Now that the Olympics have ended everyone is talking about the “China” brand and how the Olympics will affect it worldwide. Many assume that Chinese brands that have been present at the event will have a great return in terms of brand awareness internationally. We partly agree with this statement, as certainly having broadcasted national brands to an audience of million people is a great branding exercise, but we still believe that the brands that are going to benefit the most are the one that have invested beforehand into brand building in face of international competitors.

In fact, there are still a few but very pressing problems Chinese brands have to deal with before being able to take full advantage of the positive influence the Olympics are bringing about.

It is no news to say that the “Made in China” label is often associated with brands of poor quality and low value. Even though the Olympics showed a highly developed China, this moniker still weights on the locally born brands. Just think about the recent product recalls that have brought consumers to become even more skeptical about buying products manufactured in China. Not to mention the influence the current milk powder crisis will have on the “China Brand” both at home and abroad. Tsingtao, for instance, have had almost a fatal blown when the barley grown in China was found to be heavily polluted with pesticides making it unsuitable for use. Consumers only started to gain trust in the brand after Tsingtao began to import its barley.

Secondly, Chinese brands seem to have been relegated to niche markets and have failed to expand. Looking again at Tsingtao we can see that the brand has been in the US market for thirty years but has been unable to break out of a niche of only 0.04% of the market.

The problem here is that Chinese brands tend to lack of a definite brand identity.

In an effort to expand to a larger consumer market Tsingtao went through a major redesigning process in 2007 aimed at supporting more effectively the brand positioning. The new design revolved around the bottle label, thought to be more contemporary while still maintaining the signature pagoda medallion and red and green color pallet thought to be representative of the “Asian cool,” or the fusion between time-honored traditions and the cool aspirational culture of the Western world.” Still, as the brand re-design have not been associated with a strong definition of what the brand stands for, Tsingtao still find itself stuck in a niche market.

Stressing the Chinese heritage cannot by itself differentiate the brand enough to make it successful in the long run. Furthermore, Tsingtao has very limited visibility outside of Chinese restaurants and grocery stores which make the search cost too high and reduces considerably the brand capacity of winning new brand loyalist. So what can make Tsingtao unique?

Tsingtao has something different than other Chinese beers: it was founded by a Germany company. Some suggest that the Chinese brewery could brand itself as a “Chinese German” beer thus borrowing from Germany’s strong reputation for beer. Though this may not be the be all and end all suggestion Tsingtao has to figure out what will differentiate itself from its competitors other than their Chinese heritage which so far has not proven to gain them a higher market share.

If Tsingtao doesn’t make enough of an example, look at Haier. By being associated with low quality refrigerators Haier is having difficulties breaking out of the low cost compact refrigerator segment targeted to college students. Haier has been selling low price and has not spent many efforts into building a strong international identity. Without brand recognition Haier is unable to enter the high end segment in America because it is all about brands in the upscale market. After all, it is just normal that those people buying a two-thousand dollar refrigerator would choose GE over the brand that makes low cost refrigerators. In a market where products look increasingly similar it is vital to have a strong brand to get your product off the shelves and into your customer’s homes. Haiers association of low quality products and their lack of strong marketing capabilities leave them a relegated market share.

As Chinese brands move from being low cost Original Equipment Manufactures (OEMs) to creating their own strong global brands they have realized the importance of brand building. However, creating strong, valuable brands will take a long time. Overcoming the association of cheap and poor quality can not be changed with the snap of fingers. Furthermore, as new companies or other countries start to capitalize on low production costs, Chinese brands realize that they can no longer use their low price advantage if they want long term success in the international market. After all there is more to a brand than just a cheap price tag.

“A product is something that is made in a factory; a brand is something that is bought by a customer” says Peter Schweitzer the president of J. Walter Thompson. China is used to manufacturing products for exports but as they start making more and more products for themselves they then can offer more than just a low price. A brand is not created by only using a low price advantage. The consumer who bases his purchasing decision only on the price is generally not loyal to the brand and most of the time does not even know the brand name.

The Road Ahead

Chinese companies have become successful by entering less developed markets first which helps gain brand awareness before entering mature markets. This allows companies to understand the international market in a less competitive environment and comprehend how their brand is perceived in different countries. Yin Tongyao, CEO of Chery, is very vigilant when going overseas. Tongyao’s philosophy is “We always start small. If this works, we’ll increase our investment. You always need a nurturing period if you want to take root in a local market, so I don’t expect exceptional sales in any country.” Building a brand is a very expensive and time consuming endeavor but it is vital for Chinese companies to invest.

The 2008 Beijing Olympics has been the opportunity for Chinese company’s to showcase their brands. For Instance, Beijing Urban Construction Group hopes for their 19 Olympic related facilities to have gained worldwide publicity causing foreign companies to come to them for new contracts.

