How to Beat 'Made-in-China' Fear

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"We will see one or two Chinese brands among the top 10 world brands within five to 10 years," predicts Christophe Bezu, senior vice-president and head of the Asia/Pacific region for Adidas (ADSG.DE).

Competition from Vietnam and India

Of course, companies will have to overcome China's image problems. More than 40% of product recalls in the U.S. this year have involved Chinese-made products, Interbrand says, dealing a "serious setback" to the "Made in China" brand. Although respondents in Interbrand's survey said Chinese brands are "a good value," few labeled them "safe," "high quality," "prestigious," or "luxurious."

But it's not only the image of poor quality that is holding back Chinese brands. Many companies still operate as original equipment manufacturers (OEMs) rather than selling under their own names. And while Chinese companies compete on price, thanks to their low manufacturing costs, they increasingly face rivals at the low end from countries such as India and Vietnam.

That trend, plus the desire to create a more innovative, higher value-added economy, explains why Beijing is pushing companies to begin manufacturing and selling more technologically advanced products and services under their own names. "Brand was not something that Chinese businesses have been accustomed to [thinking about] in the past," says , chief financial officer of Chinese search engine company Baidu.com (BIDU). "How to build a brand is a struggle that many Chinese brands must now face."

Lenovo Goes for the Gold

Chinese companies are taking different strategies as they try to build global brands. Lenovo and other companies plan to trumpet their products by investing heavily to sponsor next year's summer Olympics. Thanks to its purchase of IBM's (IBM) PC business in 2005, Lenovo is recognized by more international marketing experts than any other Chinese brand. Fully 53% of the respondents in the BusinessWeek/Interbrand survey named Lenovo as a top emerging global player. And when the marketing professionals were asked which brand best serves as an "ambassador" for China, Lenovo came in second place behind Tsingtao Brewery.

Now the Beijing computer maker is using its status as a top sponsor of the Beijing Olympic Games to further boost its exposure. "The Olympics are a golden opportunity for us," says Alice Li, vice-president for Olympics marketing at Lenovo. "Within China we already have high brand awareness. But outside China we still need to build our brand."

To do that, Lenovo hustled to win the right to design the Olympic torch (BusinessWeek.com, 8/3/07), a first for a company. The Beijing Olympic Committee in April selected Lenovo's submission out of a field of more than 300 entries. The Lenovo Olympic torch, made of a lightweight aluminum magnesium alloy, is shaped to resemble a Chinese scroll. The torch will be carried to 20 countries before arriving in Beijing next year. To increase the marketing payoff, the company is organizing an online contest with Google's (GOOG) YouTube to choose three international torchbearers for the China portion of the Torch Relay. Lenovo is also selling a limited-edition notebook PC with design elements of the Olympic torch.

Midea Backs Swimming

While Lenovo is the only Chinese "global sponsor" of the Olympics—a privilege that Chinese media reports estimate may have cost up to $65 million—other brands are sponsoring Olympic teams.