Chinese Marketers Look Overseas

Via Advertising Age (subscription required), a detailed look at how internationally-minded Chinese companies are trying to build brands and retail operations overseas, such as Li Ning (who hopes its Italian sportswear brand will appeal to hip teens), Chery, Haier, and Lenovo.  As the article notes:

“…The global recession has turned cash-hungry western companies into takeover targets for Chinese marketers, and foreign countries into tempting new markets for Chinese brands and retail stores.

Chinese companies haven’t been hit to the same extent by the economic crisis as the U.S. and other major countries. Thanks to a massive domestic stimulus package, China’s GDP rose 7.9% during the second quarter of 2009 from a year earlier. Economists are optimistic that growth will continue. Credit Suisse, for instance, predicts China’s economy will grow 8% this year and 9% in 2010.

Two privately-owned Chinese car companies, Geely Automobile Holdings and Chery Automobile Co., are looking for low-cost manufacturing sites from Indonesia to Brazil. Earlier this year, Chinese oil refiner Sinopec acquired Addax, a Swiss company with oil fields in Iraq.

These Chinese companies can take advantage of the recession to pick up bargains. They can also rely on financing from state-owned banks to carry out ambitious expansion plans.

Chinese marketers look overseas
In the past, Chinese enterprises that went overseas tended to be industrial giants looking for resources and cheap manufacturing sites, like the messy and ultimately unsuccessful effort this summer by Aluminum Corp. of China (Chinalco) to buy Australian mining company Rio Tinto.

But now the internationally-minded Chinese companies are marketers trying to build brands and retail operations, not factories.

Lenovo Group is the pioneer. The computer company was one of the first privately-owned firms in China to expand overseas when it acquired IBM’s personal computing division in 2005.

Some bold gestures like global sponsorship of the Olympic Games in 2006 in Turin and last year in Beijing helped make the Lenovo name more familiar to western consumers, and Lenovo will continue that strategy by sponsoring the 2010 World Expo in Shanghai.

But Lenovo is still struggling to overcome an early decision to focus on business-to-business sales, a market that dried up quickly after western economies started to tumble. So the world’s fourth-largest PC manufacturer is refocusing its efforts on consumers rather than corporations.

Earlier this month, for example, Lenovo opened colorful, spacious concept stores in Kuala Lumpur, the capital city of Malaysia. The stores let consumers test and experience Lenovo’s full product range, including the ThinkPad and IdeaPad series.

The concept stores “are a key part of our strategy,” said Anthony Feng, a brand communications executive at Lenovo’s global headquarters in Beijing. “We are renovating existing stores with this new design and are rolling out fresh new ones in both mature markets and emerging markets. Given the current global economic recession, emerging markets are the growth engine for us to sell PCs to consumers.”

Li Ning opens first overseas flagship store
Li Ning Co., a Chinese sportswear and sporting goods marketer, is taking a similar approach. Unlike Lenovo, Li Ning is building its brand overseas from scratch. Li Ning hired Bates141 as its first global ad agency in April and this month opened its first flagship outside China, in Singapore.

The store is dedicated to badminton, a popular game in Southeast Asia markets like Singapore, Indonesia, and Malaysia. Shoppers can try out technology-inspired badminton sportswear and racquets used by top-seeded shuttlers such as Lin Dan, Chen Jin and Bao Chun Lai. Li Ning sponsors the Chinese National Badminton Team and is connected with some top badminton tournaments.

The Singapore store “is an important step of the group’s strategy in sports category differentiation and brand internationalization. Expansion into this market not only shows our determination to become the sports brand synonymous with badminton, it also laid a solid foundation for the group’s expansion into overseas markets,” said Beijing-based Nicholas Chong, Li Ning’s chief financial officer.

China’s largest appliance maker, Haier Group, hired WPP Group’s Hill & Knowlton this week to help develop and execute communications programs around the world. Haier earlier bought a 20% stake in New Zealand’s Fisher and Paykel Appliances in a deal that will help Haier sell its own brand products in New Zealand and Australia.

Haier is “determined to make further inroads both domestically and abroad,” said James Heimowitz, CEO, North Asia of Hill & Knowlton.

China’s mixed record
Chinese companies have a mixed record overseas. Haier, for example, has manufacturing operations overseas but has failed to develop its brand name in the U.S. and other markets, and pulled out of a bid to buy U.S. appliance maker Maytag Corp in 2005.

Buying U.S. companies has proved a challenge for the Chinese. Telecommunications company Huawei Technologies made an unsuccessful play for a stake in 3Com last year, and China National Offshore Oil failed in a 2005 attempt to buy Unocal.

But Chinese companies are a growing presence. In fact, 37 Chinese companies appeared in Fortune’s annual ranking of 500 top global companies this year. That’s up from 28 in last year’s Fortune 500, and just 8 Chinese companies a decade ago. This year the number of U.S. firms fell to 140, the smallest U.S. presence ever in the Fortune 500 ranking.

This entry was posted on Wednesday, July 29th, 2009 at 9:14 am and is filed under China, Uncategorized.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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