“Do you know more than one Chinese brand?” According to the Chinese newspaper Runnmingmang (人民網 ), 20 July 2015, a recent survey of foreign consumers has found that the number of positive answers to this question has significantly increased from three% in 2012 to 23% in 2015. At the same time, we observe Korean car (Hyundai and Kia) and electronics brands (Samsung and LG) ranking in the top 100 most valued global brands.
In the last few years, we have also come across news about Chinese start-ups and the fastest growing companies now being Chinese. For example, in 2014, we saw Alibaba, a Chinese e-commerce company, with an initial public offering, become the largest ever IPO. This company alone generated over $22 billion in revenue in its first day of trading.
In the past, consumers from the West associated “Made in China” products as cheap, and of perhaps poor-quality. However, in the last few decades, the Chinese government actively supported Chinese multinational firms to build positive global brand awareness. Meanwhile, Chinese companies have been emerging with successful efforts towards internationalisation. These Chinese firms have repositioned themselves to obtain advantage competitiveness in the global market through improving both product quality and service, and their brands.
As a result, today, more and more Chinese brands have – more or less - overtaken American and European brands in global markets. 29 Chinese brands are listed among the top 500 world companies, and four Chinese internet firms, Alibaba, Tencent, Baidu and Jingdong, are listed on top 10 global internet companies (Fortune 2015).
Nowadays, not only Chinese brands but also other East Asian brands (Japan, Korea, Taiwan) have taken centre stage of the global market. For example, in the smartphone industry, Samsung lead the top in both smartphone shipments and global market share in 2014 and 2015.
Huawei, the Chinese tech powerhouse, is currently the world's third-largest smartphone maker by shipment volume after Samsung and Apple. It shipped 108 million smartphones in 2015 with a 44% increase compared to 2014. Huawei essentially copied the Samsung approach when Samsung took over from formerly Siemens in Germany, then Nokia in Finland, then some Japanese and Taiwanese brands.
Here’s the recipe: advance technology beyond competitors, make strong mobiles, keep costs low, compete on pricing and build the brand. The new Huawei P9 does precisely that – it has a huge marketing budget to build that Chinese brand outside of China.
There are more Asian smartphone producers such as Xiaomi (Chinese), Lenovo (Chinese), HTC (Taiwanese) and LG (Korean). It demonstrates how the smartphone industry is now dominated by East Asian Companies.
East Asian companies strongly outperform the global market because they set up high standard of goals, focus on performance and execute the promised value. How is this possible, how has the West been superseded?
To deliver high standards, it may well be argued that the cradle of economic success goes back to the performance driven education systems in East Asia. They are characterised by strict discipline, a focus on academic performance, and a competitive attitude, all driven by East Asian Confucian values.
Such values spill over into the workforce, and East Asian brands have also recognised the importance of high quality service, loyalty and trustworthiness. While East Asia has long been at the forefront of manufacturing (cars, consumer electronics, batteries, semiconductors, ships), we are now observing East Asian services blossom, and quite possibly so because of that performance driven and disciplined workforce that emerges from the Confucian education system.
In the airline industry, Singapore Airlines and Cathay Pacific (Hong Kong) both ranked in top three best airlines in 2015 (SKYTRAX), and the Korean airlines (Korean Air and Asiana) are also regular prize winners for excellent service. These prestigious airlines have built brand awareness through their high quality workforce providing Asian caring service, putting the customer first. Excellent service and respectful front line staff are rooted in an emotional attachment of staff to customers and their employers, and enjoyment on their job, which in some sense, relates to ‘work ethic’.
Research supports that education drives work ethic. By analysing panel data from 10 countries (Australia, China, Germany, India, Indonesia, Japan, South Korea, Singapore, UK and the US) to test the pedagogical approach’s role in forming work ethic, it was showed strong associations for performance orientation and respect, both in Asia and Western countries. However, strict discipline and a focus on academic performance were merely found significant for the Asian cluster. The model explains 10-37% of work ethic, indicating that the pedagogical schools and universities indeed influences work ethic.
Asia’s education systems instill work ethic through strict discipline and a focus on academic performance, whereas these effects could not be seen in Western countries. Have they lost focus somewhat, and this is now reflected in reduced competitiveness of the Western workforce?
In East Asia, human interactions are an important part of culture with tradition and rituals, influenced by Confucian values. Confucian values are characterised by harmony, respect and humility, and these values are passed on in East Asian education. This also affects East Asian brand building and their positioning with customer orientated marketing.
Western brands may be at risk of neglecting that basic customer-oriented performance with strong focus on immediate commercial and financial benefits and sometimes blown up bureaucracies in their back offices.
Meanwhile, East Asian companies successfully build brand awareness and increase their market share, and they have a clear focus on customers – and – the competition. Perhaps an understanding and analysis of East Asian cultures and values (including how they pass on Confucian values and performance orientation in their education systems and into their work forces) may benefit companies looking for a new approach to brand building.
By associate professor at Macquarie University and Seoul National University (SNU), Korea , Chris Baumann, and SJ Yang, an HDR candidate at Macquarie University.