Oct 14, 2013

    Firms hide China roots to boost sales

    IN THE global contest for business, Chinese brands struggle to compete with big Western and Japanese names, but some are now looking to reinvent their identities to overcome image and political hurdles.

    The world's second-largest economy does not have a single one of the world's top 100 brands, as compiled by marketing consultancy Interbrand.

    And according to a survey by HD Trade Services, 94 per cent of Americans are unable to name a single Chinese brand, with a third saying they would not buy one they knew to be Chinese.

    "Brand China has many problems - transparency, ethical practices, treatment of employees, the quality of the products," Mr Richard Edelman, head of public-relations giant Edelman, told a World Economic Forum meeting in Dalian.

    "And, unfortunately, the China reputation for companies is too much overshadowed by the reputation of the government."

    Chinese phone-security company NQ Mobile dealt with the problem by effectively presenting itself as an American firm.

    It created an entirely new headquarters in the Lone Star State, listed on Wall Street, has an American co-CEO brought over from US banking giant Citigroup, and its English website proclaims: "Made in Dallas, Texas".

    Mr Henry Lin, the group's founder, said: "All our employees in the US are American people...the consumer will feel it's a US company."

    Others are simply buying foreign firms, as decades of inward investment into China begins to move in the other direction.

    Last month, a US$7.1-billion (S$8.8-billion) takeover by Shuanghui International was approved by shareholders of US pork giant Smithfield Foods, the biggest Chinese acquisition of a US company.

    Chinese car manufacturer Geely bought out Sweden's Volvo, while its rival Chery created a new brand, Qoros, in partnership with an Israeli group.

    But others prefer to stick with their own name, such as the world's top fridge maker Haier and telecoms giant Huawei - which has been described as one of the world's most controversial companies.

    Huawei generates 67 per cent of its sales from outside China, and last year was listed among the top five companies in the world for number of patents.

    But despite marketing its flagship smartphone as the world's slimmest, it struggles to compete with South Korea's Samsung and Apple of the US - and faces accusations that it is a spy agency masquerading as a commercial enterprise.

    For Mr James McGregor, China president of the US strategy group APCO Worldwide, it is the domination of the state sector that stifles innovation the most.

    "China's private sector can innovate," he said, pointing to WeChat, a messaging app for smartphones made by Chinese Internet giant Tencent.

    "It's a Chinese product, it's very efficient, it's getting worldwide because it's a brilliant product."