In October, Shelly Lazarus, chairman and CEO of Ogilvy & Mather, gathered together more than a dozen Chinese companies at the former estate of David Ogilvy in France to discuss branding (see BW, 11/08/04, China's Power Brands). What did they learn? Beijing Bureau Chief Dexter Roberts and Asia Correspondent Frederik Balfour caught up with her at the annual BusinessWeek CEO Forum in Beijing to discuss the lessons that came out of the meeting. Here are excerpts of their talk:
Q: Do Chinese companies really understand what branding is?
A: You start with the desire -- they think branding is important, and they want to understand what a brand is. But they don't have any experience. If you haven't grown up with brands it's hard to understand them. There's a lack of experience in what a brand is what it takes to build a brand.
Q: Do you think there are real Chinese brands?
A: Is Lenovo is brand? No. Is Haier a brand? No. They are brand names and aspire to be brands. But they have to understand that branding is about the relationship with people -- both intellectually and emotionally. They have to have a consistent proposition they put in front of people. Yes, there are brands in China. But overseas, Chinese brands are just beginning in areas like consumer electronics.
Q: What is the biggest challenge facing Chinese brands?
A: The organizational challenge [is] putting marketing at the heart of the company. If you don't have the skills of marketing, the only way you can differentiate is on price....The CEOs have very clear ideas what their brands are. The Haier CEO knows what his brand is and can express it...but it's difficult to take the CEO vision and drive it down the ranks.
Q: Does counterfeiting threaten the development of brands in China?
A: I think it's a serious problem. Every time the consumer experiences your brand, you are vulnerable. Brands are quality guarantees, and when they don't live up to expectations, that's a serious problem.
Q: Ultimately, do you think Chinese companies will develop their brands faster than Japanese and Koreans companies did?
A: I think they're going to do it faster. They understand what they're trying to do. They're committed to brand-building. And they're smarter and more pragmatic when it comes to brand-building. Indian consumers already have a preference for Chinese brands over Korean brands.
Q: Do you think Chinese brands should aim for developing markets like India first or push into developed markets like the U.S.?
A: There are many options in between. I don't think it's all or nothing. But they have to develop a view on how the brand fits into a person's life -- to develop a product that appeals to the head and the heart and present that product in a consistent way to the consumer.
Q: A lot of Chinese bosses don't believe in consumer research. Is that an obstacle to their brand-building goals?
A: It's crazy to spend any money until they figure out what lies in the heads and hearts of consumers.