China cannot afford to have no world-class brands

akane

From the viewpoint of national department when the per capita GDP of a country reaches a certain level it cannot sustain its development without owning some world-class brands matching that level.

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The reason is that brands represent a kind of resource. An enterprise may need three kinds of resources, namely, the R&D resources, the manufacturing resources and logistic resources. The R&D resources are like the human brain, manufacturing resources the trunk and logistic resources the limbs. It is hard to imagine how an enterprise that concentrates only on low-cost processing and manufacture without establishing brands sustains its development, it is like a human being who has only the trunk with no brain and limbs

akane

There have been heated debates in the public opinion over whether China needs its own brands. My personal opinion is that China cannot afford to have no world-class brands. It is not a question for debates, it is a must! However, not all Chinese enterprises can be world-class brands, considering most of them still rely on capitalizing on low-cost labor. Still, there is one thing for certain for all kinds of enterprises, that is, Chinese enterprises must have the entrepreneurial spirit to establish world-class brands. For example, the electric machinery sold to us by the world No.1 producer Emerson from American cannot be cheap. Then why don’t we use the cheaper products made by domestic producers? The reason is simple: because Emerson has the innovative capability and can design and make the best electric machinery according to the specifications, raising the competitiveness of the products.

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I was for an opinion that “there are no brands within the country”, which gave rise to much questioning.

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This opinion has now been proved true from a global point of view. For example, an important prerequisite for us to secure a name brand in China is a huge market created by the external environment of reform and opening up to the outside world.

akane

Moreover, a magic formula for establishing domestic brands is quality and service.

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Since other enterprises cannot do better than us in the above two aspects, we succeeded and has been able to continue the success, taking up an irreplaceable place in people’s heart. This is a brand. This advantage, when taken to the international market, however, becomes a necessary condition rather than a sufficient condition. It is like taking part in a competition in the Olympics. Quality and service, as the qualifying test, don’t guarantee a place among the first. What is taking up my mind is that Haier is facing a very real “pass”— how to transform domestic brands into international ones? It is an arduous task that involves transformation from quantitative changes into qualitative changes!

akane

Haier Group is the first home appliance enterprise to go and establish brands overseas. It has strived for 15 years in the overseas market and we summarize the journey of creating world-class brands as: going global, going into and going up.

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“Going global” means entering the mainstream market. Different from the practice of ordinary enterprises which select developing countries Haier decided to “tackle the hardest first” by first breaking through the mainstream developed country markets. Our strategy is to raise corporate competitiveness through “competing with the masters”. Europe, the US and Japan have been become the “main battlefields” for Haier to establish world-class brands.

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akane

“Going into” refers to marketing mainstream products by entering the mainstream channels of the mainstream market. Haier has entered the mainstream channels of the European, American and Japanese markets in an all-round way. However, not all of its marked products are mainstream products.

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“Going up” means establishing localized brands and we still have a lot to do in this regard. In a figure of speech we have “finished one and half of the three steps”.

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So, how should the next one and half steps of Haier internationalization is finished?

We are extending our Haier’s internally verified SBU management to our overseas managers. Haier has hired a great many of local managers worldwide. They have very high individual qualifications. Nevertheless, how to integrate the different cultures they bring in constitutes the greatest challenges. We believe the core idea of the SBU management is to make each individual responsible to the market and become the principal body of business operation. The objective of the culture integration of overseas managers is to let each individual create valuable order forms for the enterprise. Only by creating a mechanism that can mobilize the initiative of overseas managers can localized brands be established.

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This article is written by Haier CEO Zhang Ruimin