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Stephan Loerke reflects on the global opportunities and challenges Chinese brands face
I travelled to Shanghai a week ago for China Brand Day. It had been 18 months since my last visit and I’d almost forgotten how fast the country is transforming.
Landing in Shanghai Pudong airport, one of the world’s busiest airports, travelling on the MagLev train at 300km/h into the city centre and seeing electric public transportation buses on the streets were all powerful reminders that China lives in Fast Forward mode.
China is a great place to see what the future looks like. But while technology and infrastructure investment are flying ahead, the macro-economic news has been less bullish of late.
Despite the slowdown (a relative term), the Chinese ad market, which is now the second biggest in the world and worth around US$100bn annually, is still predicted to grow by a very healthy 7%.
More than half of all ad spend goes online and more than 70% of that goes to mobile thanks to the dominance of smartphone-led lifestyles. There are almost 900m monthly WeChat users and a heavy reliance on mobile phones for everything from shopping to spending.
China has seen explosive growth in social e-commerce recently, for example, as brands use technology to break the boundaries between communication and sales.
But while Chinese brands have been remarkably successful at leveraging their home-grown digital platforms to drive business success in China, they still have some way to go to replicate that globally.
The WFA delegation and its CANA counterparts
According to the Prophet Brand Relevance Index, Chinese brands now outperform global brands in China thanks to pragmatic/affordable innovation and convenience.
Globally, however, they struggle and only two Chinese brands (Tencent and Alibaba) feature in the top 10 BrandZ ranking in 2018.
That global challenge is the reason why China celebrates China Brand Day every year on May 10, an event designed to help Chinese companies build global brands.
The 2019 conference in Shanghai, organised by our local association, the China Association of National Advertisers, was opened by a State Councillor, one of the most senior government representatives in China, highlighting the importance that the government places on this challenge.
In typical Chinese fashion, it included a mix of government representatives, state-owned enterprises and private companies. Unlike perhaps any other country on the planet, it was the government representatives who were the most eloquent at articulating the importance of marketing and brand-building to drive growth and well-being across society.
I moderated a panel discussion on May 10, where Chinese companies across a variety of sectors shared the challenges they had faced in expanding abroad.
There was a lot of humility, stories of quite a few set-backs, plenty of learnings and, above all, an unfettered determination to build their brand equity over time.
We should keep watching this space. The jury is still out on whether and how fast Chinese companies will succeed in building global brands. But there is no doubt that the response to that question will have a profound impact on our industry and the world economy.
For more information or questions, please contact Stephan Loerke