The appeal and illusion of foreign brands in China

Photo: Wal-Mart in China

In China, Wal-Mart is synonymous with good quality and a pleasant shopping environment. It’s a far cry from the low quality – low price image prevalent among US consumers.

And Wal-Mart isn’t the only one.

Holiday Inn in China is often located in brilliantly decorated downtown high rises, instead of being just off the highway. Their clients aren’t budget travelers, but rather international businessmen or rich bosses from China.

Fast foods restaurants such as McDonalds, KFC, Pizza Hut and Subway in China are renowned for their quality. These places are always packed with customers, especially young people. To them, it’s in fashion to eat there.

McDonalds, KFC, Holiday Inn, Pizza Hut, Subway, Wal-Mart and other companies are getting a high-class makeover in the Middle Kingdom, where these modest establishments suddenly transport Chinese consumers into a world of privilege, abundance and luxury.

Why are US brands often perceived so differently in China? Quite simply, US brands say quality, just as this article in Brandweek titled Emerging markets still like US brands will attest to:

“Branded international products are a mark of quality,” said Mike Sherman, executive director of customer insights for Synovate Asia, Hong Kong. “Even low-income consumers will pay a premium for a well-made, branded product.”

China, the premier emerging market, has a taste for not only Bud, but also Coke and Kentucky Fried Chicken. Safeguard soap is also very popular, as are Sony TVs. “China was closed down for so long, that they have more of a nostalgic pull for all things American,” said Gerald Celente, director of the Trends Research Institute in Rhinebeck, N.Y. “They have an affinity for America as it used to be so they are flocking to brands that are more past than present.” Adidas, Armani, Chivas Regal, Lipton, Maybelline, Shell and 7-Eleven are among the brands with more Western appeal to appear among the Chinese most-preferred brands.

For Chinese, service from a foreign business seems to give people a sense of importance or superiority. They are apt to think all American products are good just as they tend to believe all Americans are rich. To be sure, these products/businesses do tend to look nicer in China. But much of this is just an illusion. In fact, when Chinese come to the US, they will be surprised to find that Wal-Mart looks less appealing, McDonald’s is just an average fast food restaurant — not a chic hangout — and Subway has restaurants in gas stations. Nevertheless it’s a profitable illusion for these well-branded companies who enter China.

So what about middle-market companies — or newer companies? Just being from a major Western country still has a lot of cache for the average Chinese consumer or Chinese businessperson. I spoke to a Chinese supplier for one of my clients, and he gushed about how trustworthy my client, an American, was. That’s not the first time I’ve heard Chinese consider Americans trustworthy. The very fact that one is an American in China brings along an entirely positive stereotype with it.

Though note to the Chinese…we’re not all trustworthy, so caveat emptor!

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