Oral History: Famous Brands Battle Identity Crisis
As a longtime foreigner living in China, I’ve always been intrigued by the local fascination with famous brands, or mingpai, and how much weight such names carry among local consumers. Brand names are also important for westerners, but they seem to take on a much bigger importance among Chinese — often to the point where a name becomes more important than the actual product.
Against that backdrop, I was intrigued to read about a recent exhibition in Shanghai to promote some of the city’s most famous brands of years past, including names like Forever (永久) bicycles, Butterfly (蝴蝶牌) sewing machines and Pechoin (百雀羚) beauty products. Many of these household names for a previous generation have faded or even disappeared in recent years, collapsing in the face of competition from newer local brands and international rivals.
This effort by Shanghai to promote its local famous brands seems commendable in some ways, as many of these names have cultural value and represent an important part of modern Chinese history. But at the same time, I strongly believe such brands should survive only if they can innovate and remain relevant in today’s society without major government help. Those who can’t should be allowed to quietly close, relegating themselves and their colorful names to the history books for collectors and museums to appreciate.
My own experience in China is filled with memories of such famous brands over the last 25 years. I remember happily drinking many bottles of Yanjing beer and Erguotou liquor during my days in Beijing in the 1980s, and also frequently snacked on White Rabbit Cool Creamy Candies (大白兔奶糖). For doing laundry, my personal favorite was White Cat brand detergent. Flying Pigeon bicycles were considered the best of the best way to get around town in those days, and supply was so tight that people often had to wait for months to buy a new bike bearing that famous brand.
I’ve never seen any formal research on why Chinese put so much faith in famous brands, but my guess is the reasons are mostly historical and cultural. In the socialist era when all factories were state-owned and profit and product quality were unimportant, famous brands allowed average consumers to distinguish the handful of high quality product makers from the rest of the herd. The Chinese love of famous brands also probably stems from the Asian concept of face, since such brands are often status symbols for anyone who owns them.
Some of the famous Chinese brands of previous years have managed to make the transition to modern times, but others haven’t been so successful despite admirable efforts. A friend who works at one of those names, Shanghai piano maker Strauss (施特劳斯钢琴), recently told me how orders for the former famous brand have dropped sharply in recent years. He said the company was once the most famous piano brand in China after its founding in 1895, but is now constantly losing money and has laid off many of its employees. It could just be a matter of time before it is forced to close or be taken over by a larger state-owned enterprise, he added.
Some of the brands have managed to survive by innovating, with names like Butterfly and Forever showing off advanced new products like high-tech sewing machines and electric bicycles at the recent Shanghai event to prove their continued relevance in today’s consumer world. While I commend them for their efforts, I do suspect that many will ultimately fail to make the transition in the longer term simply due to their slowness and stiff global competition.
A look at the latest list of the world’s most valuable brands paints an interesting picture of this dynamic landscape, and hints at the types of Chinese brands that are likely to survive into the future. Among the top 20 brands on the latest list compiled by brand consultant Interbrand, 7 didn’t even exist 40 years ago. Those include the world’s second, fourth and fifth most valuable brands, Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG) and Microsoft (Nasdaq: MSFT), which were founded in 1976, 1998 and 1975, respectively.
Among the older companies in the top 20, most are consumer brands like Coca Cola (NYSE: KO) and McDonalds (NYSE: MCD), the world’s first and seventh most valuable brands. The other group with major representation is car makers, including Toyota, Mercedes Benz and BMW.
That kind of mix is similar to China, where many of today’s most recognized brands didn’t even exist 20 years ago. Internet names like Baidu (Nasdaq: BIDU) and Taobao are both 21st century creations, and even older well-known consumer brands like Lenovo (HKEx: 992) and Haier didn’t emerge until the 1980s and ‘90s. These are the brands that China and Chinese should really be proud of, as they represent the future of the country rather than a nostalgic past of fuzzy old products with cute names.
That’s not to say that old brands can’t make good products. Coca Cola has managed to not only survive but also thrive since its founding more than a hundred years ago, and is now the world’s most valuable brand. Still, the line of drinks behind this beverage giant is far different and diversified than the original Coke, which was a nerve tonic containing the coca drug. Likewise, the Nokia (Helsinki: NOK1V) of today – the world’s 19th most valuable brand – is far different from the pulp manufacturer behind the company’s origins in the 19th century.
All that said, I still think Shanghai should be commended for trying to promote its famous old brands with an exhibition like the one it held this month, in a bid to showcase their products and portray them as companies of the future. Perhaps buyers will be impressed with the new high-tech line of Butterfly sewing machines, which amateur clothing makers to stitch out 400 different patterns. And maybe Forever’s new smart and electric bicycles will find an audience not only in China but around the globe.
But if Butterfly, Forever or any of the other brands can’t compete, the government should let them quietly close up shop and retire their brands instead of trying to prop them up with subsidies and other forms of state support. Instead of reviving these old brands, Beijing and local governments should focus their efforts and other resources on developing China’s brands of the future like Lenovo and smartphone maker Xiaomi, which have the innovation and savvy to make products that not only appeal to local consumers but also a global audience.
