At the INVESTUSA Wenzhou Forum, Vichy Liu, project director for Weber Shandwick’s Emergent China practice, attended to advise on best practices in China’s investments in the United States as well as the importance of corporate branding for overseas investments. Here are her thoughts:
Why is china interested in investing and building brands in the USA?
The US is still a leading voice in the global platform, especially in the technology and automobile arena. By stepping into a developed market, it allows China to cultivate customers for a bigger profile and build up its brand image at the same time. And while according to industry specialists, entering emerging markets like Indonesia, Brazil and South America increases the volume of sales, the US is still the first step for Chinese companies to begin to build up their image in a market that has the infrastructure and experience to support it.
I read an interesting report that revealed that at this year’s Consumer Electronics Show held in Las Vegas, Chang Hong, a Chinese company specializing in LED TV’s and screen platform technologies held the most expensive booth there – an aggressive approach that highlights how important Chinese companies place on having a presence in the US market. While the likes of Microsoft, Apple and other giant companies are backing out of CES, Chinese brands are jumping on the opportunity to take over those seats to boost up its visibility on a global platform. We are in an age where people are eagerly awaiting the release of new products, new gadgets, and it is a time for Chinese brands to leverage this window.
What are the key challenges Chinese companies will face in building a brand in the USA?
First, a plain and simple culture shock. How the Chinese do business is very different from how business is done abroad. Business in China is conducted based on trust. On relationships. Opportunities are reliant almost solely on relationships. This model does not work when entering with a foreign market where relationships do not yet exist. This breeds trust issues.
The language barrier is a secondary component to this challenge. Chinese companies enter the US with little to no confidence in themselves or the people around them, or their abilities to communicate their message.
Second, the Chinese tend to themselves and do things alone. They don’t trust other people. A Chinese brand looking to penetrate the US market will bring out a team of its own senior management who are all equally unfamiliar with the new terrain, and have a very basic understanding of the market, it’s consumers and the business landscape. They don’t ask for help and as a result, their needs don’t get fulfilled.
This point is no better demonstrated than in the stark difference in how US companies and Chinese companies make merger decisions. In the US, professionals will be hired to give support and advice, make value assessments and legal consultations, engage in stakeholder mapping and so on. But in China, such decisions are made on gut feelings or on the nature of the relationship held between the parties.
Lastly, China has an image problem to work on. People still associate “Made in China’ goods with words like piracy, low quality and unreliability. But the truth is, companies pour tons of effort into research and development for their goods in an attempt to counter this stereotype. The challenge for China will be to find a way to position itself in a positive light and highlight the value that it creates
So what would you advise Chinese brands to keep in mind when investing overseas?
We’ve devised a 3-pronged approach to tackling these hurdles. It’s as easy as ABC.
A) Adapt. No matter which country brands are looking to enter, they have to adapt to the culture. Not only the culture, but also the media environment, ways of doing business and so on. Fit in. Be prepared.
B) Balance. Leverage the right resources and use them properly. To build up a global brand and to properly communicate your message, we need to focus not only on publications and the power of media, but also organizations, associations and individuals. The power of influence is not a force to be ignored in the realm of marketing communications.
C) China. What is the Chinese story? It’s no secret that many Chinese brands have driven themselves into being seen as ‘bad’, or as ‘copycats’, synonymous with ‘bad quality’ and ‘no taste’. Remember what you stand for. Take the opportunity to create a new story for your brand. Promote the values that will catapult your brand into a global standing: hard work, family, the Chinese spirit. Use the China brand wisely.
Vichy Liu is project director at Weber Shandwick’s Emergent China Practice