China – Poised to go global

An analysis of China's Top 50 brands and their potential for global growth, as well as China's 12th five year plan and the rise of consumer culture

In January a seminar in London discussed trade with China, the country’s strongest brands and the changing attitudes of Chinese consumers. Thirteen of the 100 top earning brands in the world are Chinese, yet few are household names outside China

On 14 January 2013, WPP and UK Trade & Investment hosted ‘China: New Year, New Leadership, New Opportunities’, a half-day seminar held in London, designed to shed greater light on topics including what the change in political leadership will mean for business in China, the shift by Chinese companies from manufacturers to brand marketers, the growing shopping sophistication of Chinese consumers in second and third tier cities and the Chinese corporate quest for partners at home and abroad.

Chaired by David Roth, CEO of WPP’s The Store, EMEA and Asia, the seminar opened with a comment from Ed Vaizey MP, UK Minister for Culture, Communications & Creative Industries, who advocated UK companies as potential business partners for Chinese brands. He cited the 2012 Olympic Games and last year’s UK Now festival, which was held in China and attracted an estimated 400 million attendees, as demonstrating Britain’s suitability as an area for serious Chinese investment.

WPP CEO Sir Martin Sorrell, interviewed by Roth, affirmed China’s position as the leading BRIC country, emphasising the sheer scale of its population. He revealed that China’s population, while generally cited as being 1.3 billion, could be as high as 1.5 billion (a census is ongoing), meaning there could be another 200 million potential Chinese consumers.

In the context of 2013’s global economic situation, China is becoming more important than ever because of the lack of growth in western Europe and the US, he said, adding that China’s 12th five year plan (covering the period from 2011 to 2015) was achieving its targets, which include 7% GDP growth, increased consumption, the development of the service sector, a scaling down of quantity in favour of quality and a greater focus on the hinterland/west of China.

Commenting on the performance of domestic and foreign companies in China, Sorrell referred to a ‘battleground’ in which multinationals with a Chinese presence currently enjoy significant consumer loyalty but suffer from a lack of awareness and limited distribution, whereas local companies lack loyalty but are well known and have established distribution.

He concluded that for foreign brands China was a high risk but high reward market. “All opportunities are threats if you don’t deal with them,” he said, warning that certain brands operating in certain industries and/or provinces of China had “already missed the boat”.

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