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Selecting Brand Names That Shanghai Esteems
By Alcinda Hatfield
China may be famous for its teas, ceramics and ancient medicines, but not for its brands. Until recently, producers invested little effort to develop a name or product image.
A brand creates a differentiated image that surrounds a company and its products. This image affects the way customers feel about a product, the "brand personality" they prefer and how they experience a product. The best brand images totally engage the consumer and prompt an automatic purchase response.
Today, Chinese manufacturers and retailers sell branded products as if they were bulk items, assuming that products will sell themselves based on their merit and consumer need. But as competition and disposable income increase, effective branding will be the difference between success and failure in China.
East Meets West
Potential exporters must understand cultural characteristics when considering brand management in the Chinese market. Because the Chinese continue to favor names that convey goodness, luck, happiness, long life, prosperity or historical significance, it is sometimes difficult to translate a Western brand name into Chinese.
The Coca-Cola Company took 11 years to make a profit, in part due to an ill-advised brand name, after it came back to China in 1979. Today, Coke dominates the vast soft drink market across the Chinese continent, after creating an improved name meaning "delicious, enjoyable and makes you happy."
PepsiCo, Inc., came up with "everything makes you happy" to capture market share for Pepsi.
The Keebler Company found a phonetically similar name meaning magic treasure. Chinese consumers associate the Keebler elf with the brand name as do others around the globe.
The Hershey Foods Corp. found that "good times" was better received than "good thoughts." Again, the success of these brand names indicates that the underlying meaning of a product name is important to local consumers.
A Taiwan noodle manufacturer capitalized on its "master chef" name, while countless companies use "dragon" in their brands as this connotes prosperity and a sense of imperialism to the Chinese consumer.
In the world's expanding urban marketplace, businesses must effectively design brand names that convey appealing images to which consumers can relate. Because China remains an enigma to many Westerners, identifying such images and then successfully marrying them to a particular product brand is far from easy.
For some Western food products, only a phonetically similar Chinese name, often with no meaning, identifies the product for the consumer. But that is better than nothing. Before the new Chinese labeling standard went into effect in September 1996, many imported food products were labeled exclusively in the country of origin's language. At least now more labels are in Chinese, but this is only a first step.
Effective branding means more than Chinese character labeling. A brand image manifests itself in many ways: a memorable brand name and logo, attention-getting packaging, attractive advertising, brand communications and a well-designed, contemporary retail environment.
Market Trend: From Bulk to High Value
Positioning and marketing are relatively new concepts in China. Ten years ago, the typical Chinese diet consisted of rice, vegetables and pork. As a result, most of China's agricultural imports were bulk commodities. But with the rise in value-added imports, brand names and marketing should not be overlooked.
Modern brands require integrated branding programs in which advertising, sponsorships, retail spaces, promotions, consumer education and other marketing tools are combined. Consumers may try a product once out of curiosity, but successful marketing ensures repeat purchases as competition grows.
Exporters should never assume that local traders have a marketing plan for introducing new products. Chinese brands rarely use an integrated, holistic communications approach. Local retailers may not even be sure what a product is or to whom it should be targeted.
One supermarket, unfamiliar with the product, put a German children's cereal brand in the pet foods section because it had cartoons of animals on the box.
Almond sales illustrate another example of the need for better branding. The retail market has over 80 different brands of almonds. None has more than 5 percent of the market. After consumer focus group sessions in China, the Almond Board of California learned that some local consumers had no concept of California almonds. They associated all almonds with the smaller Chinese bitter almond used for medicinal purposes.
While the attributes of California almonds are well known by the trade, the average Chinese consumer has yet to recognize their value and uses.
Brand Recognition on the Rise
Though possibly unaware of a particular product or brand, the Chinese shopper quickly discerns value and quality in products. Thanks to increasing Westernization, higher education and greater incomes, brand recognition is on the rise. In supermarkets, consumers read product contents and compare quality and prices.
A recent 31-city survey indicated that 70 percent of the top performing foods in China were local brands. However, this figure underestimates the tremendous influx and popularity of Taiwan-packaged food and, to a lesser extent, Western imports.
Because many Western imports and Taiwan brands have only regional distribution, they cannot compete in a nationwide survey. Additionally, Western imports face higher tariffs and transport charges, thus restricting their appeal to the wealthier coastal cities and Beijing.
China's lack of infrastructure and countrywide distribution channels hampers national campaigns for many imported brands. Also, cultural preferences, eating habits and language can be substantially different from region to region within China, thereby inhibiting national promotion efforts.
"Little Emperors" Wield Economic Clout
Sustained economic growth means today's children will become a lot wealthier than previous generations. As the first generation in China brought up in a consumer society, these children are far more receptive to advertising and brand image than their parents.
China's one-child policy means children exert a strong influence over household purchasing decisions. This "Little Emperor" phenomenon, in which one child receives the undivided attention of two working parents along with two sets of grandparents and possibly several aunts and uncles, is a driving factor in the growth of new industries in China.
Over 350 million children hold a large stake in the consumer market. Toys, clothing, food and drink are obvious growing sectors. Many multinational companies now target their marketing campaigns to children. Besides advertising, sports sponsorships and youth-oriented promotions are potent ways to foster brand loyalty within this receptive audience.
Copycats Threaten Quality Image
Brand name imitations proliferate throughout China. High-value food products are not as prone to copycats as other products, but locally grown fruits in wet markets are sometimes labeled as name brands or imported goods from Japan, the United States, the Philippines and Thailand. This can be extremely damaging for imported products since consumers often don=t know the difference between the genuine article and fakes. Bad first impressions are not easily forgotten.
Chinese handlers or importers have mixed high-quality California almonds with lower quality almonds to keep prices competitive in the market. Other wholesalers have re-packed Australian almonds in California cartons. Such practices taint the quality image of a branded product.
Future Trends and Globalization
Today, the Chinese government actively promotes local brands by endorsing articles and reviews in newspapers and by organizing surveys to gauge consumer behavior. In addition, more young managers are emulating the management techniques that have made foreign brands famous in China. But time will tell of the success of such developments as domestic companies face greater competition from improved distribution systems and sophisticated marketing practices of rising joint-venture and multi-national food product companies.
While regional and cultural preferences for foods, fashion and entertainment are still very important in China, lifestyles and trends are beginning to mirror global trends. As a result, U.S. food exporters must remain flexible, adapt to the Chinese way of doing business and establish a strong brand image that transcends current market obstacles and ensures future success.
Alcinda Hatfield is a marketing specialist with the Foreign Agricultural Service's Agricultural Trade Office in Shanghai, China. Tel. (011-86-21) 6279-8622; Fax (011-86-21) 6279-8336. Homepage: http://www.atoshanghai.org/ Email: atos@public.sta.net.cn
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