Technology key to unlocking local brand potential

By Liu Tian Source:Global Times Published: 2014-11-18 17:33:01

Rise of Internet-based companies underscores importance of innovation


Illustration: Lu Ting/GT

Brand consultancy Interbrand unveiled its 2014 Best China Brands list Thursday. On the whole, this latest ranking features several significant differences from the consultancy's 2013 list. Specifically, Tencent surpassed long-reining champion China Mobile to take the top slot as China's top brand. Elsewhere on the list, an ascendant pack of Internet brands - which includes names like Alibaba Group, Baidu Inc and jd.com - undermined the long-standing domination of the banking and telecoms giants which have traditionally ranked as the country's most valuable and recognizable brands.

Brands are invaluable intangible assets when it comes to attracting customers and generating profit. A brand's strength can also greatly influence its ability to compete and secure long-term financial success. Put into context, the total value of China's top 50 brands rose 22 percent year-on-year, according to Interbrand calculations based on 10 indices, such as financial data.

As the potential benefits of brand building become more obvious, Interbrand's latest rundown reflects the new ways in which emerging brands are using technology to gain traction in China's consumer market. In comparison, many of the traditional enterprises which have traditionally ranked as China's most valuable brands look to be loosing ground due to lacking of policies aimed at ramping up market competition and Internet-based innovations. The new challenges facing banks and telecoms companies from - among other things - new online financing platforms and over-the-top applications should force these businesses to embrace new technologies and develop new services that meet unsatisfied market needs.

Recent years have seen Chinese enterprises devote more resources toward brand building. Still, while certain local brands may be more visible now than in years past, few have managed to strike a deep chord with consumers - particularly consumers outside of China. Local brands still greatly lag their global peers when it comes to promotion, business operations and customer services.

Statistics show that 69 percent of Western consumers have a negative impression of the phrase "Made in China", compared with 30 percent who hold neutral opinions and only 1 percent who hold positive opinions, according to Interbrand's latest brand report. Perceptions of poor product quality were identified as a key factor behind the negative views.

Chinese brands face an uphill battle when it comes to countering such beliefs and cultivating strong, compelling brand images. Given the recent rise seen among tech industry brands, more businesses should develop comprehensive digital strategies. While many Chinese businesses can talk about the need to digitize and penetrate the mobile Internet, it seems that few understand how to leverage the benefits of big data, cloud computing and engagement through social media.

Another common shortcoming of Chinese brands is that few have managed to decisively differentiate themselves from their peers. Brand distinction and uniqueness deserve to be seen as core competitive strengths. Many Chinese businesses, it seems, would disagree. To separate themselves from their rivals, most rely on race-to-the-bottom tactics designed to put pressure on their competitors' (and their own) bottom lines.

The time has come for Chinese brands to realize the full potential of the new technologies which are open to them. Firstly, this will mean capitalizing on the mobile Internet, which many have already identified as a key development area. China's mobile Internet market was worth 44.49 billion yuan ($7.26 billion) in the second quarter this year, up 104.1 percent from the same period last year, according to iResearch. Looking further ahead, brand differentiation within China's crowded consumer market will be vital to long-term development.

The current generation of top Chinese brands is developing in an age marked by rapid change and unceasing progress. The low-cost tactics which gave them a leg up in their infancy may no longer be effective today - or, more importantly, tomorrow. Fortunately, the options open for them to develop in new directions have never been more numerous.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn





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