Managing strong brands in China sustainably

Summary: China is increasingly developing from a price-sensitive market to a technology-oriented market. German medium-sized companies in the B2B sector can benefit in a sustainable way from the increasing brand awareness of the Chinese if they now reposition their brands – which should also stand for strong self-confidence and a new attitude – on the Chinese market.

I wrote this article for “ChinaContact – Das Außenwirtschaftsmagazin (Foreign Trade Magazine)”. It was published in the 3/2020 edition. I would like to thank the Managing Editor Petra Reichardt for her valuable assistance.

Numerous medium-sized companies from Germany have so far benefited from the rapid and dynamic growth in China. Last year, however, on account of political disputes and trade conflicts, clouds appeared over the country. According to the AHK 2019/20 business climate survey, this resulted in the expectant attitude of German companies becoming more subdued. In view of the continuing coronavirus crisis, this is unlikely to change in the foreseeable future.

Nevertheless, in this Year of the Rat and beyond, China will remain an important growth market for medium-sized German companies. A market
• in which local Chinese providers are increasingly catching up with German market leaders from a technological point of view
• in which the demand for greater quality of the end products is increasing, and which is thus less price-sensitive
• which is characterised by an increasing brand awareness among the Chinese.

In recent years, German companies in the B2C sector have already benefited from the increasing demand for valuable brand products, for example automobile manufacturers. German medium-sized companies in the B2B sector can likewise use the stated trends to their own advantage – sustainably and profitably. However, the condition is that they upgrade their brand image in China now and today, regardless of whether they are already active there or are only just planning their market entry.

Changing towards a brand-conscious technology market

In recent years, China has caught up strongly with regard to technology. With current trends such as electromobility, e-commerce, artificial intelligence, and also automation, on an international comparison the country does now definitely have competitive advantages. These advantages are also a result of the huge state promotion of the economy. With strategic programmes such as Made in China 2025, the Belt and Road Initiative, and also the development of the Greater Bay Area to become the Chinese Silicon Valley, by 2049 China wants to be the leading global economic power.

As a result, market-defining purchasing criteria are changing: The focus is now less on the price, but is moving more towards technological competence, innovative power and greater quality of the end products – criteria that characterise strong and successful brand products around the world.

For German medium-sized companies, this is an opportunity to upgrade their brands by means of more stringent brand management in China. This is also supported by the fact that, in two important areas, they have a considerable advantage with regard to competence and experience compared with Chinese providers: First, the seal of quality “Made in Germany” continues to enjoy maximum recognition also in China, and is associated with German engineering skills and technological competence par excellence. Second, the companies have succeeded in creating worldwide renowned brands that convince the customers in the long term with their highest product and service quality, but also with strong brand values, a unique promise of performance, and a well-thought-out and stringent corporate design.

Avoiding the dilution of famous brands

This “Made in Germany” tag has certainly in the past been thrown onto the scales in China by numerous German medium-sized companies – in particular from the automobile supplier industry and the mechanical engineering sector – and used to build up their brand and public awareness. Through the marketing of the product brand, ultimately also the corporate brand has been strengthened; an important aspect and certainly an advantage when it comes to hiring local specialist workers and managers.

In the marketing of brand products whose qualities and functionalities were previously modified in local production to comply with the requirements of Chinese customers, individual companies resorted to a marketing trick: They linked their brand messages to Chinese values. With claims such as “German know-how. Flexibly produced in China for China”, they linked German strengths such as technological competence and manufacturing quality with local strengths such as flexibility and speed. Other companies alternatively selected the approach of introducing a technically simplified and more inexpensive version of their brand product as a second brand in China. However, this approach involved greater costs for development, design and implementation, and required a great deal of patience with regard to market acceptance.

Both brand strategy procedures are today certainly still relevant, in particular where action in the price-sensitive market for mass-produced goods is involved. Against the background of an increasingly technology-oriented competition, however, German medium-sized companies should ask themselves the question as to whether, with these brand strategies, they want to accept the dilution of their brand image, which is renowned and unmistakeable in western markets, and thus also of their margins.

Upgrading the brand in China now

The implementation of a technology-oriented market development strategy, or also a respective realignment, currently offers German medium-sized companies a great opportunity to move their brand with strong values to a higher position with respect to quality in the Chinese market.

For companies that are striving for local market leadership and wish to distinguish themselves by gaining market shares from the competition, the following approaches may prove to be a rewarding investment in local brand management, especially if they are operating in niche markets:
• Refining the unique selling proposition (USP) of the brand, the brand values and the performance promise
• Improving the active and activating customer guidance
• Developing the public awareness of the brand
• Marketing the technological strengths of one’s own products and services.

Self-confident brand ambassadors with a new attitude

Launched in 2017, the “China Brand Day“ – a state initiative to strengthen brand awareness and to develop globally successful and recognised Chinese brands – is celebrated every year at the beginning of May. In addition, the names of Chinese companies listed on the stock exchange are announced that have made it into the top 100 in China and the top 50 abroad according to brand value. Also the 50 most successful Chinese start-ups according to brand value are presented to the public. German medium-sized companies in the B2B sector are thus certainly right to consider a technology-oriented upgrade of their brand as a contribution to sustainable growth in the Chinese market.

In this context, in order for the companies to be successful, attention should be paid to two things: self-confident appearance – powered by their faith in their own technological competence and innovative power, as well as their experience in successfully developing renowned brands – and the adoption of a new attitude that acknowledges, respects and sees as an incentive the learning capacity and impressive development of Chinese companies to become technological competitors that should be taken seriously.

It is important to actively shape in a communicative way this process of intellectual change in one’s own corporate culture by developing local managers and workers so that they become enthusiastic and convincing ambassadors for the new brand awareness.

Please feel free to “download” the article (only in German) published in the 3/2020 edition of “ChinaContact – Das Außenwirtschaftsmagazin (Foreign Trade Magazine)”.

My skills for your success (selection):

  • Over 50 projects in China for increasing operational business activities and brand awareness
  • Communication of the change of ownership from KraussMaffei to ChemChina
  • 10 years heading the global department at international market and technology leaders

You have questions about my offer or a specific requirement? I am happy to help you and look forward to hearing from you.