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The Stigma of Chinese Brands

Even though most electronics and consumer goods production has moved to China, a third of Americans surveyed said they would not buy a brand if they knew it was Chinese-owned.

There are two twists that make this survey point ironic, if not slightly amusing: A majority of Americans probably can't name a Chinese brand, and Americans have been buying Chinese-made products branded under more common US names for years but somehow the idea of Chinese-owned brand means something different than “Made in China.”

A recent survey done by HD Trade Services (HDTS) indicates that about a third of 1,500 Americans surveyed wouldn't knowingly buy a brand owned by a Chinese company; notably, the other 68 percent would (a stat that surprised me given the strong “Made in America” sentiment I often hear).

Conversely, when an equal number of Americans were asked if they would buy Japanese-owned brands, 81 percent of respondents say yes, they would. And, if your corporate name sounds German — like in the case of Chinese-based Haier, the world's top major appliance brand — you may win consumer perception points, too, because of the association Americans make with German-engineered products.

In another poll, HDTS, which provides distribution, marketing, and fulfillment services and helps Chinese brands with United States market development, asked 1,500 Americans the following question, “Name the Chinese brands with which you are most familiar (list up to five brands).”

Guess what? Ninety-four percent of those surveyed could not name even one Chinese brand. And, I thought names like Lenovo, Hisense, Huawei, and ZTE were pretty common brands by now.

As HDTS points outs, the paradox is a bit startling. “Look around your house, look around your office. What percentage of products — furniture, fashion and accessories, electronics, housewares, appliances — do you think were made in China? Based on market data, chances are that number is close to 50 percent,” the firm said.

Several reasons perhaps explain the stigma for Chinese-named products. One obvious hurdle is the general perception Americans (and others in the Western world) have of Chinese products.

When compared against American, German, or Japanese-made devices, Chinese electronics products are seen as low-cost and low-quality devices, despite the fact that the most well-respected US and European companies have products made by Chinese workers in Chinese factories.

It doesn't help either that many of the counterfeit parts slipping into the electronics supply chain come from — or again, are perceived as coming from — China. Of course, the US-Chinese political backdrop, where espionage finger pointing reads like a Tom Clancy novel, fuels the “China is bad” mindset among typical American consumers.

Much of this perception, arguably, could be connected to how manufacturing supply chains evolved in different regions. Concepts like Kanban, Lean, and Six Sigma have long roots in high-tech production and supply chain processes, and Western companies have invested plenty in ensuring that their operations meet these universally accepted standards.

Until recently, Chinese companies were not held to this same standard. China was — and still is — the low-cost alternative, the place where generic set-top boxes were efficiently pushed out during around-the clock shifts and shipped in boxes printed with better-known global names.

Western companies opened shop here because that's where they got significant tax breaks, saw direct and indirect labor costs drop and were able to win shareholder approval by turning profits on low-margin consumer electronics production. Product quality was an afterthought, only now creeping into the Chinese manufacturing mindset as Western companies come under different consumer and shareholder pressures.

Partners vs. competitors
Also, a noticeable shift has happened, which might further confuse the branding messaging. Chinese companies used to just make products for all the major top-tier OEMs, and their name stayed out of the limelight. They were supply chain partners, not competitors.

Now, more Chinese companies are taking their manufacturing expertise global, trying to establish their own brand and win market share in the important North American market. Not only does this change OEM-supplier relationship dynamics, it flips a different switch in the consumer's mind.

For some reason, consumers may not think twice about buying Chinese-made flat screen TVs, video game consoles, phones, laptops, or cameras, but they will pause if the name and address on the box changes from a Silicon Valley company to one located in Shanghai.

Maybe it's a brand loyalty issue, but I suspect the buying-decision pause stems more from accountability and trust issues, which, from a brand and marketing perspective, are harder things to develop and require more time to build.

I wonder: If China had not been initially labeled as the low-cost offshoring country of choice a couple decades ago, would Americans have a different point of view today? Reversely, what if Japan, Germany, and, say, Detroit in the 1970s and 1980s went the route of China and converted into low-cost manufacturing hubs? Would we hold products from those regions in high esteem?

Really, what this shows is the fickle nature of the consumer. People may not care much where a product is made or even how it's made, but change the corporate name on the product they buy and all sorts of red flags go up.

24 comments on “The Stigma of Chinese Brands

  1. Lavender
    June 7, 2013

    Despite some bad-quality problem, years of development has largely improved the impression. But consumers sometimes seems to be hypocritical: despising Chinese brands, but they welcome the low expanding generated by low cost products made in China, which is also the reason supporting the bright manufacturing of China. 

