In May 2012, Asia-Pacific branch of the British trade magazine Campaign and the global information and insights provider Nielsen released its Asia Top 1000 Brands report. It is based on a survey of 12 key regional markets and over 14 major product and service categories and 73 sub-categories. The respondents were asked to name the best brand in a category and then the second best one.
As before many of the named top brands in Asia specialize in the production of the innovative electronics (Apple, Samsung, Canon) or luxury goods (Chanel, Louis Vuitton, Gucci) what represents a symbol of the increase in disposable incomes. However, the most surprising fact is that these brands are international. China could represent a good example for analysis of the consumption habits of the customers who give preference to foreign products over national.
The photo on the left shows advertising for of the iPhone 4S model in a crowded Apple Store in mainland China.
In fact, China represents the second biggest market for Apple. It produced $7.9 billion of revenue only in the 1st quarter 2012 compared to the quarterly revenue of $46.33 billion (as states the Apple Inc. fiscal year report for Q1 2012).
According to The Economist in 2011 “A survey by researchers at Stanford University found that iPad penetration was greater at an elite high school in Beijing than at one in Palo Alto, California.” It seems that Apple sales strategy suits Chinese customers better than the strategy of the local electronics brand, for instance Lenovo.
Indeed, Apple makes innovative products with many helpful applications and features (e.g. maps that helps navigate in a big city, or make possible writing messages using different keyboards) that create demand among busy citizens and travelers. At the same time software upgrading options help to keep customers up to date on the brand’s news.
High prices for Apple products are not only a proof of their quality but also of the service provided (technical assistance, in-store workshops and advice).
Also, in Apple stores an interactive customer-care experience is offered: each member of the Apple team (called a “specialist”) shares their experience with Apple products and their passion for the brand. Specialists show customers how to use the products, what creates a special relationship between customers and Apple employees based on the knowledge sharing.
Another important point is that leadership of the brand in the global trade gives importance to its customers and also contributes to creating a feeling of their belonging to the global community. And Chinese people, as a nation that travels a lot, appreciate it.
The strategy is similar for the luxury brands. Louis Vuitton has opened its largest store in China this summer, in Shanghai Plazza 66 mall and hopes to surprise its customers not only by a large product offer of products but also a new store architecture and design that boasts some creative artistic findings (see video, please, double-click).
So why are the Chinese brands less attractive?
First explanation would come from marketing that seems to be less developed in Asian companies that lack the experience of well-established international brands to advertise their corporate story and trade achievements.
Second, big Asian cities such as Singapore, Shanghai or Tokyo have a large Western expatriate community which introduces its way of living or lifestyle to the local population.
Another significant point is trust in a brand. Even local customers believe that many national brands are copies of well-known products and prefer to pay higher price to buy those instead of supporting the local brands.
Also, fashion plays an important role in Asia, and a quality design and wrapping is what makes products attractive to customers.
Chinese entrepreneurs are facing the challenge to build 100 global influential industrial brands and 1000 domestically renowned brands by 2015, focusing not only on actual value of delivered goods but also on perceived value of the products sold. That is why today’s leading foreign brands will need to continue investing in innovations and quality in order to remain attractive and competitive at the Asian market.
China Daily: http://usa.chinadaily.com.cn/business/2012-08/06/content_15646248.htm
China Briefing: http://www.china-briefing.com/news/2012/08/31/global-brands-ripe-for-asia-not-just-china.html
Forbes magazine : http://www.forbes.com/sites/kenrapoza/2012/08/06/apple-tops-list-of-chinas-top-10-foreign-brands/
The Economist magazine: http://www.economist.com/node/21559624