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Branded Entry into the U.S. Market for Chinese Companies
Presented to Young Presidents’ OrganizationThe Monogram GroupOctober 11, 2011
Copyright 2011 The Monogram Group, Inc.
Distribution is very different in the US vs. China, and because that is top of mind for every Chinese company, we have to start there.
National Retailers
Branded Products
Innovative Products
• Dominates products competing on low price (not
available anymore)
• A strong brand gives retailer reason to stock
the product (Chinese companies’ best choice)
• Creates its own category, highest
chance to gain distribution
Private Label Products
OEM Model
Good enough for client specs
Cheapest price
FOB only
Transactional focus
Trade shows, friends’ intros
Immediate sales
No consumer contact
Low margin, high volume financials
Branded Model
Excellent quality, own design
Competitive price
Entire logistics & customs continuum
Relationship with buyers and consumers
Marketing and sales support
Longer sales cycles with many factors
Understanding, serving consumers
Much higher margins and creation of brand value
The Old Reality vs. the Future Opportunity
The Five Prerequisites every Chinese company needs to have to consider the US market.
Excellent product quality (ideally, innovative products)
Clear, realistic business objectives
An international talent team
Appropriate financial resources
Patience (minimum 2 year time commitment)
...which lead to The Five Factors every Chinese company needs to master for success in the US market.
New product development tailored to US market needs
Willingness to adapt business practices to US standards and methodologies
Insights about consumers/customers who buy their products
An understanding of the wholesale and retail process
The differences between OEM and Branded business models and how to do both concurrently as a transitional stage
The Proven Path to securing US distribution.
The Chinese CEO and Board of Directors need to consider the following:
Are you committed to going global and building a brand as the best long-term strategy for your company?
Do you have a team you can trust and authorize? If not, can you hire the management team you need?
Do you have the financial strength and patience to do develop and execute on a minimum 2-3 year plan?
Will you commit to proper due diligence and the flexibility to adapt to local market practices?
Monogram’s market research study into US consumers’ attitudes towards China and Chinese brands.
Research Objectives and Methodology.
Understand American attitudes to China and the quality and price of Chinese branded products over time.
Determine American openness to Chinese branded products.
Explore the necessity of American consumer familiarity with Chinese brands and brand advertising.
Surveys were conducted online in 2007, 2008 and 2011.
Sample is demographically representative of the US market.
Americans appear to be getting more comfortable with Chinese products.
0%
15%
30%
45%
60%
24%
45%
17%
53%
20%
38%
200720082011
% Americans agree that:
I will not buy foods from China because they may have unsafe chemicals or additives.
I think Chinese products are a much better price and value
than American made products.
All countries have an increased perception of being low priced, with China the clear price leader.
0%
20%
40%
60%
80%
US Japan China
71%
28%
7%
60%
17%
3%
45%
17%
5%
200720082011
Perception of Manufactured Goods as Being LOW Priced:
Chinese manufactured goods still reside in the “Low Quality/Low Price” quadrant. The long-term goal is to move into High Quality/Low Price.
0%10%20%30%40%50%60%70%
0% 20% 40% 60% 80%
United StatesJapan
Hig
h Q
ualit
y
Price/Quality Ratios
Low Price
High Quality/High Price
Low Quality/High Price
High Quality/Low Price
Low Quality/Low Price
China 2011
NokiaHyundai
HaierTsingtao
LenovoRed Dragon
Lotus BlossomChery
ChangyuMaotaiBaidu
Ping An
0 20 40 60 80 100
2334
89
1414
1819
9395
Even the biggest Chinese brands were virtually unknown to American consumers, scoring the same awareness levels as brands we fabricated.
% Americans Aware of the Brand
And that low awareness (along with a poor overall image of Chinese quality) correlated to low scores on quality perception.
