Chinese Brands Going Global
Off the top of your head, name 2 Chinese brands that are popular in the US. Not an easy thing to do right? Although we are used to seeing the “Made in China” on many products we buy here in the USA we have no idea where in China they are made or even what factory they came from.
For decades Chinese manufacturers have tried to fight the idea that Chinese manufacturers are only good at creating cheap products at massive quantities. In the past this reputation led Chinese manufacturers to forego brand recognition and focus on productivity in order to compete in the global market.
This idea of “Made in China” being synonym with low quality is of course laughable. Think about it for a second, your $1000 iPhone is assembled in China, sure the pieces are assembled all over the world but ultimately the phone is assembled in China. Last I checked $100 isn't "cheap", hell it's almost as much as my rent. There is a great Tim Cook quote I once read that makes this point very clear:
“There’s a confusion about China… the popular conception is that companies come to China because of low labor cost. I’m not sure what part of China they go to but the truth is, China stopped being the low labor cost country many years ago and that is not a reason to come to China from a supply point of view…the reason is because of the skill… and the quantity of skill in one location… and the type of skill it is. The products we do require really advanced tooling. And the precision that you have to have in tooling and working with the materials that we do are state-of-the-art. And the tooling skill is very deep here”.
Marc has in the past talk about Chinese brands that failed in the US, like Huawei, WeChat, and Ankerbox. Today I want to talk about a few brands that have managed to make their way into household names, try to figure out what they did differently, and see which of these strategies can be replicated in the future.
I’m going to be honest here, I had no idea that Lenovo is a Chinese brand. So how does a Chinese company founded by 10 engineers with only 200,000 Yuan become the number one PC selling company in the world? Well, with a lot of hard work, good deal making, and great branding.
Lenovo started as “New Technology Developer, Inc” which might be one the most uninspired names ever, it didn’t keep the name for long and changed to “Legend” just a few years later, again not very inspiring and bordering on the cliché. In 2003 Legend changed its name to “Lenovo”, “le” from legend and “novo” meaning new in Italian. The name basically means New Legend which I would usually find boring but I love good wordplay.
During their rebranding, Lenovo spent close to $3 million on billboards and ads during peak viewing TV times. Lenovo went all out on marketing is what I am trying to say.In 2005 Lenovo absorbed IBM’s PC division essentially making them the number 3 PC seller in the world. This was Lenovo’s greatest business decision, IBM had a strong western following having basically invented the personal computer, and Lenovo had a stronghold on the Chinese market, they now lead PC sales in the two biggest economies in the world. By expanding into the western markets Lenovo took on a challenge few Chinese companies usually take. This gamble of course was more than worth every penny of the $1.75 billion they spent acquiring IBM given that today Lenovo is the number 1 PC seller in the world. For an anecdotal example, I am currently sitting at a coffee house. There are 5 people sitting at the same table as me and 2 of them are using ThinkPads, Lenovo’s most successful portable computer.
DJI was founded by Frank Wang, a Hangzhou native in a small college dorm at HKUST. These days DJI operates out of Shenzhen and controls 70% of the drone consumer market. DJI’s success is due to the high-quality product they deliver, to say Wang is a perfectionist would not be accurate enough, this man works over 80 hours a week and has been known to not show product at trade shows if they are not as perfect as he wants them to be. In order to combat the idea that Chinese products are inferior, Wang decided to make DJI as close to perfect as possible.
Since DJI sold almost exclusively to professionals Wang feared losing the average consumer to a competitor. With this in mind, DJI introduced the Phantom series, the first-ever ready-to-fly out of the box drone. The Phantom took drones from a professional tool to an easily accessible item anyone with a smartphone could use; these days the Phantom series makes up a big portion of DJI’s sales.
By focusing on high quality manufacturing and marketing themselves as a seller for hobbyists and professionals DJI has shown that Chinese brands can be highly successful on the world stage.
A native of Shenzhen, Angel Chen grew up with a love for fashion and creativity. Talented as she was however, she was not fully convinced she should launch her own brand. It wasn't until a friend convinced her that it was a good time for Chinese designers to start their own businesses that she decided to go for it. Chen decided to manufacture all of her pieces in China due to the low production cost and highly skilled labor.
Her creative and innovative designs have made Chen very popular in the fashion world, so much so that in 2017 her designs were presented on the window of Urban Outfitter’s London flagship store, the first time a Chinese designer had been featured at Urban Outfitters. The brand however is not limited to China and the UK, Angel Chen is also sold in the US, Italy, Japan, and Hong Kong. Angel Chen has also been featured at the London, Milan, and Shanghai Fashion Week. Although Angel Chen is a relatively young brand it is clear that it is here to stay and continue making its mark in the fashion world and showing off China’s fashion power.
The era of “Made in China” being equalized to low quality manufacturing is certainly coming to an end and brands like Lenovo, DJI, and Angel Chen are leading the way. So, what do Chinese brands need to stand out in the global market? Well from what we have seen two big factors in these brands’ success were marketing and a focus on high quality manufacturing.
In order to shine in the global market, Chinese brands need to start building their brand stories and communities in the Western world. American and Western consumers are hungry for international brands, and now is the time to capitalize.