Branding in China: Where Buick and Clarins have messed up and KFC and Omega stand out

BusinessWeek’s 9/25/07 edition has an article by Shaun Rein, founder and managing director of the China Market Research Group, called “The Key to Successful Branding in China.” The article makes a set of important points about branding in the Chinese market:
  • If the Chinese are not brand-loyal, it is because they have many more choices than they did in the past. But perhaps more importantly, multinational companies have failed to target consumers effectively, leading to brand fickleness.
  • Brand-fickleness has nothing to do with culture. Chinese consumers have shown that they are faithful to brands “that suit their needs.”
  • Chinese consumers are loyal both to homegrown and international brands—like Yum Brands’ KFC and Omega, which “controls 70% of the luxury men’s watch market.”
  • Companies need to do more than “define their brand position” and “understand and relate to their consumer base.” They must also reach out to China’s younger generation, which has both money to spend and savvy about how to spend it.
  • In addition to targeting the younger generation, multinational companies should target Chinese baby boomers—meaning people from the generation born after 1978. This group grew up using a variety of brands and is now having children. They are “teaching their children what to buy.”
  • A case study of failing to keep a consistent brand position is Buick. GM reintroduced Buick to China a few years ago, positioning it as a brand for senior executives. Buicks shot up in popularity—selling more widely in China than in the U.S. Then, Buick tried to go “mass” and started selling lower-end models. At first, people snapped up the cars; then market share fell heavily. The reason is obvious: both business executives (who wanted exclusivity) and middle class drivers (who wanted higher than usual quality) were disappointed with a brand that promised to meet both of their needs but ended up meeting neither.
  • A case study of failing to understand and relate to the consumer base adequately is Clarins, which used models for their advertising that typical Chinese men could not relate to.

The Chinese are a sophisticated buying group and marketers would do well to heed the lessons of this article.