  2. Mr. Roques
    June 7, 2013

    That stigma has been around for years! Its a misconception, well, maybe not a misconception because there are many products made in china that don't have any sort of QA. They are made to break after a short time but the low cost is what amazes customers. That was handled with “designed in the US”. Even though a product was made in China, it was designed in the US… That brought a new sense of relief but now, chinese made and designed are not synonym of bad quality. They need to work on their marketing strategy.

  3. Wale Bakare
    June 7, 2013

    Look around your house, look around your office. What percentage of products — furniture, fashion and accessories, electronics, housewares, appliances — do you think were made in China? Based on market data, chances are that number is close to 50 percent

    I think most householders would have more than that.  90% electronics in my place – China products, accessories and applicances 70%, housewares and furniture nearly 50%. 

  4. Wale Bakare
    June 7, 2013

    @Roques, it's gradually fading, the stereotype no longer strong in consumers minds comparing to years back. China has moved on from that to a standard products especially for US and Europe consumers. There're more regulations and check -balances on China products to EU & US.  However, One good strategy the country's manufacturers employ that is perfectly working – governance of the region/nation. 

  5. GlobalMarketingandPR
    June 7, 2013

    As a consultative advisor I have witnessed many of these meetings where Chinese manufacturers try to propose shortcuts and deceptions about their products. Trying to convince them to be ethical is an expensive challenge best enforced by American buying trends. For some reason they tend to find it amusing to sell us electronics weighted with lead. I have been appalled at how often they try to ship products via air to avoid inspection at ports. Buyers beware. Unless an American company is in charge, today it is still unlikely you will get a high quality product from the many Chinese/Taiwanese brands I've known. I'm hopeful that some will strive for more ethical practices soon. Chinese buyers still have very low expectations according to those manufacturers, so it is hard to convince them that Americans expect better value.

  6. _hm
    June 7, 2013

    China does not earn much money in this. In this process, big Japanese or American organization take away majority of profit. They keep money away from USA. China get little money for labour.

    China is putting their best effort to turn to value added design market. Soon, they want most product designed by China and manufactured elsewhere, may be USA.

    I wish all of us work hard and put our best effort to delay this inevitable as much as we can.

     

  7. Tom Murphy
    June 7, 2013

    I agree, Wale. If we're talking about items I acquired in the past five years, the percentage would be well over 50 percent and would include most of what I wear, carry, drive and see.  Americans' fear grows out of past experience — mostly fear of losing jobs or seeing their dollars worth less. 

    There was a time when I was young when Japanese goods were viewed as cheap and unreliable and, because it was just a decade after World War II, many Americans held deep political objections to them.  That faded in just 10 years. Today, most Americans brag about having Japanese-made items. I think the same will happen with Chinese goods. But it will take time.

  8. SP
    June 8, 2013

    This reminds me of an incidence in Walmart, San Jose. It was those summer afternoons when many would rush in to buy table fans. One lady shopper in walmart showed her happiness quite loud when after a log time she could atlast find a fan that is made in America. She was shouting Hooray atlast I got it”Made in USA”.

    Even in countries like India its so difficult to find things especially electronics made in India. Although you dont have to try any hard for getting things made in china. Chinese are so good in copying things that they can copy anything and everything. They say you need more brains and labor to copy then to invent 🙂

  9. chipmonk
    June 8, 2013

    On this day when Obama is meeting the new President of China, it will be prudent to remember that :

    1. Consumer spending in the US is 2/3 rds of the economy. Even if Made in China is 15 to 20 % cheaper it is unaffordable in the long run, because xferring manufacturing to China destroys the buying power of Middle Class Americans and impoverishes local / State Govt.s.

    2. The first 15 years of outsourcing Mfg. to China was all positive with low prices at the Wall Mart. Now we have to pay the piper as the US has lost all competitive advantage vis a vis China. Gas price has nearly tripled compared to 2000 because the Chinese now put 20 million more cars on the road every year. 

    3. If the US Auto industry had a near – death experience due to Japanese imports, wait till the Chinese start importing more. China is the same size as the US, its GDP is closing in on the US ( thanks to our own SUICIDAL choices pushed by WALL St. ) and China has NUKES.

  10. ahdand
    June 9, 2013

    What I feel about Chinese brands is that they are simply ruining the taste of technology. When you copy something which has the same outlook, you can fool the people at their first sight but once you try to use it to the maximum, then the grading of the technology can be identified.    

