The three-word blessing and curse

By Joseph Christian
Updated: 2010-07-15 00:00
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BEIJING -- It may be the most commonly printed three-word phrase in the world today. You won’t find it printed on paper but on the label of just about every product you use in the day-to-day: “Made in China”.

For Chinese, these three words impart a sense of pride. It is recognition that the economic experiment of China’s open and reform policy has worked with breathtaking results.

Inside China it has brought about mind-boggling development. It has changed bicycle riders to car drivers, toiling peasants to urban workers and a poverty-stricken, agricultural nation to a world economic power that has been buoyant in an economic crisis.

The three-word blessing and curse

Early next year China is a shoe-in to overtake America’s long held title of world’s largest manufacturer. Without Chinese factories I dare say that worldwide consumerism would fall flat on its face. No iPhones, no cheap clothes, no ear-piercing vuvuzelas.

China knows this and it brings a smile to its face as wide as the Great Wall. Its growth rates and massive trade surpluses are the envy of the world. But as much as things made in China have brought blessings to the Middle Kingdom, they have also brought various curses.

As the saying goes, “There are two sides to every coin.”

There are the obvious problems such as environmental damage and dealing with an increasingly talented workforce that demands better wages and labor conditions, but that is not my focus here. Instead I want to talk about another problem that the “Made in China” label creates: a bad image.

A lot of people in the US have equated “Made in China” with low quality and I must admit in many cases such a comparison is completely warranted. For years no one in China really cared about this. As long as foreign investment kept flowing in and exports kept flying out, there was money to be made.

But China’s economic growth did more than just create trade surpluses; it also saw the birth of reputable Chinese brands. 

In the past 10 years or so, many of these brands, building on their local success, have decided to take the plunge into foreign markets. Some have been successful, some have not, but all have met problems overcoming the low quality image associated with Chinese products. 

Recently I talked with some of the PR and branding managers of Chinese companies such as Haier and Peak. Every time the topic of overseas expansion came up so did the topic of battling a poor quality image.

Both have spent a great deal of resources trying to tackle the problem. Haier has focused on adapting to its customers by meeting niche markets and expanding from there. Peak has decided to latch onto the NBA and some of its big name players. While Peak has made more of a splash, Haier has had more success.

It is going to take a lot more than a big name or sports stars to reverse a decades-old mindset that Chinese products are not up to snuff. Just from talking to Haier and Peak, the difference was clear to me. Peak was constantly slow in response, self-praising and tentative in answering questions; Haier was more direct and professional. I think every American knows which is more convincing in building trust and reputation.

While my experience talking with Haier and Peak is far from providing enough evidence to damn a brand’s image, it did get me thinking. In the coming years, many more Chinese brands will be looking to expand overseas. Like Haier and Peak now, they will have to overcome the Western urge to call their products shabby.

They have to realize that it is not about technology or price comparisons — it has to be about customers. If you don’t know how to deal with the people that you are trying to target then it will never work.

Perceptions must be changed and while China has launched its own “Made in China” ad campaign to help in the effort, in the end the lion’s share of work will fall to China’s major brands. They would be wise to follow Haier’s example and work from the ground up. There is nothing an American likes more than a company that works hard for its customers. Now if only some American companies like Goldman Sachs can learn from that lesson.