Branding - What the Chinese companies are terrible at

The Romantic Advantage

By DAVID BROOKS

 

Published: May 30, 2013 

In the race to be the world’s dominant economy, Americans have at least one clear advantage over the Chinese. We’re much better at branding. American companies have these eccentric failed novelists and personally difficult visionary founders who are fantastic at creating brands that consumers around the world flock to and will pay extra for. Chinese companies are terrible at this. Every few years, Chinese officials say they’re going to start an initiative to create compelling brands and the results are always disappointing.

According to a recent survey by HD Trade services, 94 percent of Americans cannot name even a single brand from the world’s second-largest economy. Whatever else they excel at, Chinese haven’t been able to produce a style of capitalism that is culturally important, globally attractive and spiritually magnetic.

Why?

Brand managers who’ve worked in China say their executives tend to see business deals in transactional, not in relationship terms. As you’d expect in a country that has recently emerged from poverty, where competition is fierce, where margins are thin, where corruption is prevalent and trust is low, the executives there are more likely to take a short-term view of their exchanges.

But if China is ever going to compete with developed economies, it’ll have to go through a series of phase shifts. Creating effective brands is not just thinking like a low-end capitalist, only more so. It is an entirely different mode of thought.

Think of Ralph Lifshitz longing to emulate WASP elegance and creating the Ralph Lauren brand. Think of the young Stephen Gordon pining for the graciousness of the Adirondack lodges and creating Restoration Hardware. Think of Nike’s mythos around the ideal of athletic perseverance.

People who create great brands are usually seeking to fulfill some inner longing of their own, some dream of living on a higher plane or with a cooler circle of friends.

Many of the greatest brand makers are in semirevolt against commerce itself. The person who probably has had the most influence on the feel of contemporary American capitalism, for example, is the aptly named Stewart Brand. He was the hippie, you will recall, who created the Whole Earth Catalog.

That compendium of countercultural advice appeared to tilt against corporate America. But it was embraced by Steve Jobs, Steve Wozniak and many other high-tech pioneers. Brand himself created the term personal computer. As early as 1972, he understood that computers, which were just geeky pieces of metal and plastic, could be seen in cool, countercultural and revolutionary terms. We take the ethos of Silicon Valley and Apple for granted, but people like Brand gave it the aura, inspiring thousands of engineers and designers and hundreds of millions of consumers.

Seth Siegel, the co-founder of Beanstalk, a brand management firm, says that branding “decommoditizes a commodity.” It coats meaning around a product. It demands a quality of experience with the consumer that has to be reinforced at every touch point, at the store entrance, in the rest rooms, on the shopping bags. The process of branding itself is essentially about the expression and manipulation of daydreams. It owes as much to romanticism as to business school.

In this way, successful branding can be radically unexpected. The most anti-establishment renegades can be the best anticipators of market trends. The people who do this tend to embrace commerce even while they have a moral problem with it — former hippies in the Bay Area, luxury artistes in Italy and France or communitarian semi-socialists in Scandinavia. These people sell things while imbuing them with more attractive spiritual associations.

The biggest threat to the creativity of American retail may be that we may have run out of countercultures to co-opt. We may have run out of anti-capitalist ethoses to give products a patina of cool. We may be raising a generation with few qualms about commerce, and this could make them less commercially creative.

But China has bigger problems. It is very hard for a culture that doesn’t celebrate dissent to thrive in this game. It’s very hard for a culture that encourages a natural deference to authority to do so. It’s very hard for a country where the powerful don’t instinctively seek a dialogue with the less powerful to keep up. It seems likely that the Chinese will require a few more cultural revolutions before it can brand effectively and compete at the top of the economic food chain.

At some point, if you are going to be the world’s leading economy, you have to establish relationships with consumers. You have to put aside the things that undermine trust, like intellectual property theft and cyberterrorism, and create the sorts of brands that inspire affection and fantasy. Until it can do this, China may statistically possess the world’s largest economy, but it will not be a particularly consequential one.