Even in regions where China invests generously, things have not changed dramatically. Positive sentiment remains stable in most of Latin and Central America, and has dropped slightly across Africa. China fares much worse in Western nations. Over the same period, favourable perceptions dropped from 42 to 37 per cent in the United States and from 39 to 32 per cent in Western Europe. Only Australia has stable impressions of China: 52 per cent held a favourable view in both 2007 and 2016.
But a new ingredient has recently emerged in China’s quest for soft power — Chinese brands and their global influence. A recent study identified 30 Chinese brands that are ‘going global’ (meaning they derive a significant portion of their revenue and positive sentiment from overseas), including businesses in ‘traditional’ industries such as Lenovo and Huawei as well as newer internet and digital businesses like Alibaba and Elex.
What all these businesses have in common is a global growth strategy built around growing brand awareness and equity rather than one fuelled by acquisitions. Take Huawei: today, 8 out of 10 people around the world know the name, and the company is ranked third overall in global smart phone sales behind Samsung and Apple. Lionel Messi, one of the world’s best footballers, is their spokesperson, and they have previously partnered with major Hollywood celebrities. While perceptions of government alliances dog Huawei’s ability to crack the US market, in many European markets they have an impressive 20 per cent share. This all happened in the last six to seven years — Huawei began selling Huawei-branded smart phones in the early 2010s.
Similarly, Elex, a developer of online and mobile games founded in 2008, reaches over 50 million users in 40 countries. Similar to other internet companies emerging from China, Elex leapfrogs the China market entirely, going straight to overseas markets and accelerating its ability to learn consumer preferences without worrying about ‘how things are done back home’.
This is all quite unprecedented. In the early 2000s, Shelly Lazarus, CEO of the global advertising firm Ogilvy & Mather, commented that ‘China has no brands in any real sense’. Though her comments caused controversy at the time, few could convincingly argue with Lazarus. Even 10 years ago, when Hu Jintao made his announcement, to speak of successfully global Chinese brands, one was limited to a few cases.
Despite this, critics note that while they might be commercially successful, they are still not ‘brands’ in the sense of articulating their values and reason to exist to the world’s consumers. In other words, their soft power is quite weak. This criticism misses two points.
First, building a brand takes time and money. While brands such as Huawei and Elex may not yet have the soft power of Apple or Google, they do have a solid foundation of what marketers call ‘brand positioning’ from which they can grow. For instance, in some European markets consumers look to Chinese companies for disruptive innovation.
Second, critics would do well to consider the risks associated with the alternative business model common amongst global Chinese businesses, which is diversification and acquisition. Anbang Insurance, Fosun International, Dalian Wanda and Rossoneri Sports Investment Management Changxing are but some of the companies to have engaged in highly publicised acquisitions in recent years. This has led to undue CCP scrutiny — the high-profile deal makers in all of these companies have been detained and investigated in the last few years by a special government unit of the Chinese Communist Party looking at economic crimes.
Chinese brands ‘going global’ are certainly no immediate solution to China’s soft power gap. China will need to unleash its cultural and political potential if it wants to attain anywhere near the level of soft power the United States has. But if the development trajectory of Chinese brands continues to be fortuitous, there is no reason not to expect Huawei or Alibaba to be part of a future brand of Chinese soft power.
Sacha Cody is Global Account Director at Kantar, a global research and consulting firm.
Thanks for an informative analysis about a topic on which I am admittedly not well informed. Eg, I had not even heard of Huawei when considering the purchase of a cell phone a couple of years ago.
My wife purchased a laptop Lenovo around 2010 because it provided Japanese language related services for a more reasonable price than an iPad could. It proved to be rather mediocre in terms of reliability, however. She ended up buying an iPad when our IT advisor informed us that Lenovo was not keeping up with current safeguards against viruses, etc.
Thanks to this article I will keep Chinese products in mind when it comes to future purchases. It will be interesting to see how their quality changes/improves.
Hi Richard, thank you your time reading my post and for your comment.
There are definitely competing views on the quality of Chinese goods. Some China watchers claim it is the “End of Copy Cat China” (e.g Shaun Rein) while others show how imitation is central to Chinese business practices (e.g. Jessica Lin, Fan Yang).
Some claim quality is much better (too many to name, it’s a hot topic and there is certainly an up trend) while others point out the opposite (e.g. Jeremy Haft).
The interesting thing about Chinese businesses going global is the sheer ambition. The Deng dictum of “keep your head low and bide your time” is over (think the Belt & Road Initiative); being #1 is now very important. Going global is also necessary – domestic markets are saturated and there is a nice geopolitical ring to it.
It will be interesting to observe exactly how businesses work towards these goals. Consumer facing businesses – like Huawei and Lenovo – will need to ‘act’ like leading brands because consumers harbour certain expectations on how the big players behave.
As you point out from your own experiences, there is a lot of work to do still.
Cheers – Sacha.
An interesting and informative report. But to suggest China’s “soft power” is failing misses the remarkable success China has had with “soft power” in SE Asia where it has virtually defeated the US (and Australian) containment efforts in the South China Sea without a shot being fired! China has always had a potentially solid base in SE Asia from which to roll out its soft power strategy as it now has. Soft power is more about influence than whether a country is liked or not. The US often makes this mistake. When push comes to shove in SE Asia this is what counts in the South China Sea – as the debate in the recent ASEAN Foreign Ministers meeting in Manila proved yet again. Other areas of the world may not provide the same base for Chinese soft power and so it will be important to see how successful China will be there – eg. Central Asia and not to mention the Korean peninsular.
Hi Mack, thank you for reading my article and sharing your insightful comments.
Your insights are valid and I agree. I think it is about how we define ‘soft power’, a definition which has been removed in the editing process of this short piece!
For me, I think of soft power as the influence a country’s culture, political values and foreign policies have with ordinary people (a definition I take from Joseph Nye and his book on the topic).
And so I am particularly interested in how Chinese brands overseas – as a cultural force – contribute to China’s soft power; can they be a force for good in influencing sentiment toward China? I think of the US and Apple or Mexico and Corona as the kinds of examples where business influences culture influences country sentiment.
With all the media attention some global Chinese businesses are getting through their relentless acquisitions (and what this reveals their ambitions) I find it refreshing that others approach global growth less through acquisition and more though winning share and making their brand attractive to the average consumer. I am curious if this pays off with regard to attitudes toward China itself.
Cheers – Sacha.