chinese mobile gaming brands do not usually promote the provenance of their products, the Chinese character of the games differentiates them.
Brands in established and Internet-driven categories can learn from each other. Internet-driven brands benefit from rapid trial and error. They innovate and adjust as necessary to local markets. These practices can be difficult for brands in established categories, but they are worth exploring. Digital brands also rely heavily on digital marketing. For example, Google data and translation services helps gaming brands build audiences across national borders.
Both brands in Internet-driven and established categories are affected by two dynamics that seem to be happening in parallel: negative connotations about Chinese products are declining; and positive curiosity about China is rising. These conclusions emerged from a recent BrandZ™ study about the image of China across 19 country markets. Marketing Chinese brands abroad during this transition period, as Chinese brands rise in global stature, is best accomplished step-by-step.
The first step, following the example of gaming brands, is to introduce innovative products without emphasizing their Chinese origin. As the image of Chinese products improves, Chinese provenance should shift from a disadvantage to an advantage. Then it may be useful to promote a brand as Chinese, particularly in certain categories, like gaming, where aspects of Chinese history and heritage inform the products with differentiating and desirable ingredients.
Associating the product with its country of origin could add brand strength, in the way France connotes luxury or Germany, quality engineering. And as more Chinese brands with quality innovative products confidently promote their provenance, the stature of Brand China should rise, helping to facilitate the overseas growth of Chinese brands in the future.