Ogilvy: Chinese companies spend almost no money on market research

On January 6, 2016, Mr. Miles Young, President of Ogilvy & Mather, gave a keynote speech entitled “Chinese Brands in the Belt and Road Context” at Tsinghua SEM, and analyzed the advantages and disadvantages faced by Chinese companies in the speech. And the corresponding solution.
For Chinese companies, you first need to know yourself. All brands will need to face this challenge. How do you view this world from a brand perspective? How does the world view this brand? Where is the gap between the two?
Chinese brands are now increasingly associated with “soft power,” largely because of China’s growing importance in the world. But China's soft power is still very disproportionate to its status as a big country. Compared to China's huge scale, its soft power is much smaller.
We can see that the recent famous Bain Consulting Company released a research report showing that in China's domestic market, the market share of Chinese local brands has surpassed foreign brands for the third consecutive year. In 2014, local brands increased their market share in 18 categories among the 26 categories, with an average increase of 10%, while foreign brands only rose in 8 categories, up only 3%.
But on the other hand, the global market is less enthusiastic about Chinese brands.
In the “Manufactured Origin” research report released by “Future Brand”, China’s popularity among consumers worldwide is only ranked 9th. Transforming "Made in China" into "Created in China" will be the key to Chinese brands going to the international market. If we evaluate “Made in China” in various industries, we will find that the world’s perception of “Made in China” has not changed.
The first step in eliminating such a gap is to acknowledge the existence of the gap, which we can call the “China Going Global” strategy. The history after World War II shows that countries with strong soft power usually have extraordinary "hard power", that is, the strength of business. Global multinational corporations are the concentrated expression and representative of hard power and soft power. The United States, Japan, Germany, and France are all examples. Their national brands, as well as the influence of national brands, are built and supported by multinational companies and brands in these countries.
In the last 10 years, China's progress in building business strength has been very obvious. For example, there are 106 Chinese companies in the 2015 Fortune Global 500 list. But on Interbrand's 2015 list of the world's best brands, there are only two Chinese brands. Interbrand's ranking measures both soft power and hard power. It considers both the market value of the company (hard power), the proportion of the company's brand in the consumer's purchasing decisions (soft power), and the ability of the brand to create loyal customers, which are the soft power of the brand.
At this point, we can see the huge gap between China and the United States. We will understand this by looking at the brand value and market value of Chinese and American brands.
Not only that, Chinese companies often make serious mistakes in foreign markets.
According to the New York Times, the factory set up by Beiqi Foton in India was strongly resisted by the local people. Beiqi Foton chose to build a factory in this ideal location that meets the Chinese “feng shui” standard and is surrounded by mountains and rivers. However, this land is a “sacred place” for the monks to learn and practice in Indian culture.
Another example is that although China is Kenya's second largest source of foreign capital, Kenya still believes that China hinders its development. According to the latest public opinion survey, 17% of people in Kenya regard China as the biggest threat to the country's economic and political development.
To bridge this gap, any Chinese brand that seeks to develop through the “Belt and Road” must ask itself the question: How can we have positive emotional connections with consumers in these countries?
The answer to this question is whether we will significantly increase our investment in market research. If someone asks me where the difference between Chinese companies and international giants is, I think the difference lies in the willingness of Chinese companies to spend money on market research in order to understand local markets, which is almost negligible.
Chinese companies spend almost zero on market research in the “Belt and Road” countries, and China’s spending on global market research cannot enter the top five, which is not commensurate with China’s market position. At the same time, those countries that are willing to invest time and money in market research are all among the best in soft power.
Not only quantitative market research, but also world-famous brands are also leading the way in qualitative research technology. They understand customer motivation and attitude more. Such research will not only tell us about the phenomenon, but also tell us what is the reason behind the phenomenon and the emotional foundation of the attitude of consumers in the word "China".
For example, young consumers in Malaysia and young Russian consumers have very different perceptions of “the charm of modern China”, such as fashion concepts, such as the unique sense of humor in Chinese culture.
Sometimes qualitative research will tell us that we should not emphasize the brand's "China" origin. For example, Lenovo is a well-established brand in both China and foreign markets, but when it merges and acquires foreign companies, it should not emphasize the “Chinese traits” of Lenovo brands. The reason why this does not benefit is because Consumers do not like the Lenovo brand because it is “from China”.
The Chinese have been going to the world from a very early age. At that time, they usually went out to pursue knowledge and hope to gain a deeper understanding of the world in the process of going west. In the 5th century AD, the monks of Fa Xian went through all the countries on the “Belt and Road”; 200 years later, Xuanzang in the Tang Dynasty became the first sorghum in China’s history to reach India and Sri Lanka, and their works flashed. New understanding and wisdom, and for us today, if we want to release the great potential of the “Belt and Road”, we must start with understanding.

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