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Multinationals Face Tough Competition From Local Brands in China
As leaders of the world's large firms gathered in Hong Kong at the Fortune Global Forum, business people here warned Wednesday that their international brands face increasingly tough competition from local brands in China.
Chairman of Ogilvy & Mather Asia Pacific Miles Young said, " Over the last two years, Chinese brands have been getting their act together with dramatic results." They have put money into image building in advance of China's admission into the WTO, he added.
Manufacturers and providers of branded goods and services, from banking to insurance to autos to pharmaceuticals, will face more and more competition from their big-spending local rivals, they believed.
A recent study by Ogilvy & Mather Asia Pacific showed that the new generation of the Chinese brands have very strong emotional pulling power on consumers, which owes much to their image as Chinese brands made by Chinese people for Chinese people.
According to BrandZ data, a Hong Kong-based proprietary brand database which measures consumer brand loyalty, seven of the top 10 brands are local, including China Telecom, Mudan Credit Cards, Industrial and Commercial Bank of China, Sofu.com and Legend Computers, which rank well above McDonald's and Coca-Cola.
Young cautioned that it is simply not enough for foreign-owned and foreign-managed brands to "think global, act local". Instead, they must be seen to be local by locals, he said.
As this data shows, they believed that China will create strong domestic brands in finance, banking, telecom and technology sectors, which is expected to be opened up to foreign competition after China's entry into the WTO.
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