The influence of culture on brand building in the Chinese market: A brief insight - Essay Example

The influence of culture on brand building in the Chinese market: A brief insight I. Introduction Recently a great deal of discussion has taken place regarding the best approach to build a successful brand in an increasingly globalized market. A globalized market is defined as including emerging markets, which are quite different from the markets found in the developed world. Prior to the influx of the globalized market place, corporations did not concern themselves with geographically distant marketplaces. (Ayala, 1996). In today’s market, a majority of the established brand names come from the Western world. (Chan, 1997). However, as these Western brands expand into the international market, and thus into new markets in developing nations, these companies have realized that foreign markets are often more attractive than their domestic counterparts. In 2004, for example, 40,000 new companies were started in China as the result of approximately $57 billion in foreign investment. (Dayle,2005,p.9). For this reason, Western brands have been moving towards creating a brand recognition similar to what they created in their Western origins. One of the most lucrative developing markets in today’s world in China. The three regions that have been identified as dominating the future global marketplace include the Pacific Rim with emphasis on China, North America and particularly Canada, and the European Union (EU). (Dayle,2005,p.9). Due to a combination of China’s reputation as a challenging country to break into, lengthy history and recent rapid movement of development attract foreign businesses to the nation. Commencing with Deng Xiaoping’s open-door reforms, China has moved into the spot of “world’s biggest market”. Part of this has to do with its population of 1.2 billion. Once the market doors opened, many international businesses moved in and established a market presence with the hope of earning a significant profit. Surprisingly, this was easier said than done. A vast majority of businesses failed due to a general lack of knowledge as to both the Chinese people and the Chinese way of doing business. (Ayala, 1996). Those who did succeed still initially eventually found themselves withdrawing from the market. In the big picture, very few foreign companies have succeeded in building brands in the Chinese market. Those who have succeeded did so by working to enhance the status of their brand by adopting culturally appropriate strategies and establishing economically sensitive business operations. (Muhlbacher, 1999). Thus, when it comes to establishing a successful brand in the Chinese marketplace, the question is “What can be learned from these past attempts?” First and foremost one has to consider the companies themselves and evaluate the mistakes they made. Second, the companies that were somewhat successful should be evaluated as compared to the first group, taking particular note as to the critical differences that have led to their success. When doing this, the differences can be summarized into two broad categories. First, many firms make the mistake in believing that the Chinese market is similar to the Western market they are use to operating in and therefore utilize the same branding strategies. (Hines, 2001). The second group is the companies that spend a majority of their time observing the market, trying to comprehend the method of Chinese business from the outside. Needless to say, both of these groups ultimately fail at doing successful business in the emerging Chinese market. In order to succeed, one needs to first understand the cultural issues and then reorganize so as to adapt to these issues. (Hines, 2001). II. Understanding Cultural Issues In order for a traditionally Western corporation to do successful business in the Chinese market, several issues need to first be clarified. First, one needs to understand the essential differences between the Western and Chinese markets. Second, one has to understand how to deal with these differences. (Hines, 2001). A. Collective Society One of the primary differences between Western and Chinese culture is the role that the individual plays in society. Whereas in the West, individualism is the dominate trait of the typical consumer, in China the consumer is much more a collective. (Hofstede, 1994). The Collectivist culture is characterized by a reverence for the common good as opposed to self interest, valuing of group and family identity more than individual achievement, and tends to respect vertical status hierarchies. (Dayle,2005,p.353). This significantly changes the way businesses should approach the consumer. Take for example the computer corporation, Dell. Dell has done a successful business in the West by branding itself as a customized computer provider aimed at meeting the needs of the individual consumer. However, this branding strategy has not been successful in China. In China, because of the collective mentality of society, the Chinese consumer prefers a standardized product as opposed to the customized product. (Apadu, 1991). This concept is evident in the globalization strategy of the Coca-Cola company as it approached worldwide distribution. The globalization program introduced by then CEO Roberto Goizueta, “think global, act global,” treated the whole world to a standardized set of everything the company had to offer to great initial success (Ghemawat 2004). Early globalization efforts initiated by companies such as Bozell in representing Heinz tomato ketchup saved money by utilizing assets such as the same television commercial for numerous markets, with only a simple change included in the final line or a straight translation from one language to another (Wheeler 2000) to decent effect. With such strategies, companies with strong brand identifications have been able to move into and even take over foreign markets all over the world, not just in China. Globalization does not eliminate differences in language and culture. One of the essential elements of expanding business across cultures is the introduction of a product or service that is easily identified with the brand while remaining consistent with local tastes and tolerances.