The ongoing dispute between France's Danone and China's Wahaha
has helped sharpen Chinese entrepreneurs' focus on brand value.
Much has been said in recent years about the importance of brand
value at various seminars and business forums. But the message has
been slow to reach Chinese entrepreneurs, preoccupied as they are
with quick and easy profit.
Too many Chinese companies are seen to be ceding control of
their brand names to joint venture partners in order to gain fresh
capital, economies of scale, management expertise and, eventually,
market share.
But some of them have belatedly realized the price they paid for
the advantages afforded by their joint-venture partners was their
brand identities and independence.
Most Chinese entrepreneurs must have realized by now the
importance of brand value. The question is, how many of them are
willing to invest time and money to create value for their brands,
when manufacturing under contract for foreign companies is so
profitable.
But such business models have fallen behind the times as the
supply of land and labor is becoming less plentiful and the cost of
production is on the rise. Also, competition from other low-cost
manufacturing bases in South America and other parts of Asia is
bound to intensify in coming years.
Although the going has remained good thus far, Chinese
entrepreneurs have been urged to step back and take a longer-term
look at their future development.
In their relentless pursuit of short-term gains, they run the
risk of missing the potentially bigger opportunities arising from
the explosive growth of the domestic consumer market as a result of
the rising income and expectations of the people, especially in the
urban areas.
Retail experts have noted that in a maturing consumer market
like China, branding counts more than in the US or Europe.
In China, the best known brands in a wide range of consumer
products, including clothing, electronics, processed food,
beverages and cosmetics, are mostly foreign-owned. Only, perhaps,
in white goods, or consumer durables, can Chinese manufacturers
claim some success in the branding game.
But it doesn't have to be so. There has been an increasing
number of small manufacturers in the Pearl River Delta industrial
powerhouse in Guangdong Province that have distinguished themselves
with high-quality products in the domestic and international
markets.
Their brands command the same respect as the best in the world
and their products are selling at premium prices.
These Chinese entrepreneurs, though few in number, know the
power of brands and are setting a shining example for others.
(China Daily April 10, 2007)