Tsingtao has been the official domestic beer sponsor of the Olympics. This opportunity has gained Tsingtao tremendous awareness internationally but only time will tell if this will be enough for them to gain a stronger market share internationally. As Tsingtao’s brand campaign is heavily associated with Chinese culture they have planned that while watching the Olympics a bottle of Tsingtao was to be in hand. The Olympics have also marked their one hundred year old anniversary – lucky coincidence to make them able to display to the world their strong Chinese heritage and associate the brand with the Olympics values.

In the increasingly competitive global economy the role of the brand has never been greater. Chinese brands are learning how to position themselves internationally. By looking at Tsingtao, Chery, Haier, and the Beijing Urban Construction Group we see that these companies are successful by ensuring that their products sent overseas are of highest quality, starting small when entering markets overseas, creating brand designs that translate well over many different countries, and using their Chinese heritage in their brands image. It is no doubt that it will take Chinese companies time to gain brand recognition but by continuously managing and creating brands that are strongly differentiated, Chinese companies have a real good shot to become major players in the international market.

Nowadays, brand value is a well appraised concept. Every company hopes to have a brilliant name and a well established image. However, facing so many existing brands, companies may easily fall into the infringement trap. How to avoid this risk? The Labbrand team can give you some hints to understand the rationale behind trademarks registration’s criteria.

According to Trademark Examination Standards, if the pronunciation, character form, meaning, and character order of a newly created name is identical with, or similar to, the existing trademarks from the same or closely-related trademark registration category, this name is at high risk of infringement because it can easily create confusion between existing trademarks and itself. The famous malicious trademark Registration case for Starbucks is a good example.

The famous American café chain STARBUCKS registered in 1999 “STARBUCKS” and “星巴克” (xīng bā kè) as its trademark in mainland China after its entry on the Chinese market. Its Chinese name is a combination of transliteration and translation. “星 xīng” means star, “巴 bā” is the name of an ancient Chinese place, “克 kè” is kilogram. These three characters, no matter if analyzed one by one or together, have no direct relationship with coffee or with the food industry. Today, the fact that the evocation of well-cooked coffee and the leisurely life style arise when we see this name depends entirely on STARBUCKS’ continuous brand construction. Nevertheless, in 2000 a local coffee chain, tried not only to register the same Chinese name - Shanghai Xin Ba Ke (星巴克) - of its American competitor, but also a very similar English name: “starbuck”. Furthermore, the trademark color, shape and layout were all extremely close to STARBUCKS so that the two brands were hardly distinguishable. In 2003 Starbuck filed a lawsuit against Shanghai Xinbake Cafe claiming they had violated the rule of fair competition and infringed upon the US Starbucks trademark and eventually won it in 2007: the Shanghai Municipal Higher People’s Court, in fact, ruled that Shanghai Xingbake intentionally used Xingbake in its name to mislead the public and thus infringe the trademark of US Starbucks. Similarly, other brands such as “辛巴克” (xīn bā kè) and “星吧客” (xīng bā kè) are at risk of infringing in trademark registration laws for their the similar pronunciation with “星巴克” (xīng bā kè).

However, according to our rich experience in brand research, we found out that some similar brands can also co-exist. Let’s look at the example of “资生堂/SHISEIDO”(zī shēng táng) and “养生堂/YANGSHENGTANG” (yǎng shēng tang). The Chinese name chosen by the famous cosmetic brand, “资生堂/Shiseido”(zī shēng táng) originates from a sentence “至哉坤元，万物资，乃顺承天” of the well-known ancient Chinese book called Yi-Jing, which means that all living beings are born according to the natural principles. Here, “资生zī shēng” represents “滋生zī shēng” which means growing, while  “堂” táng is a traditional name for a shop. As for the health product brand “养生堂/YANGSHENGTANG” (yǎng shēng tang), “养yǎng” means maintain, take care of; “生shēng” can be understood as life and energy. Although these two names are close to each other, they exist in different industries and convey different messages. For these reasons consumers can distinguish them easily. Therefore no infringement was caused in this case.

Again in the cosmetic industry, we may find other cases of brands having similar names such as “兰蔻/LANCÔME” (lán kòu), “兰芝/LANEÍGE” (lán zhī), “兰皙欧/RECIPEO” (lán xī ōu). Are they then at infringement risk? Labbrand provides its point of view:

The character “兰lán”, from the point of view of the Chinese culture and tradition, has an positive meaning conveying the idea of perfection which is naturally quite desirable to be included in companies’ names. “兰lán” refers to orchid: orchid, plum, bamboo and chrysanthemum are regarded as “four most noble among all plants”. This flower has always been admired and praised in Chinese literature since ancient time. It is said that Confucius praised Orchid as the flower having the most elegant fragrance among all. This connotation meets well the psychological need of cosmopolitan women who pursuit the perfection and beauty. That’s why this character is used so often in cosmetic brands. Let’s have a look at another example. The brands “雅芳/AVON” (yǎ fāng), “雅倩/ARCHE” (yǎ qiàn) and “雅漾/AVÈNE” (yǎ yàng) all use a same character “雅yǎ” translating in elegant, cultured, refined. The reason behind the common choice of this character among different companies here is very similar as for the previous case. In our opinion, even though these companies are in the same industry and use this same character in their names as well as the similar name structure, the meaning they strive to convey comes from the Chinese culture. Meanwhile, their logos and packages are clearly different and can be easily distinguished so that consumers will not be deceived or confused in recognizing one brand from the other. Therefore, the risk of infringement is low.

