Brand China, Beijing
An address to the 1st China International Brand Strategy Conference in Beijing. What are the marketing challenges facing Chinese companies? How can Chinese companies create the conditions to have their goods more readily accepted in the West? In this presentation to an influential Chinese business audience, a solution is suggested.
I love China. I’m a huge China fan and it’s very exciting to be a part of the biggest story of the 21st century – the re-emergence of China as the central country. I’ve been coming to China for many years and I’ve always had a great time, drinking Chinese beer late into the night talking deals with my Chinese business partners. I built a brand new $200 million brewery in Suzhou for my former company Lion Nathan, so I really do know about the pleasures of local brands of beer.
Today, I am the leader of Saatchi & Saatchi Worldwide. Our goal is to generate extraordinary ideas that transform our clients’ businesses. Our vision is to be a hothouse for world-changing ideas. We have 130 offices in 90 countries. We’re the #1 agency in China, #1 in Los Angeles, #2 in London, #3 in New York and #6 in Japan. At a recent conference in New York I shocked the US investment community by telling them China will become the world’s biggest advertising market in the next decade. We plan to help this growth, and to gear up for the full-on marketing of Chinese brands internationally, by signing up smart, dedicated, ambitious and imaginative young local Chinese to join Saatchi & Saatchi.
You all know that China has been touted in the West as the world’s biggest market for potentially everything. The opportunities are immense for global brand leaders. The successful ones will take the classic marketing approach of meeting consumer needs with superb products, offering great value, and wrapped up in fantastic advertising.
The opportunities are even greater for Chinese companies. If they can make the products then Chinese brands can perform better than foreign brands in this market. The vital key to success is marketing – building those Chinese brands. That’s where there are lessons to be learnt from the Western companies.
Two Procter & Gamble brands handled by Saatchi & Saatchi, for example, are doing exceptional business here. Sales of Head & Shoulders shampoo in China will shortly exceed those in the United States, and Tide will become the #1 laundry detergent in China. Tide is Procter & Gamble’s single largest brand and is a great example of how to build and maintain brand equity. Since its introduction in 1946 Tide has been the number one laundry brand in the United States. A great brand like Tide stands for something that consumers care about, something the brand delivers better than its competitors, something that lasts and is consistent over time. This “something” is the brand’s core value system, the fundamental reason that consumers purchase any given brand on a sustained basis.
Tide’s values are captured in a few simple phrases:
- “the best clean you can get”
- “a reliable, trusted friend you can always count on”
- “maintaining family harmony through unsurpassed cleaning that takes care of your clothes.”
These values mean the same thing for consumers from the United States and Canada to Saudi Arabia, Morocco, Russia and China. This is what a global brand means: people all around the world sharing the same vision and set of values of the brand. In supermarkets around the world this means shoppers walking straight past the other washing detergents, and picking up Tide.
What will be the Chinese equivalent of Tide in branding terms? Which Chinese products will make the breakthrough in terms of innovation, quality, value and image, that will be sought after by international consumers willing to pay a premium?
China of course is not the first country to seek to overcome the liabilities induced by a ‘Made In’ tag. Many of you may know this story. In 1945 a company was formed by Masaru Ibuka called Tokyo Tsushin Kogyo. The overriding objective of Ibuka and his colleague Akio Morita was nothing less than changing the image around the world of Japanese products as being poor quality. In the 1950s “Made in Japan” meant “cheap and junky.” Ibuka had no specific product idea, except for a vague concept of applying technology to the creation of consumer products.
Sony, as the company re-branded itself to be understood in foreign markets, pursued seemingly impossible goals. Their first triumph that become a pervasive product worldwide, was a radio that fitted into a shirt pocket. We all know this as the transistor radio.
What is profound about the Sony story is that they started first with the answer – and then worked backwards to find the product to get them there. I’d like to tell you another story, more recent.
One of Saatchi & Saatchi’s most valued global clients is Toyota. They have revolutionised the luxury car market which was traditionally dominated by Mercedes Benz and BMW. Even a decade ago the notion of a luxury Japanese car was a contradiction. There was no heritage for such a product. The perception among Americans was that Japanese cars were functional, but not high performance or high quality. Toyota’s motivation with Lexus was to create a car that was superior in every performance element to Mercedes – and would cost less. This car brand would also communicate important messages about Toyota quality that would improve the desirability of their other vehicles such as Camry and Landcruiser. This was really important – promote the top of the range, the very best quality.
