China needs brands

OK, maybe China won’t bury us economically after all:

Quick: Think of a Chinese brand name.

Japan has Sony. Mexico has Corona. Germany has BMW. South Korea? Samsung.

And China has . . . ?

If you’re stumped, you’re not alone. And for China, that is an enormous problem.

Last year, China overtook Germany to become the world’s largest exporter, and this year it could surpass Japan as the world’s No. 2 economy. But as China gains international heft, its lack of global brands threatens its dream of becoming a superpower.

No big marquee brands means China is stuck doing the global grunt work in factory cities while designers and engineers overseas reap the profits. Much of Apple’s iPhone, for example, is made in China. But if a high-end version costs $750, China is lucky to hold on to $25. For a pair of Nikes, it’s four pennies on the dollar.

“We’ve lost a bucketload of money to foreigners because they have brands and we don’t,” complained Fan Chunyong, the secretary general of the China Industrial Overseas Development and Planning Association. “Our clothes are Italian, French, German, so the profits are all leaving China. . . . We need to create brands, and fast.”

The problem is exacerbated by China’s lack of successful innovation and its reliance on stitching and welding together products that are imagined, invented and designed by others. A failure to innovate means China is trapped paying enormous amounts in patent royalties and licensing fees to foreigners who are.

China’s government has responded in typically lavish fashion, launching a multibillion-dollar effort to create brands, encourage innovation and protect its market from foreign domination.

Through tax breaks and subsidies, China has embraced what it calls “a going-out strategy,” backing firms seeking to buy foreign businesses, snap up natural resources or expand their footprint overseas.

Domestically, it has launched the “indigenous innovation” program to encourage its companies to manufacture high-tech goods by forcing foreign firms to hand over their trade secrets and patents if they want to sell their products there.

via Beijing tries to push beyond ‘Made in China’ status to find name-brand innovation.

Just because a country takes advantage of the market doesn’t mean it has a free-enterprise economic system.   China’s government-controlled socialist economy may be good at mass industry and mobilizing labor, but innovation and consumer-capitalist tricks such as “branding” are hard to come up with under a top-down, command economy.  (So why, one might ask, are WE moving in that direction?)

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • Winston Smith

    Wal-Mart?

  • Winston Smith

    Wal-Mart?

  • Petersen

    There’s the rub.

    We care about “capitalist tricks such as ‘branding.’”
    China cares about becoming the world’s largest creditor nation.

    They will bury us, all right.

  • Petersen

    There’s the rub.

    We care about “capitalist tricks such as ‘branding.’”
    China cares about becoming the world’s largest creditor nation.

    They will bury us, all right.

  • http://www.toddstadler.com/ tODD

    I’m not entirely sure what this thought experiment proves. I mean, Corona? Seriously? Grupo Modelo, which owns the Corona brand, isn’t close to the largest company in Mexico, and it’s 50% owned by Anheuser-Busch InBev. But then, perhaps that’s why Mexico’s economy isn’t doing so well? Because the author can’t think of a better Mexican brand than Corona? Quick, think of a Canadian brand. All I could come up with was Tim Horton’s and a beer brand that, on further research, has merged with an American company. Is that a good indicator of Canada’s economy? Or of my knowledge of Canadian brands?

    Anyhow, if we’d played this game with Japan all of 50 or so years ago, I’m not sure they would have fared so hot, either. They were that little backwater that makes cheap electronics, yes?

  • http://www.toddstadler.com/ tODD

    I’m not entirely sure what this thought experiment proves. I mean, Corona? Seriously? Grupo Modelo, which owns the Corona brand, isn’t close to the largest company in Mexico, and it’s 50% owned by Anheuser-Busch InBev. But then, perhaps that’s why Mexico’s economy isn’t doing so well? Because the author can’t think of a better Mexican brand than Corona? Quick, think of a Canadian brand. All I could come up with was Tim Horton’s and a beer brand that, on further research, has merged with an American company. Is that a good indicator of Canada’s economy? Or of my knowledge of Canadian brands?

    Anyhow, if we’d played this game with Japan all of 50 or so years ago, I’m not sure they would have fared so hot, either. They were that little backwater that makes cheap electronics, yes?

  • Tom Hering

    “Quick: Think of a Chinese brand name.”

    La Choy. :-)

  • Tom Hering

    “Quick: Think of a Chinese brand name.”

    La Choy. :-)

  • http://www.toddstadler.com/ tODD

    Hey, if Corona is the “it” brand for Mexico, then isn’t Tsingtao just as much evidence that China has whatever Mexico has?

    Also: Lenovo. Computer maker (the fourth largest in the world, apparently). Bought the IBM PC line, including the popular ThinkPads.

  • http://www.toddstadler.com/ tODD

    Hey, if Corona is the “it” brand for Mexico, then isn’t Tsingtao just as much evidence that China has whatever Mexico has?

    Also: Lenovo. Computer maker (the fourth largest in the world, apparently). Bought the IBM PC line, including the popular ThinkPads.

  • cattail

    It could be said that China has The North Face, a lot of it fake! You can buy TNF garments in the street markets there for a fraction of the price charged in the US. It’s basically impossible to tell if those garments are real or fake!

  • cattail

    It could be said that China has The North Face, a lot of it fake! You can buy TNF garments in the street markets there for a fraction of the price charged in the US. It’s basically impossible to tell if those garments are real or fake!

  • Cincinnatus

    They should probably “discover” intellectual property law before they discover brands.

  • Cincinnatus

    They should probably “discover” intellectual property law before they discover brands.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Is it brands, or is it creativity in general?

    Lessee…I know the “Chery” brand for cars, the Tsing Tao name for liquid bread, Exelstor (defunct I believe) for hard drives….

    …..that said, it’s a good point that the other “Asian tigers” generally did very well by creating their own name recognition, especially in Japan and Korea, in the postwar era, and China does lag.

    And here’s a link to a hilarious video of the crash test of a Chineses “Brilliance” car which led the EU to ban its sale there….

    http://sayanythingblog.com/entry/a_car_for_liberals_and_your_mother_in_law/

  • http://www.bikebubba.blogspot.com Bike Bubba

    Is it brands, or is it creativity in general?

    Lessee…I know the “Chery” brand for cars, the Tsing Tao name for liquid bread, Exelstor (defunct I believe) for hard drives….

    …..that said, it’s a good point that the other “Asian tigers” generally did very well by creating their own name recognition, especially in Japan and Korea, in the postwar era, and China does lag.

    And here’s a link to a hilarious video of the crash test of a Chineses “Brilliance” car which led the EU to ban its sale there….

    http://sayanythingblog.com/entry/a_car_for_liberals_and_your_mother_in_law/


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