(Dayle,2005,p.12). Communication and culture obviously influence each other as different cultures result in completely different communication styles. (Gudykunst and Stella, 1988). For example, a collectivistic society is typically preoccupied with high-context communication while an individualistic society is often characterized by low-context communication. (Gudykunst and Stella, 1991). China, as a whole, is a collectivist society and thus uses high-context communications. This means that the fashion in which they transmit information is dependent on whether it is “in the physical context or internalized in the person”. (Hall, 1976). In other words, Chinese typically communicate in an implicit way. As such, in Chinese society one will observe people placing the greatest emphasis on interpersonal relationship in which they communicate with in an “indirect, ambiguous and roundabout way”. (Gudykunst, 1991). In contrast, most Western nations are individual and thus use low-context communication to transmit information in a direct and straightforward way. (Gudykinst, 1991). To summarize, Chinese communication patterns emphasize the group, are indirect but expressive, are non-confrontational and are generally relationship orientated. Western societies, on the other hand, have communication that is explicit, with an emphasis on the individual, direct and to the point, confrontational and action or solution orientated. Clearly, these foundations of communication style affect each culture’s negotiation style. Clearly, collectivism continues to play an important role in Chinese society. For example, it is quite common for three or four generations of a family to share a house. (Usunier, 2000). Likewise, collectivism plays an important role in consumer patterns, especially as many companies are state-owned. In order to succeed in the Chinese marketplace, the Western corporation needs to adapt their marketing and branding strategies in order to meet this collective approach to consumerism. (Armstrong, 2002). B. Brand Perception Despite this state-controlled market, the average Chinese consumer is quite aware of the brands. In fact, long-established brands are considered more reliable than recent entrants into the market place. (Pan, 2002). Further, foreign brands carry a high regard by the Chinese consumer. Partly due to the low levels of technological development in the nation’s past, foreign brands carry a reputation of being better than the local brands. For this reason, foreign brands have a foundation of success and reputation from which to work from. More so, foreign brands are often regarded as being more fashionable and therefore have a higher demand. (Schmitt, 1994). One example can be found in the food products made by Proctor and Gamble. For this company, the entry of the Pringles potato chip brand into the global market was as easy as translating the packaging to a foreign language, but when the unique product became an instant success, meeting the demand became a liability. Rather than a market to rid themselves of surplus product, the company found it necessary to quickly obtain overseas manufacturing plants to keep up with the new demand (Smith 2001). However, it should be noted that this reputation is not as strong as it once was. As the Chinese marketplace has continued to develop, so has the reputation of its homemade products. Thus, today the Chinese consumer places more emphasis on the quality of the product than just the brand on the packaging. Likewise, the Chinese are careful shoppers, often sampling several alternatives of a product before making a decision as to which brand they will purchase. (Yan, 1994). One reason for this change towards local products is that, with the increase in technology, the average Chinese consumer feels that it is easier to get something serviced if it is a local brand. (Pan, 2002). William Mougayar urges companies to work in close connections with the governments and existing corporations in each country they enter for greater economic impact (2002). Upon entry into China, a vast majority of businesses working off of the Coca-Cola example failed due to a general lack of knowledge as to both the Chinese people and the Chinese way of doing business. (Ayala, 1996). In “Why global brands are not always cost-effective,” Lindsay Williams quotes Laurie Young, global head of marketing at PricewaterhouseCoopers as saying “Local culture is a powerful barrier to the success of a global brand. It really is time that we recognized the power of cultural differences and their effect on global enterprise” (Williams 2004). To help work around that barrier, US-based United Airlines opted to join Air China based in Beijing in the Star Alliance, a group of airlines reserving the ability to sell air passage tickets on each others’ planes (United 2003), thereby retaining their local brand draw while gaining a more globalized reach. To summarize this branding trend in China, it can be said that as consumption grows, so does the brand selectivity of the consumer and, thus, the competition between brands. (Pan, 2002). What the Western corporation needs to take from this information is that, in developing its branding strategy, the company should consider coordinating campaigns to extol several beneficial aspects of the product as opposed to merely just one specific aspect. (Terpstra, 2000). C. Language One of the most significant barriers to doing successful business in the Chinese market place is language. As all business transactions center around the ability of the parties to communicate, a fundamental understanding of the language is essential. Without language, a corporation