Lexus has been marketed around the world from day one by Saatchi & Saatchi. We set up an entire new agency of 250 people dedicated to Lexus. We called it Team One and placed it in California where our people could think freely, unencumbered by traditional Detroit practices of how you market a motor vehicle. In America the emphasis in marketing cars has been on the engineering, the nuts and bolts. We took the approach of selling the whole package emotionally, rather than the bits in a mechanical way. We put a luxurious look and a sophisticated tone of voice on the product, and wrapped it in the line “the relentless pursuit of excellence.î
That image stuck with US consumers. Now all Japanese cars are likely to be regarded as more stylish, of higher quality and better engineered.
I want to introduce you to a brand whose time is about to come. This brand has a seductive set of values that I would love to take hold of and shape into a highly desirable global icon. These are the brand values:
- High intelligence
- High craft
This brand is cool! I want to be part of this brand. Is it Sony? Is it Mercedes? Is it Coke? As a consumer it has qualities I want to identify with. The brand values suggest a richness, a depth, an allure that is philosophically inviting. This brand contains a rich set of beliefs and practices, from how I should care for my mind and my body and my soul, to how I should design and arrange my house.
The brand, of course, is China.
As a consumer I have high expectations of this brand. I can’t get these values from the West, especially as they are backed by 5,000 years of culture. This is the society that centuries ago invented paper and the printing press, gunpowder, the mechanical clock, acupuncture, the magnetic compass and so on. Consumers in the West are searching for these kind of brand values. But the brand also offers the promise of the New China, the excitement of a country re-inventing itself, and the allure of a country which is returning to its central place in the world order.
Ever since I first came to China almost ten years ago, I’ve been searching for a place to buy Brand China. I couldn’t find it until two weekends ago in New York when I went with friends to Shanghai Tang, the new department store David Tang has opened on Madison Avenue. David Tang of course is speaking later in this morning’s programme, and he will no doubt share with you his vision, but let me tell you for a moment what I found. I found a Chinese style that is sumptuous, playful, contemporary, adventurous, ironic and chic. I found a delicious re-invention of the historical Chinese aesthetic. I found wonderful silks and scarves and jackets. The service staff were beautiful and charming. The packaging was exquisite. Everywhere there was quality. And it was expensive, which goes to the heart of great branding – being able to add a premium for the added value.
I say all power to David Tang for his application of Western marketing, branding and design to products that have China at their essence. Right at the moment Shanghai Tang is the Lexus of China. It’s operating at the top of the range and setting a design style and standard.
Brand China is perfectly positioned to be applied to products that have a unique Chinese angle such as textiles, ceramics, herbal remedies, medicines, teas and beverages, and even furniture, electronics, appliances, bikes and motorcycles.
Take tea, for example, an inherently Chinese product but one which is an essential part of the fabric of Western life. There’s a job just waiting to be done to develop a carbonated green tea product for world markets that’s flavoursome, refreshing and energising. It would draw inspiration from Chinese philosophies of energy flows and have great allure to Western consumers fascinated by the power of Chinese medicines. You would draw on research about world consumer markets, shape the product, name it, image it and market it to people all over the world as the drink of Brand China.
The lesson for Chinese entrepreneurs wanting to develop premium brands for Western consumers, is that they must find or create high quality products that will be relevant. This is the Sony story all over again: find the answer first in your core values, then find the substantiation in breakthrough products and packaging. The key is to make sure the answer you come up with is excellence. Then like Lexus, go in relentless pursuit of that excellence. Never make a product or a deal which doesn’t take you closer to that goal.
I believe what China needs to do right now in order to build global brands, is to broadly research the emerging generation around the world. These are the kids aged between 5 and 15 years who have been variously called Generation Y, the Net Gen, or the Millennium Generation. Find out what the opinion leaders who set the agenda are thinking, and be sure to avoid the thinking of the herd, the masses who are the followers.
Generation Y are the consumers of tomorrow. We already know they will be the most culturally diverse and linguistically adept generation ever. They are worried about the future, wary, and are distrustful of all authority other than their parents. They are brand and style conscious, visually sophisticated, extremely comfortable with technology, and are media savvy. The opportunity for China is that Western companies do not understand Generation Y, if they’ve even bothered to consider them as an audience at all. From a cultural perspective, these young people are open to Chinese values such as harmony.
If you invest in the overall brand of China to imbue in the world a sense of Chinese values I proposed earlier such as inventiveness, energy, harmony, high craft and so on, then generation Y will be your receptive audience.
Intel, the world’s leading manufacturer of microprocessors, spends 500 million US$ a year on global marketing and branding. Pepsi spent 500 million US$ last year on a global branding campaign to change the identity and image of their product. These are the sorts of numbers needed to reach a global audience and to shape and change perceptions.
