The Whiteboard: When 'Made in China' makes us queasy, building brands is not so easy
China has a brand problem.
It cuts right to the heart of what makes a brand sustainable. It shows up repeatedly across a variety of industries, and while it isn't universal, it's pervasive: Too many Chinese companies cheat on specs, break the rules and try to sneak substandard products through the system. Their brand problem is a lack of integrity, and that's a big deal, because all brands must have it to build loyalty.
The foundation of a brand is trust, which is why slogans that essentially say, "This is a brand you can trust" are not saying anything at all. No trust, no brand.
Brands can't assume trust or demand it; they have to earn it with consistent brand experiences that deliver exactly what they promise, or maybe a little more. So if your brand promises an inexpensive umbrella or plush toy and your customers' expectation is that it's cheap, but not necessarily very high quality, you can build a successful brand.
But when it comes to more important products like food, toys or technical products, a lack of integrity is far more serious.
Interviewed by Time.com last year, Michael Clendenin, managing director of RedTech Advisors, a Shanghai-based consumer technology research and consulting company, had this to say: "For every one Chinese company that is improving product quality, there are probably 10 out there that are still cutting corners and two other new companies are coming into the market by cutting more corners."
So, here's a pop quiz: Name a Chinese brand.
To be clear, I'm not asking for a brand that uses Chinese manufacturing but is based in the U.S. or another country. Just name a Chinese brand with any kind of international success.
Having trouble? Me, too, so I asked Google.
Turns out Millward Brown's BrandZ has a well-researched list of the top 50 most valuable Chinese brands. I knew two of them well: Lenovo and Haier. I had heard of two others: Tsingtao beer and Air China. That's it.
While the latter two rely, at least in part, on the magnificence of Chinese culture, I had no idea that the first two were Chinese brands. Certainly a name like Haier sounds more European than Chinese, and it is, indeed, derived from a German word.
China has continually generated controversy over faulty, or even dangerous, product manufacturing practices, ranging from putting poisonous melamine in milk powder to lead paint in children's toys. It has ignored patents and trademarks, produced a litany of counterfeit products and now its military is alleged to be hacking into corporate computers around the world.
Despite being able to produce some of the world's most sophisticated electronics products for leading brands like Apple and produce millions of other products of acceptable quality, "Made in China" too often conjures images of cheap goods of suspicious quality.
Much of China's tremendous economic growth has been based on providing low-cost manufacturing of products for non-Chinese brands, but now the economic gap is reportedly narrowing as wages and other costs in China are increasing rapidly.
Some estimates are that Chinese manufacturing may offer only a small percentage advantage after shipping costs are calculated. Apple has announced it is returning some manufacturing to the U.S. and is pushing its lead manufacturer of mobile devices, Foxconn (a brand name problem in itself), to improve labor practices at its Chinese plants.
Bad news for brand China, but good news for brand USA. Chinese-made goods have succeeded less for their quality than for their low price. But take away that edge, and "Made in America" could become more important than it has been for a long time.
"Made in Japan" once had the same stigma of low quality and questionable business practices. Japanese products are now at the other end of the brand integrity scale, and names such as Lexus, Sony, Honda, Toshiba, Bridgestone and many more are household names in this country.
More Googleness: SAIC Motors is the leading Chinese automobile brand, in a market that is still dominated by foreign brands (could it possibly be the quality?). So, when a brand like SAIC becomes established in this country, we'll know that China has turned the corner and can compete in the global brand arena where high quality and consistent results make the difference between the best brands and the cheap imitations.
Until then, "Made in China" may do more harm than good for the country and the brands that rely on it.
David Taylor is president of Lancaster-based Taylor Brand Group, which specializes in brand development and marketing technology. Contact him via www.taylorbrandgroup.com.