Parsing through Kinaxis Manufacturing Central this morning, I came across a Wall Street Journal article, Chinese Firm Meets Global Branding. This article outlines the market strategies of Chinese firm Changzhou Asian Endergonic Electronic Technology Co., or its English brand, Züuma (pronounced zoo-ma), a name created by its U.S. partners. This firm manufactures the portable dashboard mounts that house many of our portable GPS units, and the article hit home with me since I actually purchased one of these mounts about a year ago, but it carried a private brand label from a GPS manufacturer. By the way, the mount is very stable and works well on my car dashboard. By creation of the Zuuma brand, the company will offer a higher featured mount for the U.S. market. If successful, more product margin will be able to be garnered.
The article further notes through an interview with the CEO that Chinese companies have difficulties understanding the implications of fostering global brands. We should add that understanding global market needs also connotes having agility and flexibility in one’s supply chain planning and fulfillment capabilities. Zuuma, however, wisely engaged the assistance of two U.S. partners who provide branding and distribution services.
I recall surveys conducted of Chinese firms as much as five years ago that also pointed to the fact that in order for China to succeed in the global marketplace, management skills in global product marketing would be a necessity, and were in very short supply. The Journal article notes that the Chinese government has loosened rules for foreign investment and now offers education to encourage Chinese companies to develop their own brands and move up the value chain, just as Japanese and South Korean companies had. Make no mistake, Chinese government officials understand the tenets of moving up the supply chain.
The Journal accurately notes that few Chinese companies have truly developed a full global brand presence, and cites Lenovo Group Ltd. in computing, Haier Group in appliances, Sany Group in construction equipment, and Mindray Medical International Ltd in medical devices as on the threshold. Lenovo itself gained its global marketing guidance from its previous owner, IBM, who spun off its Chinese manufacturing partner, and today the Lenovo brand has become much more recognized by consumers.
My sense is that Chinese companies mastering global branding is much closer than one thinks, and will be achieved via acquisition of certain global brands. Readers may want to refresh their memories regarding the announcement of Volvo being acquired by Geeley Holding Group, and Geeley’s management announcements that brand management will remain in Sweden. Little-known heavy machinery maker Sichuan Tengzhong Heavy Industrial Machinery tried to buy GM's Hummer group, but that attempt failed.
There will no doubt be other announcements in the coming months. Think of contract manufacturer Foxconn’s tremendous production and supply chain capabilities being married to a noted brand.
If your professional skills lie in global product marketing and/or global supply chain fulfillment, you might want to consider a mastery of Chinese corporate culture. Your skills are going to be in great demand.