Above all, China must not be passive about prospering from the West. The job of taking China to the West will not happen without concentrated effort. If you do nothing, it will be one-way traffic, with the world beating a path to cash-in on China. Just like Lexus did, China should find a single marketing partner with a global network, that fundamentally understands the job to chart a course through the shoals of contemporary Western society. To give you a taste of the issues that face modern marketers, let me give you just three characteristics of a consumer society. I’m sure you’ll recognise some of these features in China.
First, we live in what we at Saatchi & Saatchi call the Attention Economy. Everyone is so busy with their jobs and families and trying to keep up with all the news and events and just making it through the week, that getting their attention is a very difficult task for an advertiser. The result is that attention is a scarce commodity, and consumers will only grant you their attention if you appeal to them the right way.
Second, markets are intensely competitive. Almost every economic sector contains many competitors with products just as good as each other, service of a similarly high standard, and prices almost the same. The brand promise therefore, and the images that go with it, become the only difference between one company and another.
And third, there is the phenomenon of the “never-satisfied customer. The expectations of consumers keep getting higher and higher. People want instant service and if they can’t get it from you, they’ll get it from someone else for the same price or cheaper. These are the sort of big picture issues that have to be grappled with in order to succeed in a modern market economy.
At Saatchi & Saatchi we believe that the solution is totally concerned with ideas. Today, ideas have become the most important economic input. We have moved from the muscle to the mind as the principal tool for generating wealth. Knowledge has become the primary ingredient of what we make, do, buy and sell. I expect these propositions would be embraced in China given the depth of your philosophies, your rich history of invention and the value you place on education.
The biggest idea I can talk to you about today is your brand. A brand is constructed entirely of ideas, and although it adds nothing physical, a brand can significantly increase the intangible value of your products.
I’d like to show you what I mean. Ideas are the essential element of great advertising. I’ve got seven ideas to show you – some people call them ads – plus some trade secrets to share. I always get asked “what are the essential qualities of a great advertisement?î Here’s the Saatchi & Saatchi seven point plan. An ad doesn’t need all these ingredients to be successful. However, the more these qualities are present, the more likely an idea will be a success with consumers.
The first element of successful advertising is originality. Viewers like ads which are different, fresh and unique.
The second characteristic of a great ad is cleverness. Viewers like ads which have obviously had thought and effort put into them. They like to admire the ad-maker’s skill.
The third key quality is honesty. People want to believe the promises made in advertising, and they are quick to spot insincerity and over-exaggerated claims. Viewers definitely prefer soft sell to hard sell.
The fourth point is relevance. There must always be a genuine link between the ad and the product and the viewer.
Another key quality is humour. Humour disarms people and opens them up, which gives the brand more chance to “get in there and stay.”
The sixth key quality is campaignability. This is a crucial element. At Saatchi & Saatchi an ad campaign isn’t a one year strategy, it’s a five year one or even hopefully a twenty year one. Just look at the Lexus campaign. We build campaigns because this is the best way clients get value for money. We reject the model of clients making one-off ads, or chopping and changing their ads.
The final key quality of a successful ad is music. Music can really crystallise everything else in an ad. It’s often the most enduring mark an ad leaves on the brain, inducing the “I-can’t-get-that-tune-out-of-my-head” phenomenon.
A great advertising campaign is just one part of a great brand. The brands which shine brightest are created by innovative companies with the most enlightened business practices.
Companies which deliberately create the conditions where the fresh ideas behind brands can be born and grow. A great brand is an expression of a great company – and I have to say there are becoming fewer and fewer great companies in the West.
Total obsession with cutbacks, re-engineering and constant restructuring is not the way of the future. I admire the Chinese practice of setting major goals, big long term goals – dreams – and then working creatively, co-operatively towards achieving them, with the Chief Executive as the inspirational leader.
There’s a lesson there for Chief Executives everywhere. Our primary role as a CEO is to be inspirational as the steward of our company’s brand. That’s good business sense – your brand is your company’s greatest asset. The fundamental value of your company is dictated by the value of your brand. Your brand dictates your revenue – it tells you how much you can charge for each of your products, and how many you will sell. A great brand creates a premium for your products. If consumers believe in your brand, then quite simply they will pay more for your products than for the same product in a different package.
If you want your company to be a brand leader – to be the Chinese Tide or the Chinese Sony or the Chinese Lexus, then your number one task as CEO is to build that brand. You are already your company’s best salesman. You command the most respect and the attention. You must inspire your organisation and your customers to believe in the greatness of your brand.
Have the vision, create the unique products, make them excellent through design and style, build the brands and turn up the volume. The task is not small, but the rewards are great. The west is ready for China. With concepts such as Brand China you will leapfrog the West and create the future of the world.