The Key to Successful Branding in China

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As one recent buyer of a low-end Buick said to my firm, the China Market Research Group (CMR), in an interview: "I bought Buick for the luxury associated with the brand as all these business leaders have chauffeured Buicks, but the quality is terrible. I am very disappointed."

Understand and Relate to Consumers

Buick's mistake was not clearly defining its brand for consumers. No one knows what the Buick brand stands for. Is it low end or high end? As a counterpoint to Buick, BMW sacrificed short-term sales by not going after the mass market, choosing instead to maintain its premium positioning for affluent consumers. BMW is now seeing booming sales, with growth of 50% in 2006. China is now the second-largest market for its high-end 7 Series and has some of the brand's most loyal consumers. Long term, BMW will continue to grow as Chinese get more and more affluent and aspire to the life associated with owning a BMW.

Clarins and L'Oréal are two hugely popular personal care brands around the world. However, their China stories are very different. L'Oréal and its associated brands are very successful, and they have developed brand loyalty with Chinese male and female consumers. One 43-year-old chief financial officer of an investment bank told us in an interview, "I only buy Lancôme as it makes me feel young and beautiful." On the other hand, Clarins has struggled when trying to target male consumers.

The mistake that Clarins has made is to use models for their advertising campaigns to whom the typical Chinese male cannot relate. Already nervous that caring about their appearance means that they are not manly, Chinese males have been put off by Clarins' advertising campaigns. To advertise male grooming products, Clarins chose ethnically diverse, metrosexual models that presented an image most Chinese men could not identifiy with. When viewing ads, potential buyers were confused as to why and how they would want to look like the models using Clarins products.

Little Brand Orientation From Parents

L'Oréal has been much more successful recently through its choice of Korean movie stars for its male cosmetic brand, Biotherm. These Korean stars exhibit a look, style, and personality that Chinese men aspire to and that Chinese women wish their boyfriends would exhibit.

Clarins is not alone in portraying its brand in an odd light to Chinese consumers. Too many brands launch advertising campaigns centered around preppie blond models lounging on sailboats. In a country where sailboats and the Hamptons are not in the popular imagination this advertising tack does not work.

Many of the brands Americans use are ones that people chose because their parents used them. Often young adults use Tylenol or Colgate because their parents introduced them to the brands when they were young. In China under Mao, there was little brand choice, so today's youth are trying brands without any teaching by their parents. But these Chinese youth are becoming very savvy as they determine what they like and what they do not.

Chinese Concerned About Safety Too

The key for multinationals in China is to develop a following among Chinese baby boomers. People from the generation born after 1978 are coming of age and having children of their own. They have grown up using different brands. While still susceptible to the machinations of Madison Avenue's reach in China, many have begun settling on what they like and are teaching their children what to buy.

For instance, Chinese consumers are every bit as concerned about safety as consumers in the U.S., and they are crying out for safe products that will not harm their health or that of their families. Brands like Midea, Haier, Pepsi (PEP), and Unilever (UN) have been successful in establishing themselves as providing the level of quality and trustworthiness that Chinese consumers demand. The companies' bottom lines tell the story of of their success.

To develop a brand successfully in China, it is not enough to take a short-term outlook and try to sell into every available market. This risks eroding long-term prospects. It is better to first define what your brand is supposed to embody and then work to support that image. Multinationals must understand that Chinese consumers in the first-tier cities of Shanghai, Beijing, and Guangzhou will soon be as brand savvy as any in New York, London, or Paris. And consumers in the second- and third-tier cities like Chengdu and Dalian will move with lightning speed to catch up with international trends.

Shaun Rein is the Founder and Managing Director of the China Market Research Group, a market intelligence firm that helps companies make smarter decisions in China. He can be reached at shaunrein@researchcmr.com. .