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Made in China


Those are three little words we're all familiar with. But have you ever questioned what's actually "made in China"?


By that, I'm referring to home-grown Chinese brands. If you haven't traveled to China -- or even if you have -- you might struggle to name even one off the top of your head.

Demonstrated by the lack of Chinese representation on Interbrand's 100 top global brands list, Chinese brands have yet to gain a presence or awareness outside of domestic borders.

This doesn't come as a surprise. Branding is a complicated concept for the Chinese; partly because it's new. Just three decades ago, brands didn't exist in China. And the creativity and business sense required to effectively establish and grow a brand and brand loyalty are two qualities that many Chinese lack.

But as Western companies enter China, allowing consumers to gain a better understanding of a brand, and students flock overseas to educate themselves in an environment that promotes thinking outside the box and exposes them to marketing and brand building skills, Chinese companies are developing -- albeit slowly -- a better sense of brand.

With China's progress mostly contained among its own consumers, Millward Brown and WPP together established the BrandZ Top 50 Most Valuable Chinese Brands list.

Apple (AAPL) and Microsoft (MSFT) -- the two most valuable brands in the world according to Forbes -- are together worth $113 billion. That's more than 40% of the total value of all 50 Chinese brands worth $280 billion. Throw in Google (GOOG) and that figure rises to over 50%. In other words, it will be decades before Chinese brands are capable of becoming international household names.

With a population of 1.4 billion, though, Chinese brand value among its own population is highly important as strong brand recognition can yield huge results within its own borders.

Thus, I'll offer a little insight on a few of the ADR and pink sheet listed companies that made BrandZ's list since brand value and awareness is a key component to the fundamental evaluation of a stock.

Li Ning

Li Ning is a prime example of a Chinese company struggling to brand itself properly. Its presence is vast with 11% market share, lagging only Nike's (NKE) 16% market share (the industry is still highly fragmented in China). As a lower-priced option to both Nike and Adidas, Li Ning has its advantages in lower-tiered cities. The brand is wildly popular amongst the middle-class population.

At the same time it's gaining traction at the higher-end, having re-branded itself this year. Li Ning is determined to expand into a global competitor and has opened operations in the United States, though its domestic sales still account for 99% of total sales. Growing a selection of higher-priced products, it hopes to become a direct competitor to its global rivals. It's certainly already on its way; an Adidas director recently stated they considers Li Ning a direct competitor and revealed they're paying a lot more attention to the company.

It's unlikely Li Ning will ever become a threat to Nike and Adidas on a global scale. And it has a lot of work cut out for itself in terms of deepening its relationship with Chinese customers and developing its domestic brand awareness. But thus far it is one of China's most impressive brand management stories, and if it can carry its past success into the future, the company will be able to capitalize greatly on rapidly growing sporting good sales, expected to more than double by 2013 to $250 billion.


Haier may be a well-known premium appliance brand in the US, and it's assumed that its products are manufactured in China, but few know it's actually a Chinese brand. Haier's global market share grew 20% to 6.1% this past year, making it the number one global appliance brand -- and for good reason; it produces a solid product that surpasses many of its international rivals. Best Buy's (BBY) international division head stated in a recent conference call that local Chinese product sales have grown over 40% at Shanghai locations over the past year, gaining market share from Japanese and Korean brands.

Haier is a prime example of the benefit local Chinese brands enjoy over global brands in terms of understanding the market. With the government subsidizing rural residents to purchase appliances in a bid to develop their lifestyles, Haier has thoroughly researched these markets and tailored its products very specifically to cater to these consumers. Rodent-proof refrigerators and washing machines capable of rinsing potatoes are just two examples of modifications that helped the company double its first quarter profits in 2010.

China Mobile

China Mobile (CHL) has over 60% market share among Chinese mobile users -- no surprise to me given that everyone I know chooses the carrier over its rivals. The company is joined by China Unicom (CHU) on the BrandZ list, but from my experience, has far superior brand recognition. Even among iPhone users.

In fact, China Mobile is so popular that when I tested out an iPhone purchase at the Apple store and told them I used China Mobile, rather than the official and legal China Unicom, they told me no problem. The issue is routinely taken care of. The genius bar had no issue in tampering with my phone to make it China Mobile ready in minutes.

China Unicom is, as far as I know it, a premium priced service. Its 3G package starts at 47 RMB per month, but my China Mobile service sets me back just 10 RMB. This might explains why China Unicom added 2.99 million 3G users in the third quarter while China Mobile added 4.82 million.

China Moble has 569.8 million total subscribers and China Unicom has just 162.1 million. A survey by China Market Research Group held earlier this year revealed that fewer than 10% of Chinese residents between ages 22 and 32 use China Unicom and more than 9 out of 10 suggested China Mobile had better coverage and service. With the Chinese mobile market becoming more saturated, it will be near impossible for China Unicom to catch up by stealing market share.

China Mobile is a clear brand winner in this industry and its dominance as the number one Chinese brand on the BrandZ list confirms.

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