Why China Does Not Have Strong Brands?Focus On Consumer Electronics Industry

There has been a debate going on about whether the coming century will be the Chinese Century. Incredible transformation of Chinese economy has turned China into the world’s economic factory. Even though Chinese business model has been based on cheap labor force manufacturing low-quality products, it is also true that in the past10years, China has proved to be able to develop high-tech companies that are capable of producing sophisticated, complex, and complicated computer and biotechnology instruments.Most of the economists agree on the fact that, in terms of economic competency.China will be the leader. However, without Chinese Coke, Chinese Nike or Chinese Apple there will be no Chinese Century. If China wants to continue to grow, its manufacturers need to move up the value chain, design products themselves, offer complementary services, and invest in branding in order to be able to earn higher margins on products. And consumer electronics industry is a great starting point.Flourishing international consumer electronics companies share some universal characteristics, one of which is strong brand equity in the market. Every year company Interbrand, a global branding consultancy, identifies100strongest international brands. On this list of the most powerful global brands there is not even one brand from China. Despite the fact that China is one the largest consumer electronics manufacturer, it has not seen the inception of many strong and globally recognizable brands. Therefore, the purpose of this study is to determine variables that contribute to strong brand equity of Interbrand’s companies and explain the reasons behind the lack of these factors in Chinese business environment for the purpose of devising the right strategies for Chinese companies to follow.Factors contributing to strong brand equity in consumer electronics industry can be grouped into three categories:macro economic, industry related and consumer related factors. Macro economic factors refer to the stage of economic development of the country and the level of sophistication IP laws. Once the government provides the industry with hygienic conditions, industry related factors such as R&D, marketing investments and organizational structure start having the leading role in fostering innovation and creativity and in turn, building a strong brand. However, a brand is nothing without its followers i.e. consumers. Many of these factors are not present in Chinese business landscape due to myriad of reasons:weak enforcement of IP laws, myopic CEO leadership, and highly bureaucratic organizational structure. However, the most important obstacle towards building a strong brand is the mindset of Chinese executives:focus on short-term profits, often to the line where long-term perspective is completely neglected.All evidence suggests that this will be the Chinese Century:remarkable economic growth, opening of the markets, becoming the largest exporter, largest manufacturer, becoming the most vibrant business playground. However, it is becoming more difficult for Chinese companies to compete at home and let alone abroad. Therefore, in order to take part in this competitive arena, they need to make a shift from Made in China to Created in China and start building competitive advantage which will not depend any more on low cost, but on intangible assets, such as image, reputation, and brand.