NokiaHyundaiLenovo
Lotus BlossomHaier
Red Dragon Tsingtao
CheryMaotai
ChangyuBaidu
Ping An
0 10 20 30 40 50 60 70
35556
811121314
4565
% Americans Believe Brand is High Quality Based on Name
Several product categories have recovered from their 2008 lows in purchase consideration.
0%
10%
20%
30%
40%
50%
60%
70%
Tea Clothing Computers Silk Fabric Electronics Toys Cell Phones
38%41%43%
46%46%47%48%
54%
25%
41%
21%
45%48%
29%
46%
54%
38%
45%46%
52%55%
32%
50%
63%
200720082011
% Americans Open to Purchasing
HerbalProducts
Brand familiarity and advertising have increased significantly in importance over the past four years.
0%
18%
35%
53%
70%
42%
67%62%
35%
48%
69%
36%
45%
67%
200720082011
% Americans agree that:
It is important that a Chinese company that
wants to sell their products in US has an
English language website that is written in excellent English.
It is important that I purchase Chinese
goods from a brand with which I
am familiar.
It is important that I have seen
advertisements for a Chinese brand before I will buy their products.
Case Study:Yuzhou Green-Ship Garden Supplies Producing Co., Ltd.
Green-Ship is a $7.5 million manufacturer of unique flower pots and planters made from a patented composite material.
$5 million in sales in Europe and $2.5 million in the US, all under private label. They have no domestic market.
Founded in 1993, they own over 20 Chinese patents for their manufacturing of their products.
They are completing the construction of a new factory in Qingdao that will allow them to triple in sales.
Monogram was hired in January 2011 to create a US brand and build distribution to dramatically grow sales with independent garden centers.
Original OEM Green-Ship branding.
New US brandmark and tagline
New Product Catalog
New Product Catalog
Case Study:Goldwind America
Goldwind is the fourth largest company in the world in wind energy.
Monogram was hired in February, 2011.
Objective: Help Goldwind establish their US brand in North and South American markets in order to overcome political, technological and sales challenges.
Strategy: Create a brand grounded in core values that will resonate with an American/Western audience, such as innovation, hard work and tenacity.
North American trade print campaign.
North American trade print campaign.
Corporate and Product Sales Collateral.
Corporate and Product Sales Collateral.
Corporate and Product Sales Collateral.
Trade Show Flash Modules (select screens).
PERMANENT MAGNET GENERATOR THE LEADERS IN PMDD TECHNOLOGY
Higher powerto weight
ratio
Significantlyreduced
mainenancecosts and total
Technology accolades
Generator cross section
High powergeneratingefficiency
Superiorpower qualityand grid code
compliance
A sustainabletechnology
THE SUPERIOR GENERATOR FOR ECONOMIC WIND ENERGY CONVERSION
GOLDWIND PMG TOUCH SCREEN
BENEFIT FEATURE
High powergenerating efficiency
THE LEADERS IN PMDD TECHNOLOGY
Permanent magnet generator (PMG) eliminates the need for electrical field excitation and associated losses present in induction-type generators.
future machines are brought online.
Superior powerquality and gridcode compliance
Sustainable technology
Higher powerto weight ratio
top-head-mass.
PREVIOUS MORE FEATURE BENEFITS
Now is the time to take action, but be prepared and support the plan with your best efforts and resources.
The recession has driven US consumers toward “value” brands, and they are more willing to accept creditable Chinese brands than ever before.
Conduct professional research and develop a 5-year plan, and then put your resources against it and be patient. If you do it correctly, it will greatly pay off.
Be open minded about the need to adapt to US business practices and market realities.
For more information, please contact:
The Monogram Group233 S. Wacker Drive, Suite 410
Chicago, Illinois 60606 USA
Tel: +1 312-726-4300Fax: +1 312-726-4308
www.monogramgroup.comwww.monogramgroup.com.cn
Scott Markman, [email protected]
John Yang, Director of China [email protected]
Direct: +1 312-268-6687
