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December 28, 2016

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Chinese brands face cultural obstacles

FROM electronics producers to railway contractors, Chinese businesses all face the same problems—promoting their brands overseas.

One of China’s most influential commercial symbols, Lenovo, has overtaken HP as the world’s leading PC manufacturer, partly through acquisition of foreign peers, but its executives remain on the alert.

“For a domestic firm eager to expand, the biggest challenge comes from cultural differences which cannot be solved by buying companies. It is crucial to integrate into the community, speak the same language and share the same values,” said Wang Chuandong, Lenovo China’s vice president and chief marketing officer.

New York consultancy Interbrand ranked Lenovo as the world’s 99th most valuable brand at US$4 billion. HP, however, is ranked 48th with a value more than double that of Lenovo. The other Chinese company on the top 100 list is Huawei, a rising tech star. Of the top 100, 52 originate in the United States, 10 come from Germany, eight from France and six from Japan. Considering that China is the world’s second largest economy, homegrown businesses are lagging far behind.

“We have a staff of 65,000 worldwide, with nearly 30,000 non-Chinese. American Yolanda Lee Conyers is our chief diversity officer. Our CEO Yang Yuanqing worked and lived in the United States for many years. This improves global cohesion inside the group,” Wang said.

Chinese companies must take local customs and local benefits into account when trying to win local hearts, said Paul Haenle, director of Beijing’s Carnegie-Tsinghua Center for Global Policy.

Rolling stock manufacturer CRRC set a good example in creating a bond with local people when overhauling an old industry base and building new factories in Springfield, Massachusetts.

“There was an old building to be torn down, but we found out that it had a history of more than 100 years and had stood witness to the industrialization of the region and people had an emotional bond with it,” said Li Min, a marketing executive of CRRC.

The company preserved the structure, renovating it and turning it into an office building, receiving much praise from local people.

The move smoothed a somewhat frosty reception which CRRC had encountered in the United States and, in March, the company was awarded a billion-dollar order to supply 850 railcars to Chicago, its largest deal ever in a developed country.


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