cannot build a brand image or deliver marketing information to the consumer. (Melewar, 1999). Clearly, the Chinese language system is significantly different from that of Western cultures. Within this difference in language is the difference in the thinking process of the Chinese people. For example, each character in the Chinese language has its own specific meaning. This fact poses a challenge to the Western corporation who is trying to introduce their brand into the Chinese market because the foreign brand name itself does not mean anything to the Chinese consumer. Thus, the Chinese consumer will often view the brand symbol to the product itself, meaning that a company who uses a meaningful brand name will have that name associated with the product and thus is more likely to be remembered by the Chinese consumer. A key characteristic of successful companies in the Chinese market is their ability to understand the language and in finding a brand name that fits both the product and the meaning of the brand. (Fan, 2002). For example, the Coca-Cola company, whose Chinese translation, ke-kou-ke-le means “tasty and happy” serves the purpose of linking the brand name with the quality of the product and the result of using it. (Dong, 2001). The advertisements used in marketing such a brand helps the brand become a popular product on the marketplace. The issue of language also has a significant impact on the business end of branding, or in the negotiation part of gaining an entrance into the Chinese marketplace. The style of Chinese negotiating is very different from that traditional in most Western, and even Japanese, business settings. Although China’s extensive building and modernization process has altered its traditional negotiating system, it still remains uniquely Chinese. What is interesting is that instead of seeing China alter its negotiating style in order to compete in the global economy, which is currently Western dominated, the Western nations are altering their negotiating style in order to compete in the emerging Chinese marketplace. Instead of the typical Westernization of a new market economy, as occurred in Japan, in China there is a unique China-ization of the market place, which is changing how business is done on the global scale, and giving the Chinese the upper hand. Since China’s implementation of the open-door policy and its emergence into the global community, much work has been done on the uniquely Chinese negotiation style. However, as will be seen from this paper and the studies it presents, much of this information is based on stereotypes and traditions that are no longer dominate in Chinese culture. For example, most Western studies focus on the importance of relationships and trust in the Chinese negotiation process. However, although these were important components in traditional negotiation styles, they are no longer as central in the new, global China. For this reason, in order to truly understand the Chinese negotiation style and how it compares to those found in the Western world, one must get past the stereotypes and look towards modern China. D. Aesthetic Sense The Chinese people carry with them a strong aesthetic sense, based on their perceptions of nature. To the Chinese consumer, in general, images of the natural form are highly attractive. For example, mountains and animals are often used in association with brand names in order to create attractive brand imagery and visual displays. On the other hand, abstract symbols are not favored as they are inconsistent with the Chinese cultural preference for natural aesthetics. Further more, the marketer needs to understand that the Chinese people enjoy complicated forms and shapes and certain colors. For example, the color red is seen as being the most cheerful color and thus can be successfully used to attract people’s attention. Another example is the Chinese preference for peaceful imagery, largely a result of the influence of such religions as Confucianism, Buddhism and Taoism. (Kleppe, 2002). When a company is designing a strategy for marketing their brand in the Chinese marketplace, all of these aesthetic considerations must be made even if they hadn’t been a pressing concern in the home country. While a particular phrase may indicate a product is fun and safe to use in one area, it may translate to something completely different in another language. Images, colors and phrases must all be carefully considered before being applied to new markets, which presents a significant marketing barrier to large global brands that cannot just change their image depending upon the country they enter. It also remains true that there is no single image, language or cultural heritage that applies to all people, all countries and all age groups. Therefore, it is important to use specific colors and imagery in order to strengthen the brand’s market presence and thus increase overall company profits. (Yan, 1994). III. Conclusion If one thing is for certain, it is that the Chinese market is rapidly changing in light of the increasingly global market place. As a result, not only are foreign markets changing to adapt to the Chinese marketplace needs, the Chinese marketplace, and consumer, are likewise adapting and changing to meet the needs of the global market. For instance, the economic boom in China’s urban areas is creating a new consumer culture where the consumer has more disposable income to work with. This itself has effected consumer preferences and patterns within the Chinese marketplace. The general result is that a more sophisticated Chinese consumer is emerging and foreign companies need to market to their sophisticated needs while at the same time marketing to the general population’s needs. Therefore, the most effective way for a company to build a strong brand name in the rapidly emerging Chinese market is to adapt itself to the rapidly changing Chinese culture. 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