  11. Tom Murphy
    June 10, 2013

    Nimantha:  Perhaps you're being a bit harsh…?   When I visited China in the mid-80s, its electronics industry was just building its first consumer products — mostly radios, tape players and TVs.  Most weren't very good.  In fact, the Chinese citizens mentioned to me that they would do anything for a Japanese made tape player, but didn't want China-made items.  Today — not three decades later — most of the world's consumer electronics come from China, including such prestigious items as iPhones and the computer I'm typing this on.  What will the quality be like in 10 years? Or even just 5?

  12. Tom Murphy
    June 10, 2013

    Chipmonk: I'm not sure you can blame China for everything. Americans blamed Japan during the 80s for problems in the electronics supply chain and it turned out to be a much broader problem.   China has major problems ahead — an aging population with only one child to support two parents; a growing economy that will begin to consumer far more than it can export; and a thirst of energy that is only getting started.

    As an American, I'm hoping we can change the things under our control: cutting fuel consumption by motorists who could take transit or bicycles; growing food in a more sustainable way; recycling electronics instead of heaping them in landfills; and providing healthcare in a more cost-effective way so that the rising number of poor don't think of an ER as their general practitioner.  If we solve those problems, we'll be well positioned to compete with any international partner.

  13. Tom Murphy
    June 10, 2013

    _hm:  I don't think that outcome is inevitable at all.  Considering how quickly China's economy has grown, don't you think it could fall just as quickly?   It's true. While the popular assumption is that China's economy will continue to grow at the same or acclerated rates, past performance is no indication of the future.  I have seen many companies grow quickly only to find that their growth is dependent on itself; if the revenue growth doesn't continue at the same rate, there will be an enormous vaccuum in funding within China. And that could cause a severe retraction, prolonged recession, or even a depression — although I want to quickly not that I think any of those outcomes would be a nightmare for the global electronics supply chain and the world in general.

  14. chipmonk
    June 10, 2013

    But I blame ourselves for walking like zombies into Wal Mart for mere 5 – 10 % savings and listening to the opinion makers in the pocket of Wall St. who have made out like bandits off China's cheap labor. Worse yet these movers and shakers here who operate above the Law have siphoned off US technology developed at the expense of taxpayers for personal gain and pretty much DESTROYED any competitive advantage that the US had all the way up to Stealth Fighters. If we want to re-develop that competitiveness we would have to get trained Scientists & Engr.s of Chinese origin. Good Luck with IP protection !

    Why should China not take advantage of a situation like that ? They are not STUPID & VAIN like us, nor do they blabber about without making any sense.  

  15. _hm
    June 10, 2013

    @Tom: That view is correct. However, I look from human resources point of view. They will soon have so many english speaking, highly trained technocrats and they may eventually overpower most countries in world, like they did it low cost production. Chinese government also have saved lots of money for this purpose.

     

  16. ahdand
    June 11, 2013

    @_hm: I don't think it's the language that holds them from dominating. It's the attitude they have towards the rest is the issue.  

  17. Adeniji Kayode
    June 14, 2013

    @nimantha.d,

    I agree with you on that. They seems to put up walls on virtually everything, They want the entrire world to accept them but does not want to to the same to the rest of the world

  18. Adeniji Kayode
    June 14, 2013

    @_hm,

    I don,t really think not speaking English is the problem, I think it's what China feels it's good for them-Not to allow other languages in their system.

  19. SP
    June 14, 2013

    will they be writing C++ code in chinese too?? I guess may be.

  20. _hm
    June 14, 2013

    @All: I have worked with Chinese engineers since almost last ten years. I have very high regards for them and I adore them for their hard work and helpful nature. They have beautiful brain and golden arms.

    As discussed many time with them, but for Chinese politics, they are as open as anyone else. I expect to see new interantional trend making IEEE or similar standard and new products of desire soon coming from China.

  21. ahdand
    June 29, 2013

    @Kayode: Yes indeed since that has a very negative impact on them. You cannot blame the people who has  a negative impact since they feel like all of us here do.          

  22. Adeniji Kayode
    June 29, 2013

    Should we expect this to change or stop one day or so soon?

  23. ahdand
    June 30, 2013

    @kayode: I think there will be a change sooner rather than later. If not it's a disaster which I hope will not happen.  

  24. SunitaT
    August 1, 2013

    The prospects for Chinese brands in the US market are positive, in spite of certain negative perceptions related to IP infringement. As Chinese brand proprietors expand into the United States, trademark counsel must prepare themselves for the challenges that lie ahead.

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