Posted by: Bruce Einhorn on October 4, 2006
The Japanese did it. The Koreans did it. Even the Indians are managing to do it now. So why can’t companies from Greater China have more success building global brands? For years now, companies from China and Taiwan have been trying to develop global brand names – and do it fast. Rather than slowly, slowly, slowly building their brands overseas, the way that the likes of Sony and Samsung did, many have tried to go global overnight by buying famous but troubled brands in the West and trying to lower costs by shifting production to China. One of the first to try was TCL, China’s top TV maker, which took over the RCA brand from France’s Thomson in 2004. TCL Multimedia, the TV division of TCL, has been sliding ever since. Lenovo, China’s top PC maker, last year acquired the struggling PC business of IBM. The verdict isn’t in yet on the Lenovo experiment, but the company has struggled beyond its Chinese home and has brought in a bunch of new executives from Dell. Investors in Hong Kong-listed Lenovo are underwhelmed. A few months ago Lenovo got booted off of the Hang Seng Index, Hong Kong’s equivalent to the Dow.
The latest flop is BenQ, the Taiwanese company that in 2005 bought the mobile handset business of Siemens. Executives spoke boldly about using the acquisition of the money-losing operation as a way to take the BenQ brand global. Last fall the company even became the sponsor for Real Madrid, the star-studded Spanish football team featuring, among many others, English idol David Beckham and French headbutt-er Zinedine Zidane The upbeat feeling didn’t last long. Last week, less than a year after the deal, BenQ announced that it was cutting off the German business. While the news is infuriating people in Germany, where 3,000 workers stand to lose their jobs, investors initially cheered the idea of BenQ finally cutting its losses from a money pit that has cost the company over a billion dollars in losses. After the fiasco in Germany, maybe more executives from Taiwan and China in search of brand-name glory will be more wary about taking on money-losing Western names.