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Monday March 31 2003

South China Morning Post

The long march of Chinese brands

A rose by any other name smells just as sweet. The same cannot be said of a manufactured product, however. To the discerning consumer, a washing machine, a telephone or a bottle of wine of a brand other than those considered synonymous with quality simply cannot be trusted.

In the days when the mainland was still under a planned economy, quality was a mere afterthought for many state-owned enterprises whose primary concern was to meet production targets. Consumers had no choice but to accept their sloppy goods because they were virtual monopolies that did not need to worry about bankruptcy. Which was why the small range of foreign products available at the Friendship Stores - open only to senior cadres - were so sought after. And when these products were allowed to be sold on the mass market, they quickly outshone locally produced competitors.

Attitudes have been changing among local producers in recent years, however. They have had to, as the economy has been thrown open to the outside world, with more and more foreign products flooding in due to World Trade Organisation membership.

The central government has been leading from the front in this endeavour, making the development of domestic brands one of the country's top priorities. For the most part it has not, thankfully, tried to achieve this by picking winners, but by strengthening the enforcement of intellectual property laws and encouraging a culture of quality.

Such leadership certainly helps. But an increasing number of domestic brands are growing in prominence primarily because market forces are pushing manufacturers to invest in improving the quality of their products and promoting their own reputations domestically and, increasingly, internationally.

They have a competitive advantage which should not be underestimated. With its large pool of cheap labour, China has become the world's largest export processing centre for consumer products. It is only logical that, having learned to manufacture to international standards, local companies are now able to exploit the country's large domestic market of 1.3 billion people to build up their own brands. This is important to future growth: the number of internationally renowned brands that a country's enterprises develop using home-grown technologies is as significant as the volume of its production capacity - if not more so.

Perhaps the best-known of the Chinese brands is the Qingdao-based Haier group, whose electrical home appliances have not only become a household name in China, but are making headway in overseas markets. Yet, there is still a long way to go. China will need many more Haiers before the 'Made in China' tag becomes an undisputed mark of quality.

 

    

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