China's Leading Global Brands -- Are You Serious?

Dan, everyone has heard of these companies :)

Actually, having spent the last 5 years here, I know of most of them, and I am surprised as well, but more because Tsing Tao and Haier are not on the list.

However, I bet everyone in the U.S. knows China National Offshore Oil Corp. (AKA CNOOC). They tried to buy Unocal a few months back?

Bao is pretty well known in manufacturing, but then again, why would someone driving their Buick in Omaha care that the steel used to build the frame was from Baosteel? There is no logo on the truck... and no one really reads the stickers anymore.

I wonder who is doing the Marketing/ PR for the others? If no one is, then apparently there is an arbitrage opportunity here for someone.

I agree, Chinese brands do have a long way to go in creating global recognition. As the Chinese culture adapts to its relatively new capitalist policies and overwhelming industry growth, the brands will begin to realize they will need more than a government subsidy to compete.

Rich --

Thanks for checking in. I would bet less than 10% of Americans know CNOCC because the only people who would know it would be those who read the business pages during the Unocal buyout period (which was more than a few months back) and most of those people likely have forgotten the name of "that Chinese oil company." Probably just about anyone involved with steel knows Baosteel, but how many people is that? Can you name three U.S. steel companies? I can, but only because I am from Michigan and have driven through Gary, Indiana, countless times. Where are the Chinese Microsofts, Boeings, Starbucks, McDonalds, Nikes, Coca Colas, Samsungs, or Sonys?

I do not even think all that many people outside of China know Haier -- they just buy it because it is the cheapest. And Tsingtao is probably known only by urbanites who frequent Chinese restaurants.

Mr. Seale --

Thanks for checking in. You are 100% right. When will it happen and in what industries? I love using Samsung as the exemplar. Ten years ago, the only reason people bought Samsung electronics was because they were cheap. Now, it has a name and people buy it because it is good.

Chinese brands? Let's try RCA, Land Rover and Apex. Not exactly Chinese sounding but they are own by Chinese companies.

I'd see Chinese brand to reach global status at different rate and via different route. Lenovo and Ninajing Auto went global through acquisition of existing brands of IBM PC and Land Rover. TCL owns Thomas which owns RCA. Haier almost acquired Maytag. Changhong is about to own Apex. The pattern seems to be: acquisition of falling brands could have been a cheaper way to do then trying to build one from scratch.

We are not likely to see a full out war of brand building by the Chinese companies as long as China bashing is in fashion in the US. Japan had to live through Japan bashing in the 70s and 80s because sell under their own brands were the only way to bring their manufactured goods to the US market to archive the export oriented goals set by MITI.

Well, they are not the greatest brands but they are value bargain. Maytag by Haier or Unocal by CNOOC would have been better.

The $250 millions paid for Land Rover by Nanjing Auto is almost a steal. They get brand, technologies and North American distribution network. That beats building a brand from ground up that may cost a couple times of that without the certainty to archive the level of recognitions. TCL also got Thomas cheap but have a bit trouble with it. However, this gets TCL into the door of major retailers in the US under its brands. Apex is alive and well. Just reached an agreement with Changhong to solve their $190 millions debt.

Of course, we all like to see Chinese companies trying to plaster Time Square with Chinese sounding brands and CNN/Fox reporters shutting "Chinese are at the gate!" That makes good reality TV.

In reality, there are failing brands out there to be gotten on the cheap. With the brand, it comes technologies, established distribution network and international management talents. Japan had to painfully build up all of these by their own and end up having to bring international managers to save a couple iconic Japanese brands: Nissan and Sony come to mind.

Yes, RCA and Land Rover owed nothing of the brands to their new Chinese owners but the Chinese owners do get a great deal out of them.

Nanjing Auto bought MG Rover. A quick look at the different models listed on their UK website reveals that MG Rover does not produce Range Rover. I could be wrong about this, but it doesn't seem right that Nanjing Auto bought the company that produces Range Rovers.

Fern R --

Thanks for checking in. Even if you did remember the name of the company that was trying to buy Unocal, is that the sort of thing on which great brands are built? I do find it strange that your local Chinese restaurant is serving Kirin and Asahi and not Tsingtao. Tsingtao has been in the U.S. for a long time and now that Miller has a piece of it, I would expect its distribution network here is pretty good.

Land Rover is owned by Ford. Mr. Li was thinking MG Rover (a British brand) and I inadvertently (there's a lawyer word for you) went along with it. So no, you are not missing a thing.

I as a chinese know these brands for sure. but it's not true that they are called as global brand. i think they use wrong phrase. these companies are conglomerates in china. if the report call them the most powerful chinese brand, i will agree that. for the global wellknown brands, most are connected with consumer directly. if the product or service doesn't sell to consumer directly, it's hard to be a global brand.

