Western perceptions add to Chinese companies’ challenges

'Products made in China carry a stigma of low quality, and this association sticks with Chinese brands,' says Angela Bainter at the consulting firm Web-Presence-In-China.
China’s finance minister, Lou Jiwei, says US presidential election rhetoric has had an effect on Chinese business. Andrew Harrer / Bloomberg
China’s finance minister, Lou Jiwei, says US presidential election rhetoric has had an effect on Chinese business. Andrew Harrer / Bloomberg

There is something of a tit-for-tat situation regarding Chinese companies and their foreign counterparts.

Chinese brands are routinely rubbished by the media and politicians in western countries but there have been occasions when some of the biggest overseas competitors have come under fire following government investigations in China.

In recent years, Glaxosmithkline has been investigated and punished for bribing agents to get Chinese hospitals to buy its medicines.

Several foreign baby food companies were targeted for price fixing while car companies have been asked to recall cars that proved to be defective.

“Products made in China carry a stigma of low quality, and this association sticks with Chinese brands,” says Angela Bainter at the consulting firm, Web-Presence-In-China.

“This is partly because the western media is constantly pointing out defects in Chinese goods”.

It could get worse for Chinese brands before it gets better.

The ongoing presidential election in the United States has seen a negative focus on Chinese goods.

There has been China-bashing in past US elections but this time the Republican candidate Donald Trump has targeted Chinese business rather than ­politics.

The Chinese finance minister Lou Jiwei described Mr Trump as “an irrational type”. There are concerns among Chinese businesses that he could be a brand killer for them abroad.

On the other hand, a majority of Chinese polled by the state-backed Global Times see Mr Trump as less of a political challenge than his Democratic rival Hillary Clinton.

This is because Mr Trump has shown little enthusiasm for controversial disputes such as that in the South China Sea but has focused on destroying what he says is Chinese trade protectionism.

Brand bashing is hurting Chinese companies even in the domestic market because of a growing perception that foreign brands are better quality or offer the most innovative products. This was evident in a survey conducted by Nielsen in the Chinese retail market last June.

“One of the more surprising findings from the survey is that country of origin is as important as – or even more important than – other purchasing criteria such as price and quality,” says Patrick Dodd, the group president, Nielsen Growth Markets.

“Brand origin can be an important differentiator, but sentiment varies by category and by country,” he adds. Nielsen’s survey showed that 72 per cent of Chinese agree that global brands offer the latest product offerings/innovations compared to local brands, while 67 per cent agree that global brands offer higher quality than local brands.

This is a bad time for Chinese companies to suffer from a bad image; many have just started to invest heavily in developed countries while reducing their reliance on low-cost investment zones of Africa and Asia. With Chinese exports falling, July showed a 4.5 per cent slide compared with the same month last year, exporters need brand strength more than ever.

Tackling a brand challenge from powerful western politicians is usually the last thing the marketing division of a Chinese company wants to do.

There may not be many Chinese companies among the most well known and respected brands but “the clear trend is that more Chinese companies are gradually becoming successful based on their own brands, not just as assemblers and manufacturers of others’ products and services”, Scott Kennedy, the deputy director of the Freeman chair in China studies at the Washington based Center for Strategic and International Studies tells The National.

business@thenational.ae

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Published: September 12, 2016 04:00 AM

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