Wed, Sep 04, 2013 - Page 9 News List

China’s quest to make global brands held back by rigid state

Selling Chinese-label goods at home is one thing, but to shed the stigma the ‘Made in China’ label has abroad and gain global recognition, the country must rediscover the arts of creativity and risk-taking

By Jonathan Kaiman  /  The Observer, BEIJING

WeChat, a smartphone instant messaging app similar to WhatsApp in the US, has taken off in Southeast Asia and recently launched an advertising campaign in India featuring Bollywood stars. WeChat has a leg up on its competitors because of its easy-to-use interface and sophisticated integration of features It combines an Instagram-like photo-sharing tool, a voice-messaging service and an array of social functions designed for meeting strangers. Yet in January, users discovered that sending politically sensitive terms across international borders returned the words “the message you sent contains restricted words. Please check it again.” WeChat developer Tencent called the incident a “glitch.”

“In terms of China’s consumer Internet, more than any cultural factors, the biggest barrier would be the regulations and protectionism surrounding the internet,” says Kai Lukoff, co-founder of TechRice, a blog about China’s tech sector. “You have this Iron Curtain 2.0 that separates the Internet culture in China from that of the rest of the world. So ... when Chinese companies go abroad, they feel woefully out of place.”

However, that has not stopped them from trying. Last week, popular smartphone maker Xiaomi pulled off a coup by hiring Google’s former vice president for Android product management, Hugo Barra, to help it expand its global presence. The two-year-old company has established a reputation for producing high-quality, low-cost Android phones. The low-cost smartphone market is drawing Apple’s interest, but Xiaomi is ahead, having already expanded to Taiwan and Hong Kong.

Experts say Chinese companies in newer industries such as smartphones stand a better chance of gaining traction abroad.

“In Western markets we have all these legacies, the infrastructure, built in: the desktop PC, the landline, the fax. In China, they could just leap ahead to the latest and greatest,” said Rebecca Fannin, author of Silicon Dragon: How China is Winning the Tech Race.

Chinese companies have gone to great lengths to avoid the stigma associated with their country’s brands.

“They produce a lot of stuff which Western people like and use, they’re just not under a Chinese brand name,” said Sam Lipoff, a doctoral student at Harvard Business School who researches innovation in China.

Domestic conglomerates often acquire foreign brands, and encourage them to maintain their native identities.

Some of these deals have been extremely ambitious, such as the acquisition of British yacht maker Sunseeker by the Dalian Wanda conglomerate. Herborist, a Chinese cosmetics firm, has taken a different tack, marketing its products internationally as “Made in Shanghai,” evoking images of bustle and grandeur, rather than dark, industrial belt factories.

“This begs the question: What makes a company Chinese?” Lipoff said. “That its workers are in China? Or its offices? Or it sells to Chinese customers? Or has a Chinese name? This is an important thing to think about.”

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