First Outsourcing To China…Now China’s Buying Us!

Chinese branding is like the young buck of multinational companies. It’s got its legs up kicking, but it’s not quite ready to go out on its own and fare in the wild. We all know about the struggles of Chinese domestic brands abroad. It’s been covered again and again and again as of late. To many it may seem like an easy problem to fix by putting any sort of effort at all into the branding and marketing process. What a lot of people don’t understand is that “culturally” (in an economic sense), Chinese companies don’t really see the point in branding. So, first outsourcing To China, now China’s buying us.

The Chinese economy has a funky structure. You have these giant State-Owned Enterprises (SOEs) getting favorable bank loans and raking in a purported 43 percent of Chinese economy profits (according to official figures for 2011). This brings to rise a common saying among China watchers: “for most SOEs, ‘branding’ means getting a new logo, ‘marketing’ means buying ads on China Central Television, and ‘P.R.’ stands for ‘pay the reporter’.” There’s just no incentive to do much more than that if you’re one of the big SOE conglomerates.

Notions of branding are a little different in China. Along with inexperience with the Western form of branding, a lot of Chinese companies feel that when it comes to their company name more is better. Just take the translation of one of China’s biggest mobile, phone and internet providers: “China Mobile Communications Group Corporation”. It’s a tad more of a mouthful than AT&T, don’t you think? For Chinese people, a company name like that sounds more official and respected. In a Western branding and marketing sense, it is way too long and runs the risk of being easily forgettable.

So what’s hot for Chinese investors? Buying American brands. The Boston Globe has aptly laid-out some numbers for just how much Chinese investment in American companies has increased since the dawn of the 00s:

Big-name brands like Volvo, ThinkPad, AMC Theaters and A123 (battery company) have been sold to Chinese owners. Now, the largest pork producer in the world, Smithfield Foods, is “at risk” of being acquired by a Chinese company. In light of this we can identify two major shifts in Chinese foreign investment trends. Not only are Chinese investors 1) focusing more on the American marketplace, they are also 2) targeting more “brand-dependent” companies than ever before. With reference to the second trend, Chinese foreign investment has been heavily resource based in the past, e.g., investing in oil in Africa. This kind of investment does work by itself and holds no major concern about imaging and marketing. However, in investing in American companies, there are major concerns over image. Smithfield is a perfect example of how a potential Chinese owner could ruin the image and brand of a company.

It’s clear that Chinese companies tend to follow as opposed to lead. Rich Chinese investors have a lot of money and are finding their home country void of any worthy and lucrative investments. In comes the U.S. At this point it’s hard to gauge exactly how Chinese owners fare at the helm of American brands, because there’s just not enough history there. One thing that’s for sure is that investment will continue, not just in companies but in real estate as well. China and the U.S. also seem to be edging more and more towards more favorable investment policies for both sides. Should we be worried? Maybe. But keep in mind that a very similar trend arose with another certain Asian superpower with a booming economy not too long ago…


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