China's electronics industry still needs to pay the price of public relations and marketing

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China's electronics industry still needs to pay the price of public relations and marketing [Copy link]

If you visit the “Chinese version” of the tech-lovers’ beloved trade show, you’ll be struck by how different it is from its Western counterparts, as I was.

　　Last week’s China International Consumer Electronics Expo (Sino-CES) lacks the sheer size, pageantry and glamour of CeBit in Hanover or the Consumer Electronics Show in Las Vegas. Yet, despite its lack of Western showmanship, Sino-CES did underscore China’s determination to become a global IT power.

　　An estimated 70,000 visitors, mostly buyers, attended the trade show, which attracted more than 390 exhibitors, including 82 overseas companies.

　　Browsing the booths, it was clear that more and more domestic IT manufacturers are eyeing the global market with growing interest, largely because they feel that having an international presence will drive innovation and help hone their marketing skills – in which they still have a long way to go.

　　From a Western market perspective, many of the stands had overly contrived or ambiguous signage. Some product boxes were even adorned with scantily clad (Western) women. The (Chinese) information brochures were not as substantial or polished as those handed out at Hannover’s Telecom fair.

　　The fourth edition of the China International Consumer Electronics Fair, held in Qingdao, a coastal city southeast of Beijing, attracted some strong international exhibitors, including Intel, Sony and Taiwan’s Benq, as well as emerging domestic giants, including Lenovo, which acquired IBM’s ThinkPad PC business 18 months ago, as well as Haier and Hisense, both major domestic consumer electronics and white goods manufacturers.

　　Drawing on the past experience of Japanese, Taiwanese and Korean companies, Chinese electronics companies have set their sights on building internationally recognized brands, supported by product innovation, R&D planning and growing consumer support.

　　Most exhibitors privately acknowledged that the domestic Chinese market is less competitive than markets in places like the United States, where the retail industry is much more developed and profit margins are much lower. “The United States is the most competitive market in the world,” one Chinese manufacturer nodded at the booth.

　　Direct contact with product users is also missing from the marketing skills of Chinese consumer electronics manufacturers.

　　Most Chinese companies—including most of the exhibitors at the China International Consumer Electronics Fair—started as OEMs, contract-making products for big American and Japanese companies and labeling them as products of those big companies.

　　But a growing number of Chinese OEMs have begun selling devices under their own brands. One of them is Top Victory Electronics, one of the largest LCD TV manufacturers in China, with manufacturing operations in Fujian and Beijing. Top

　　Victory had sales of more than $5 billion in TVs last year and has about 30% of the market share in China's fast-growing LCD TV market. The company has been a large OEM service provider for companies such as Dell, Sony and Sharp. Today, TPV has begun promoting its own brands, including AOC and Envision, in overseas markets such as the United States.

　　Other Chinese companies have launched their attempts to build global brands by forming joint ventures with well-known overseas companies. For example, TCL has become the world's largest TV manufacturer after forming a joint venture with France's Thomson to assemble TVs and DVD players.

　　TCL-Thomson Electronics sells TCL-branded products in Asia and other emerging markets, while using the Thomson and RCA brands in Europe and North America.

　　More recently, another major exhibitor at the show, Ningbo Bird, China's largest mobile phone manufacturer, signed a joint venture agreement with French telecom equipment group Sagem Communication. Bird hopes to triple its production after the deal. Other telecommunications equipment manufacturers, including Huawei and ZTE, have also begun to establish their own brands overseas, especially in Europe. So far, however, China has no company comparable to Samsung of South Korea or NTT of Japan.

　　Some domestic IT companies, such as Lenovo, have made great progress in establishing global brands. After completing its $1.75 billion acquisition of IBM's ThinkPad desktop and notebook PC business, Lenovo jumped to third place in the global PC market.

　　Earlier this month, a survey of "Top 10 Executive Brands in China" published by Chief Executive China magazine ranked Lenovo in the top 10 of local and overseas brands, along with Nokia of Finland, Sony of Japan and Canon.

　　Other companies, such as Hisense, have begun to invest heavily in overseas manufacturing and distribution operations. Hisense is one of China's major TV manufacturers.

　　Hisense has established more than 20 subsidiaries, including TV manufacturing operations in Hungary and South Africa, 60 sales companies and more than 1,000 service departments. Outside the expo, Hisense president Yu Shumin said: "We export our products to more than 39 countries." However, she complained that the anti-dumping policy adopted by the United States has particularly constrained Hisense. "We are facing a dilemma, on the one hand, there are American retailers who demand the lowest prices, and on the other hand, there are anti-dumping policies that force us to raise prices."

　　Haier, China's leading home appliance and TV maker, is already the world's fourth-largest white goods manufacturer and is also among the top 100 international brands.

　　Despite abandoning its $1.3 billion bid for Maytag, the US appliance maker, a year ago, Haier's global strength has been strengthened by investing heavily in overseas manufacturing and marketing operations and increasing research and development spending, including signing research and development contracts with several US universities.

　　Marketing experts visiting the expo said that many Chinese companies need to adjust their branding for the international market. They pointed to Haier's corporate logo as an example. From the perspective of the Western market, the logo features two children in swimsuits, which is a bit "pretentious" and not suitable. They believe that the packaging of many consumer electronics products is not sophisticated enough and "may not be accepted by Wal-Mart".

　　Haier President Yang Mianmian acknowledged the challenges the company faces in building a global brand. "We don't know the U.S. market very well," she admitted, while also seeking advice on overseas marketing.

　　More critically, Chinese companies are reluctant to spend money on services -- which includes public relations and marketing, said a U.S. consulate official attending the China International Consumer Electronics Expo .

　　"They don't really value services," he said, noting that this will hinder the efforts of Chinese consumer electronics companies to build global brands. (Translated by Liang Ou and Xu Liu)