GLOBAL KNOWLEDGE FOR GLOBAL CHANGE

Can China grow global brands?

19 December 2011

Findings from an IDS project examining the future of Chinese brands have been launched at a series of events this autumn.

Several mobile telephone handsets sit beside a stack of flyers advertising 
discounts in Shanghai, China. Credit: Qilai Shen / Panos.

Led by IDS Research Fellow Lizbeth Navas-Aleman, the 'Global Brands from China' project explored how Chinese firms are acquiring branding capabilities: how brands start; who initiates them; and how they develop. The research found that Chinese firms have clear branding ambitions – but Western markets and buyers are influencing these far less than previously anticipated.

China is the largest exporter in the world, and is at the forefront of a huge shift in production capabilities from OECD nations to East Asian developing countries. Although China’s manufacturing success is well documented, less is known about whether Chinese firms are developing strong global brands.

The project found that China is set to become a global brand leader, with the increase of Chinese brands offering firms great growth potential outside rigid global value chains, while cushioning them against fluctuations such as global downturns.

Dr Lizbeth Navas-Aleman said, 'It's fascinating that a single Chinese firm produces 80% of all electrical plugs sold in the UK – yet they do not currently have a famous brand'. Dr Navas-Aleman’s research indicates that this is likely to change, as Chinese firms develop their own brands independently from Western buyers.

The findings were launched to business representatives at a London event hosted by the Asia Pacific Technology Network in September, and discussed with students and academics at a Sussex Development Lecture held in Brighton in October.

About the project

The project focused on firms in the city of Ningbo, in China's two most exported industries: garments and home appliances. It looked at three ways Chinese firms could acquire branding capabilities:

  • Learning by exporting
  • Learning at home (through domestic markets)
  • Multichain models (combining exports and domestic or regional sales).

Dr Navas-Aleman worked with partners at the Shanghai Academy of Social Sciences to survey 200 firms and conduct 30 in-depth interviews with chief executives and buyers.

Key findings

  • Domestic firms have brands – Both sectors showed a high use of branding in domestically oriented firms. This was due to a fiercely competitive national market, requiring after-sales services, networks and investment in innovation.
  • The West has less influence over brands than expected – Chinese brands are developing independently from Western buyers and markets, boosted by soaring domestic demand and expanding regional markets.
  • Brands are mostly initiated and grown from within firms – The influence of the founder or the design team was apparent.
  • Firms value branding – The vast majority of firms in both sectors recognise the long-term value of brands, with plans to develop or launch brands over the next three years.
  • Home appliance buyers expect brands – Firms reported pressure from buyers to develop their own brands. In contrast, garment buyers focus on quality, rather than branding.

To find out more about the project, download the Research Summary or visit the Global Brands from China project webpage.