In lesson 1, you have learned about the buying motivation of Chinese consumers. In lesson 2, we have discussed how <i>guanxi</i> building and management can affect Chinese consumers’ decisions. In lesson 3, we have learned from the results from a cross-national survey how some distinctive Chinese values affect the way Chinese and Chinese families decide how to spend their personal and family income. I hope that by now you can appreciate the importance of some of the major cultural characteristics of Chinese consumers. At the beginning of this course, I promised that after this course, you would have some ideas on how to sell to Chinese consumers. Let’s try to use what you have learned in the previous lessons and apply it to branding. How do Chinese consumers understand branding? Brand management is not a necessity for all businesses. For example, enterprises that do business primarily with a selected group of loyal customers do not have the incentive to invest in branding. Many small businesses in China have tried to maintain competitiveness by positioning itself as neighborhood stores that offer added values to loyal customers in a certain neighborhood. Companies that try to compete with their peers in terms of price competitiveness may also be less motivated to invest in branding. For example, a popular term among Chinese consumers is quality to price ratio. These companies will focus their marketing efforts on convincing the customers that their companies offer the best buy in the market. Major electronic stores in China often offer customers the lowest price guarantees for the products sold in the stores. In addition, 3.1 % of the firms in China were state-owned enterprises. State-owned enterprises have competitive advantages over private firms. For instance, big companies like China Construction Bank, or Sinopec Group are state-owned enterprises. They, together with another twelve state-owned enterprises in China, are on the Fortune 500 Companies List. These companies are insulated from free market competition, so to these companies, marketing and branding is not a necessity. Since China joined the World Trade Organization in 2001, the presence of global competition has changed China’s business landscape. The massive inflow of global brands into China has made it a necessity for local companies to remain competitive. Foreign businesses in China do not have much competitive advantages over state-owned enterprises, or price competition with local companies. Foreign businesses also do not have an advantage over neighborhood stores in the competition for loyal customers in local communities. Nonetheless, the rapid growth in GDP, the expansion of the luxury markets, the association of foreign brands with quality and style, and the consumers’ craving for luxury brands in China have made branding a major consideration for foreign companies that try to capture the upscale consumer market in China. But some characteristics about the Chinese consumers have made branding an important consideration when doing business in China nowadays. Chinese consumers have become more sophisticated than before. They are still price conscious, but they have also become more brand conscious than before. Chinese consumers lack brand loyalty, and they will buy from the same brand only when they expect that it will deliver the expected qualities and consumer benefits. Branding is a way to build up and manage consumer expectations. In China, if a new brand wants to succeed in competition, the brand needs to differentiate itself from existing brands. This is the case for both foreign and local companies. Chinese consumers are not forgiving. Foreign companies that have made a wrong move in its branding strategies may not be able to recover from the mistake. Today’s lesson will focus on two topics. What is branding in China like today? What are the psychological factors that we should take note of when introducing a foreign brand into the Chinese market? The first part of the lesson will cover the concept of self-brand connection, and how to build a strong brand in China. You will then watch an interview with Professor Dongmei Li from the Hang Seng School of Management. In the interview, she will discuss what differentiates a strong brand from a weak brand in China. The second part of the lesson will cover global branding. You will learn how to build your brand in China and globally. How may Chinese consumers relate and react to a foreign brand? When will they embrace it and when will they resist it? This knowledge will allow you to manage your brand in China. You will then meet Professor Carlos Torelli in another interview. Prof. Torelli is an expert in global brand management. The research he has carried out will give you a lot of insights on how to manage your brand in China.
