After a few appearances at trade shows in Europe and North America, Chinese companies wonder how they can make their company and brand names better recognized. Most of them started their firms after 1978 and many just in the past few years, as nascent as the Western concept of branding in China.
To make it more complicated, these export-oriented companies, with at least half of their sales coming from exports, are facing the branding issue in overseas markets as well as at home.
The Chinese domestic market, be it plastics machinery or finished products, is still competing on price. And the successful landing of made-in-China products in the United States, Europe and elsewhere also largely relies on competitive pricing.
Does the cutthroat pricing leave any room for brand building?
Yes, said executives from leading Chinese plastics companies at Chinaplas 2007's CEO Forum in Guangzhou.
“Of course [selling to original equipment manufacturers] is a shortcut to sales growth. Building your own brand takes much longer but is much more important than some growth number,” said Zhang Jianming, chief executive officer of China's largest injection press maker, Ningbo Haitian Group Co. Ltd.
Building a brand is not an easy task for anyone. It requires long-term investment and gives no immediate return. For Chinese firms, the bottleneck is often technical. Short on research and development and unique products, the Chinese tend to produce items similar to what's already on the market, but for a lower cost. That creates price wars and makes branding nearly impossible.
A popular slogan among Chinese entrepreneurs translates, “If others don't have the product, I'll have it; if others already have the product, mine is good; if others' products are good, mine is cheaper.”
As Toland Lam, president of Meixin Manufacturing Co. Ltd., put it: “The most difficult part of brand building is to differentiate.”
Another company at the CEO Forum, Guangdong Liansu Technology Industrial Co. Ltd., is touting its PVC pipe and wood-plastic composite decks to customers in North America. Vice President Ou Yang Rong said it is vital to stay a step ahead of competitors. “That only happens when you constantly develop new technology and products,” he said.
Intellectual property remains important. While Western firms hesitate to transfer manufacturing of many proprietary products to China, some Chinese companies also are having a headache with the enforcement of IP protection.
Haitian CEO Zhang simply shrugged at the fact that quite a few press makers in China use logos similar to Haitian's. “What can you do?” he asked. “Patents and trademarks can only do so much. But we work hard to stay the market leader, and we don't fear the copying.”
But nobody stops you from taking a more aggressive approach. Liansu's Ou Yang said the 3 billion-yuan ($393 million) company formed its own “crackdown knockoff” team and diligently tracks violations. His philosophy — that you need to do your best to “help” the authorities — definitely works in China.
Sun is a Plastics News staff reporter and Asia specialist.