The monogram group branded entry into the us market for chinese c ompanies
Branded Entry into the U.S.Market for Chinese CompaniesPresented to Young Presidents’ OrganizationThe Monogram GroupOctober 11, 2011Copyright 2011 The Monogram Group, Inc.
Distribution is very different in the US vs. China,and because that is top of mind for every Chinesecompany, we have to start there. National Retailers Private Innovative Branded Label Products Products Products • Dominates products • Creates its own • A strong brand gives competing on category, highest retailer reason to stock low price (not chance to gain the product (Chinese available anymore) distribution companies’ best choice)
The Old Reality vs. the Future OpportunityOEM Model Branded Model Good enough for client specs Excellent quality, own design Cheapest price Competitive price FOB only Entire logistics & customs continuum Transactional focus Relationship with buyers and consumers Trade shows, friends’ intros Marketing and sales support Immediate sales Longer sales cycles with many factors No consumer contact Understanding, serving consumers Low margin, high volume Much higher margins and creation financials of brand value
The Five Prerequisites every Chinesecompany needs to have to consider theUS 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 everyChinese company needs to master forsuccess 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 Chinese CEO and Board of Directorsneed 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 marketresearch study intoUS consumers’ attitudestowards China andChinese 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 comfortablewith Chinese products. % Americans agree that: 60% 53% 45% 45% 38% 30% 24% 20% 17% 2007 15% 2008 2011 0% I will not buy foods from I think Chinese products are a China because they may have much better price and value unsafe chemicals or additives. than American made products.
All countries have an increased perception ofbeing low priced, with China the clear price leader. Perception of Manufactured Goods as Being LOW Priced: 80% 71% 60% 60% 45% 40% 28% 17%17% 2007 20% 5% 3% 7% 2008 2011 0% US Japan China
Chinese manufactured goods still reside in the“Low Quality/Low Price” quadrant. The long-termgoal is to move into High Quality/Low Price. Price/Quality Ratios 70% United States 60% Japan 50%High Quality High Quality/High Price High Quality/Low Price 40% 30% China 2011 20% Low Quality/High Price Low Quality/Low Price 10% 0% 0% 20% 40% 60% 80% Low Price
Even the biggest Chinese brands were virtuallyunknown to American consumers, scoring thesame awareness levels as brands we fabricated. % Americans Aware of the Brand Nokia 95 Hyundai 93 Haier 19 Tsingtao 18 Lenovo 14 Red Dragon 14 Lotus Blossom 9 Chery 8 Changyu 4 Maotai 3 Baidu 3 Ping An 2 0 20 40 60 80 100
And that low awareness (along with a pooroverall image of Chinese quality) correlated tolow scores on quality perception. % Americans Believe Brand is High Quality Based on Name Nokia 65 Hyundai 45 Lenovo 14 Lotus Blossom 13 Haier 12 Red Dragon 11 Tsingtao 8 Chery 6 Maotai 5 Changyu 5 Baidu 5 Ping An 3 0 10 20 30 40 50 60 70
Brand familiarity and advertising have increasedsignificantly in importance over the past four years. % Americans agree that: 67% 69% 67% 70% 62% 53% 45% 48% 42% 36% 35% 35% 18% 2007 2008 0% 2011 It is important that a It is important that It is important Chinese company that I purchase Chinese that I have seen wants to sell their goods from a advertisements for products in US has an brand with which I a Chinese brand English language am familiar. before I will buy website that is written their products. in excellent English.
Case Study:Yuzhou Green-Ship GardenSupplies Producing Co., Ltd.
Green-Ship is a $7.5 million manufacturerof unique flower pots and planters madefrom 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.
Goldwind is the fourth largest company inthe 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.
Trade Show Flash Modules (select screens). GOLDWIND PMG TOUCH SCREEN PERMANENT MAGNET GENERATOR TH E L E A D ERS I N PM D D TECH N O LO GY TH E L E A D ERS I N PM D D TECH N O LO GY BENEFIT F E AT U R E High power Permanent magnet generator (PMG) eliminates the need for electrical field excitation andTHE SUPERIOR GENERATOR FOR ECONOMIC WIND ENERGY CONVERSION generating efficiency associated losses present in induction-type generators. future machines are brought online. Superior High power power quality A sustainable generating Superior power and grid code technology quality and grid efficiency code compliance compliance Sustainable technology Higher power Significantly to weight ratio Higher power reduced top-head-mass. to weight mainenance ratio costs and total PREVIOUS M O R E F E AT U R E B E N E F I T S Technology accolades Generator cross section
Now is the time to take action, but beprepared and support the plan with yourbest 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 Group 233 S. Wacker Drive, Suite 410 Chicago, Illinois 60606 USA Tel: +1 312-726-4300 Fax: +1 312-726-4308 www.monogramgroup.com www.monogramgroup.com.cn Scott Markman, President firstname.lastname@example.org John Yang, Director of China Department email@example.com Direct: +1 312-268-6687