MG Rover has come out with one of the most popular cars recently... the mini!.. and NJ Auto announced plans to build a U.S. factory (the first Chinese auto factory to be located in the U.S.).

I have seen a number of reverse mergers take place in a number of industries, and there are a number of reasons why you will probably never know the name of the Chinese company� Political roadblocks have killed the last 2 deals in U.S�. An American public that fears the Chinese are stealing their jobs are not likely to buy a product that has a couple of Chinese characters stamped on it�.

Dan, you bought Samsung 10 years ago because it was cheap, but now it has a good brand right? Haier will do the same, and given it has some 80% of the market for small refrigerators, I would say someone out there thinks it has a good brand.

How difficult will it be for Haier to move into big American style double door refrigerators? After all, retailers know Haier products to be of good quality, people who once bought dorm refrigerators are loyal to the brand, and the products are 30% cheaper than comparable products....

The Lenovo deal for me was not about Lenovo getting IBM. It was about the hundreds of other component companies supporting IBM and the shifting orders that will occur.
That was the real deal, and it will result in a lot of acquisitions that will go unnoticed to the American public... and that is exactly how it was planned. It is a team effort where Lenovo is the quarterback who gets all the press, and the other 1000 companies on the team simply go unnoticed while they do their work.

Have a good weekend everyone!

Keanu Zhang --

Thanks for checking in. I think you are right. These are strong names in China, but few of them are global brands in the way a Nike or a Sony is.

Don't mean to sell Japanese companies short. In fact, I do works for one which is a semiconductors supplier to Sony, Panasonic, and other big electronics. There are great companies in Japan as those you mentioned. I'd add Mitsubishi as well as Nintendo.

I'd single out of Sony and Nissan not just they are vivid examples of infusion foreign helps. Unlike the other companies mentioned, neither one of them belong to a Zaibatsu. Without backing of the Zaibatsu's deep pocket, the management mishap are easier to study as their top management's decisions have much direct impact on the companies' performance.

Not to insult on Japanese companies, but their top management are more monolithic then their global counterpart. Sony suffered greatly in the engineering driven which in the past has helped the company greatly (Walkman, PS1) but have been hurting the company lately. Missing flat screen in defense of its Trinitron CRT, PSP's UMC and now billion dollars in PS3 all directed by their engineering minds. As Clayton Christensen's "Innovator's Dilemma" pointing out. Companies can innovate themselves to failure.

Sony's board's decision to get Howard Stringer is a good one. For nothing else, bring a new voice and perspective to the company.

Not sure when troubles will begin with other Japanese electronics. They are losing North American as well as Europe markets to Samsung and Apex alike. Domestic market is still protected but Docomo's recently brought Nokia and other brands into Japan's mobile market. Docomo is paying about $200 per 3G handset to these companies and Nokia's is $40 ~ $100 range. The Japanese electronics have recently lower their prices to be in the 10% range of the Chinese brands for Chinese market.

Mr. Li --

I think you are right about the acquisition strategy, but so far the names being bought (with the obvious exception of IBM) are mostly nickel-plated, not gold.

You live in China and you have heard of ALL of these brands and all of them have some form of international business! "So what?" you say? Conservative estimates put the size of the Chinese middle class at over 300 million pepole. They may not be purchasing to the amount that middle classes in developed countries are (they CERTAINLY are not buying on borrowed money with credit cards as other countries are), but the potential is still there. You did not hear of Lenovo, CNOOC and Haier in the West three years ago but now you do. Those outside of China have not heard of Chery and SAIC...but give it 5-10 years and they just might be as famous as Toyota. It might be more national pride than truth that leads this austere organization to call them "global brands" right now...but just wait. You will hear of them soon.

Mr. Kedl --

Thanks for checking in. I agree with you that we can expect some of the companies you list to become global brands, but I think you are really pushing it to predict that a Chinese car company is going to be as famous as Toyota in 5-10 years. No Korean car company is close yet and I do not see it happening with a Chinese car company in such a relatively short time either.

I agree those acquired are nickel-plated. Some high profiled ones would be nice and they make good TV. I loved the "Chinese Are Buying America" Fox style news alert from CNN. They are great entertainment value but unrealistic acquisitions didn't work for Japanese. When I came to L.A. in early 90, a friend took me on tour of downtown and told me more then half of the downtown were owned by Japanese. Most were sold back to the American hand just before the latest real estate boom started.

Hi guys!
Great article! Like I said, I'm going to reactivate the American Volunteer Group (remember the AVG?) and go pioneer brands in China. Anyone want to join me?