The accumulation of brand value is a long-term process. Brand value is gradually built with great efforts both in marketing and branding, and it will be therefore a nightmare to put it at risk of legal infringement. In order to avoid this, companies need to spend more efforts during the creation stage and to reflect well about different options. This is, in fact, the first step on the long path toward branding.

To get more information on branding services please surf Labbrand website at:

 www.labbrand.com  

Vladimir Djurovic

For those of you who, like us, work in the branding and marketing industry, the importance of a good brand name comes to be pretty clear as the name is one of the most important assets of a brand. For any company or product positioned in the Chinese market, finding a Chinese name is the first step of a successful branding campaign. It is indeed a crucial tool in acknowledging, engaging and interacting with Chinese consumers.

Companies starting up in China as well as marketing manager involved in launching new products, all need to consider the initial important question of phonetic versus semantic naming. A little explanation might be in order here: phonetic naming is the translation of an original brand name into another language to convey its proper pronunciation, often without any regard for the meanings of the characters used. An example of this is Motorola: 摩托罗拉 — mó tuō luō lā. Semantic naming, instead, can be achieved in two ways. One is to translate the name and/or its components directly into its Chinese counterpart; the other is to find Chinese characters which express the metaphorical meanings associated with the name. The hassle here is that it is difficult to determine which naming solution, phonetic or semantic, is the better option and sometimes the best result can be achieved only by combining the two methods.

Having said that, you still need to consider that there are other elements to consider including: tonal progression, artistic conception, visual identity, grammatical structure and provocation. And in addition, there is a whole other set of important steps in creating and, more importantly, selecting a suitable Chinese name: brainstorming, linguistic check, legal check, and consumer testing. Said that, even having selected a great Chinese name, your brand can still be at high risk if you do not give it proper protection.

If your Chinese name is not protected, a competitor can take it, along with all the equity attached – and the cost of getting it back is high. This was a lesson Toyota learned the hard way. Several years ago, Toyota wanted to launch their Camry model in the Chinese market, believing that the new product had the right attributes and positioning to do well. As part of the branding strategy, the name 佳[jiā]美[měi] was chosen, expressing the elegance and comfort of the model’s design. Subsequently, marketing and public relations activities were launched even before the name was registered.

Just as the public was beginning to recognize and accept the product, Toyota was informed that the Chinese name had already been registered by another company. Finally, they had no choice but to change the name to 凯[kai]美[měi]瑞[ruì]. Unfortunately, all the investment in and potential returns of the initial marketing campaign had been lost.

This is just a little example of how important trademark name registration can be, since it is the only effective tool to offer protection to the brand name nation-wide. In addition, you should consider that companies can also benefit by including the trademark name in the corporate name so to avoid confusion and dilution of brand image.

However, all these benefits can be achieved only through a quite lengthy and complicated process which, in our opinion, should run parallel to the selection of the brand name. In fact, trademark registration can be divided into 45 different classes belonging to similar categories. To make sure a trademark is fully protected, it is advisable to make the registrations in several related classes. Each class is divided by industry and from the perspective of naming and trademark registration, each industry has its own preferred characters. This means that certain Chinese characters are frequently used in specific fields. The following graph shows an example of this kind of trend. The preferences are indicative of particular features in the industry and the increase in risk for registering names containing certain characters.

Sample Trademark Search Result

Character	亮[liàng]
Meaning	Clean, bright
Class	3	11	17
Searching results*	26	19	5
Frequency for use	High	Middle	Low
Example(s)	新[xīn]亮[liàng]	易[yì]亮[liàng]	金[jīn]亮[liàng]

*Search results on all the trademarks which use the character亮comes from the National Trademark Bureau database.

Source: Labbrand China Consulting, Ltd.

In conclusion, for companies starting up into the market or selecting the name for a new product, choosing and protecting the right Chinese brand name is of vital importance. The benefits of a suitable name are in avoiding future problems and in reinforcing other brand communication efforts. And finding the right partner to help you in the process of naming and trademark registration is even more important to guarantee that your name will enjoy greater protection and your brand greater success.

To get more information about creative naming services, you can surf Labbrand website at:

www.labbrand.com

Vladimir Djurovic