How to Beat 'Made-in-China' Fear

China's companies have been hurt by product recalls, but Lenovo and Tsingtao lead a list of brands that can go global, says consultant Interbrand

by Dexter Roberts

Made. In. China. Those three words are shaping up to be a marketer's worst nightmare. After a year of massive toy recalls, tainted toothpaste scares, and poisonous pet food incidents, consumers around the globe are thinking twice—or more—before buying Chinese-made goods. Indeed, in an online survey of 569 international marketing and business professionals by brand consultant Interbrand, 69% of respondents said the slogan "Made in China" hurts mainland brands.

The word most frequently associated with Chinese brands? "Cheap." Says Jonathan Chajet, Asia-Pacific strategy director at Interbrand, which did the survey for BusinessWeek: "Conservatively, it will be five years before people will let go of their fear of 'Made in China.'"

Those widespread negative attitudes are a big setback for Chinese brands' global aspirations. The goal of both government officials in Beijing and China's top companies for the past few years has been to move toward higher-value production, with less emphasis on low cost. Part of the strategy, of course, involves boosting quality. But equally important, companies must build their brand's reputation and value. And as the survey shows, that will prove a real challenge for at least the next few years.

Assessing Awareness of Chinese Brands

Yet this is a good time to look at Chinese brands, precisely because of the challenges they face. In its survey, Interbrand asked marketing and business experts outside the mainland to assess their awareness of 28 product names. Interbrand also asked respondents whether the brands are "an ambassador for China," an indicator of quality. In addition, the consultancy analyzed available financial data from the companies as well as their marketing strategies to create a list of 12 brands that have a chance to make it on the global stage.

The five players that Interbrand considers "already serious and recognizable" are personal computer maker Lenovo, beermaker Tsingtao, appliance maker Haier, telecom giant Huawei, and automaker Chery. A second group of "contenders" poised for success over the next three to five years includes electronics manufacturer TCL, Huawei's telecom equipment rival ZTE, automakers Geely and Brilliance, and air conditioner manufacturers Midea and Gree.

China's most ambitious brands hope to follow the path originally trod by Japanese and Korean giants such as Sony (SNE) or Samsung: They aim to make the leap from low cost and low quality to become world brands of real repute. "In the past we created a brand that was well-known throughout China. But in recent years we have realized that our key goal must be to take our brand to the world," says Tomson Li, chairman and chief executive officer of TCL, which raked in 57% of its $6 billion in revenues from overseas last year.