Made in China

Made in China

Made in China

This is the story of ‘Ainonghui’, a farmers’ association in China. This is also a story about social change. In 2005, a group of people found that they could not access good, safe food in regular markets of Liuzhou, Guangxi province. In search of quality produce, they went to the nearby villages that are located around the city. In that remote countryside, the villagers still practiced traditional agricultural models of organic farming. With the notion of helping these farmers and developing a stable channel of organic produce, they founded a social enterprise called Ainonghui. They helped those farmers streamline their activity and attached them to a few restaurants that serve organic food. This small story looks even smaller when shared like this but the amount of effort that goes into bringing about a social change is huge. Especially in a country like China, this story looks tiny. With so many tiny stories like this, the Chinese created an ocean of change.

This is how China became the rising Sun.

First, they stopped being ideologically rigid. In less colourful terms, the Chinese realized their future at the cost of a surge in inequality and a substantial share of carbon emissions. With an overarching goal, they moved from a centrally planned economy to a market economy. Recently, Syed Akbaruddin, former diplomat and Indian representative at the United Nations, recalled his brief stint in China while addressing the students of the University of Hyderabad, his alma mater. He said that he watched the Bollywood movie Tezaab while he was working in China and when he returned to India, he happened to watch it again and was taken by surprise learning that the movie he watched there was censored frame-to-frame. He expressed his contentment that the country has moved forward and has changed completely now.

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A lot has changed indeed since then. In both China and India, average real incomes have approximately doubled in the past thirty years. China joined the World Trade Organization by the end of 2012, which meant that the country was willing to test its strength on a global stage. Until then, China was used to playing by its own rules but now that it is part of WTO, the rules have been rewritten. This very move altered the dimensions of the manufacturing industry. Chinese brands and businesses moved their manufacturing facilities to China entirely in the process of ‘offshoring’. Offshoring is a great deal because they can make products at a low production cost and sell them to the world. At the same time, Chinese brands earned the name ‘original-equipment-manufacturers’ in the beginning, and slowly became leaders who create and manage global brands.

Maybe, it all started with Deng Xiaoping, the Chinese Communist leader, politician and reformer, saying, ‘to get rich is glorious’. This reform happened inside out. The decision of the third plenum of the 18th Congress of the Chinese Communist Party listed over 300 reform items essential to improve the economy, including monetary, social security, health care, and environmental items, along with the state-owned enterprises. After the well planned & executed ‘silk road’, Chinese trade routes laid out themselves allowing a flux (both in and out) of technology and innovation. This accelerated progress and made China a part of the global market. Adding to this, the digital revolution and cultural exchange has influenced the markets and consequently the consumer behaviour, and the advertising industry too played its part. In a country where advertising was seen as a capitalist evil, huge billboards of Kentucky Fried Chicken and McDonald’s appeared everywhere. Apparently, Deng’s statement is more relevant now.

With the new economic policies, China has welcomed western brands and in fact, Chinese make a large fraction of the luxury brands’ consumers. Concurrently, Chinese brands have made their way into our lives and became a part of our routine. This social and technological leapfrogging is a spectacle, but operating in the global market means fighting with global competitors. The twenty-first century came in and shifted the power to consumers and now consumer-centricity is an acquired trait in global brands, without which any enterprise is doomed. So, the next spectacle would be how tough would Chinese brands get against western ones to thrive in a global market.

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Against this background, when researchers asked international consumers to describe Chinese brands, the most used/chosen words were ‘cheap’, ‘low value’, ‘poor quality’, ‘unreliable’, ‘unsophisticated’ and ‘innovative’. The last response here is comforting, but innovation needs quality and sophistication.

There are quite a few Chinese brands that actually make it big in the home-market. Most brands operate in industries such as computer applications, gaming, consumer electronics, mobile applications, ecommerce and other services. Alibaba, Haier, Lenovo, AirChina, Banggood, Bigo Technology, DH Games, Fotoable Inc., Ant Financial and many other valuable companies stay in the top 50 Chinese brands list and they are trying to venture into the west. Out of these brands, Lenovo and Haier have already made their presence formidable in the international market by deploying a functional brand strategy.

Lenovo is the new name of the old company ‘Legend’. The first two letters of the old name have been retained in respect of the legacy the company carries, and ‘novo’ has been added as a suffix making the name what it is now. A year into its rebranding, the company acquired IBM’s global personal computer division, which now owns a seven percent market share. In the same way, in an attempt to appeal to global consumers, Qingdao Refrigerator Plant was renamed as ‘Haier’ and proper distribution and supply channels were established. Now, Haier is a global competitor who cannot be ignored at any cost. It appears that Chinese brands share a common quality of centrifugal growth. Having built a strong consumer base and establishing themselves as a dependable brand in the home-market, they venture out into the international markets either with a new name or by buying out a company from outside China or investing in a foreign firm.

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The 2018 KPMG report notes that within the consumer goods vertical, the Chinese consumer electronics brands have some of the highest levels of brand recognition. The report states that if goods made in China were associated with low quality products, that perception is rapidly shifting. Today, international consumers, especially those in emerging markets, are very receptive to products from Chinese companies. With a hold in the home-market, many Chinese brands have already entered nternational markets such as Thailand, Indonesia and India and this is quite a market-diversity to exhibit.

The ‘Made in China’ mark surely was a little disappointing earlier but they believe it will not be anymore. Chinese brands have managed to find a new voice and a narrative. On the contrary, sloppy Chinese products are readily available too. If not soon, this dichotomy will have to change in the near future to make the mark less disappointing.

Europe was the twentieth century’s setting Sun.
America then became the rising Sun.
China is rising now. So, what is next?
Maybe it is too early for the new Sun to rise.
Anyway, two Suns cannot be rising at once.