It's conventional wisdom that China is just the factory floor of the world, and that its companies operate in obscurity making, or rather, assembling stuff for their American, European and Japanese counterparts. That's still partly true, but in 2011 Chinese brands gained some traction. According to a recent article in Advertising Age, 83% of people outside China still cannot name a Chinese brand (if they can, they cite Lenovo or Tsingtao), but that hasn't stopped Chinese companies from becoming much more popular at home. The value of Chinese brand names is going up across a wide variety of sectors, including mobile phones, clothing, food, the Internet, airlines, insurance, and autos. In a variety of industries, the popular view of Chinese brands is surpassing that of their foreign counterparts.
If one just looks at corporate behavior, you might conclude that this is simply the product of business competition, and naturally Chinese companies ought to be gaining in popularity. While definitely part of the story, it is also true that foreign firms face a variety of market access obstacles and that these regulatory barriers are providing space for local companies to move ahead. Would Baidu be so popular if Google wasn't so harrassed it had to move its search enginge portal to Hong Kong? If Singapore Airlines could fly between Shanghai and Guangzhou, don't you think that would bite into the market share and image of China Eastern Airlines as consumers could directly compare service? (Speaking of which, I'd love it if Singapore Air flew Indianapolis to DC.) Would ICBC be seen as a strong bank if it UBS, HSBC, and Citibank could really compete on a level playing field for domestic customers' RMB deposits and loans?
Of course, not. If so, shouldn't Chinese consumers be upset, not to mention the foreign companies? Well, I suppose so, at least in the short run. But if we look at things over time, if Chinese companies use this opportunity to actually improve the quality of their products and services, and not just get fat from eating from the hands of the Chinese government, then the sacrifice of Chinese consumers may be temporary and worth it. The trick is to provide just enough protection to encourage Chinese brandnames to develop traction, but not so much cover that local companies feel no need to genuinely improve. Most economists and foreign industry would argue that this balance is so hard to achieve that policymakers ought to err on the side of more openness. I'm really not so sure.
Rather than brand rankings, I'd like to see more cross-national polling on company service, since I think that good customer service is the best proof of who company executives think are king -- customers or government officials. With no knowledge of this data, which I'm sure exists, my sense, based solely on my own personal experience, is that service among Chinese companies is gradually improving. My restaurant experience in China has gone up a kajillion percent over the last decade. It's probably no coincidence that the restaurant sector is relatively open, with tons of privately owned restaurants as well as a variety of foreign brands, not to mention the push given by the food service in 4- and 5-star foreign hotels, such as the Shangri-La and Westin.
Where's the truth in all this? Data. Let's go back a decade, and then wait another five years, and we'll be able to even better analyze the trends and what factors -- competition, protection, etc. -- shape them.
So when looking for that last present to place under the Christmas tree, perhaps you ought to consider something with a Chinese label.
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