Academic Research学术研究连载

走进中国工业品牌管理与竞争的新常态

Entering into the “IB and HB branding management Era”

                               by Dr. Yang XiaoTong

 Edited by Eric and authorized for release

WHAT WE KNOW ? -003

For nearly a decade most recently, in order to get adapted to increasingly upgraded market competition that is in dynamic move from outside, equipment-making enterprises in China have been doing all they can to strengthen their competitive advantages respectively by investing more in Research & Development driven innovations internally and in overseas Merger & Acquisition externally. However, it is not the case that each company with acquired operation resources will be put into competitive advantages as expected for continuous growth with a continued branding strategy. Morever, only a small number of them is able to innovate what they do with branding strategy by cultivating independent ingredient brands of their own, mainly used for restructuring of existing resources they have, growing host brands, customer expansion and formation of differentiated competitive advantages. Concerning the competitions among various host brands in the Chinese equipment-making industry, it seems that a majority of the suppliers are intended to avoid the negatives including increased cost brought by Ingredient Branding. For those ingredient brand suppliers, it may be inadequate to rely solely on the traditional ways of marketing, such as improved product design and pricing, due to one of the possibilities that these approaches can neither contribute remarkably to an ingredient brand surviving the market competitions nor guarantee that the success of a company will sustain. What marketing was focused on in the past by ingredient brand suppliers lies in their direct customers, like OEM host brand manufacturers, making the end users often not clear of the marketing efforts paid by ingredient brand suppliers. Driven by the self interest of host brands along with those stakeholders, host brand manufacturers are rarely willing to promote outsourced ingredient brands that are incorporated into their host brand products, which is a common practice to our domestic equipment-making industry. Given the increasingly stiff market competitions, most host brand products are becoming more and more homogeneous leading to an inevitable over-competition among different host brands. So this is the reason why de-branding is formed in many industrial customers’ favor. As far as the current Chinese equipment-making industry is concerned, we have already experienced a similar process of development with complete equipments imported from those advanced economies, covering introduction, studying, digestion and recreation, during which the customers had been continuously impressed by various quality OEM ingredient components inside with their outstanding performances. The result is, branded ingredient products received increased popularity with a high degree of recognition and finally became dominant in how purchase was made by the customers, making domestic market competition internationalized. In the light of more intensified Ingredient Branding from outside and its reinforced market influence as a result, an increasing number of host branded equipment manufacturers, especially those medium-and-large-sized OEM manufacturers, are preparing themselves to extend competitions to ingredient branded products with a consideration of developing self-owned ingredient Brands, thus forming an intriguing picture of upgraded competitions driven by multi-leveled domestic industrial brands in combination.

With a growing number of the emerging Chinese companies based on what accumulated before shifting focus to acquiring manufacturing resources from outside, we have seen an outstanding phenomenon of those Chinese enterprises launching mergers and acquisitions relentlessly not only in domestic market but also in overseas market. By absorbing asset-related resources from outside, it can present a quick way to grow the company in size but is still to take quite a long time for the combined resources to fully integrate. In addition, it is even rarer for us to see much attention turned to the way brand marketing strategy is managed and innovated when corporate merger or acquisition is completed. Although some internal organizational constraints on selection of the appropriate products/solutions or markets to enter are present inside a company due to its existing asset structure and capabilities, marketing works can be redesigned by taking full advantages of these conditions combined with branding strategy as they are of unique merits. The conclusion we draw from numerous merger & acquisition cases in recent years is, what most valued in many decision-makers’ eyes are still the traditional elements that feature product quality, technology and market. Even fewer of them can give serious considerations strategically to the resources they have acquired based on the particular model their host brand business is grown to, as a result of which a critical thinking of how to get the best out of these acquired resources by applying their existing brand marketing strategies is often ignored. Nowadays, it is increasingly accepted by many corporate managers that a challenging managerial technique under stiff market competitions lies in whether brand marketing can be carried out effectively and extensively in a way that will contribute to increased market valuation and sustainable competitive advantage in a long run. Allowing for the ever-changing future demands in China, marketers are turning their attentions to combining multiple brands, like DCEC engines using double-brand marketing strategy and customized corporate SAP information management systems that are in use of Composite Branding Strategy. More importantly, Ingredient Branding Strategy as the focus of this study, is also applied to serve this particular purpose, which has been distinctively reflected in mining industry with some of the flight-bar conveyor manufacturers adopting self-owned brand of chains.

A noticeable context we have to put our study into is with the Chinese government who is apparently in a dominating position on where the macro-economy is headed by publishing various guidance and stimulus policies to help with industrial restructuring and upgrading for many times. In June 2012, the state Ministry of Commerce issued a 12th Five-Year National Plan to encourage both importation and exportation of hi-tech electric & mechanical produces. It is recognized that some fundamental problems to the sector are still not addressed despite what we have achieved in the course of the previous decades of trading. Among them is a weak link of brand building which has been widely prioritized by many enterprises at managerial levels. The plan further required a healthy environment to be built up for continuing with pro-trading policies that would be helpful in upgrading traditional processing trade and in restructuring of importing trade as well. To achieve that goal, a series of measures were put forward by the central government including boosted support to those importers of advanced technologies, critical industrial components, scarce resource and what are limited to foreign trading, plus incentives to import-based technological innovations and also the accelerated construction of platforms to introduce advanced technologies from abroad. A few months earlier than that, the State Council on the 18th of January 2012 issued a notice titled a 5-year plan between 2011 and 2015 for building up an upgraded industrial economy, to find a new way to industrialization in China. In this plan, Section 5 was found to be focused on a company-leveled strategy which was closely associated with the quality of industrial produces. In the heart of the strategy as that section mentioned was a combination of different actions, including major technical breakthroughs to be made in some primary produces, increased stability of critical materials & components, as well as Branding Strategy to be implemented. The stress was laid at some of our major industrial enterprises who were encouraged to go abroad for takeover of overseas brands. For this reason, we believe the study can be valuable to some extent in terms of giving the readers a comprehension of all the rationales that are relevant to Ingredient Branding Strategy, which is a key factor to define how a company behaves and develops under more intensified competition. What’s more, it is considered this study will be of practical meanings for the readers to understand from a macro point of view what the trend would be with upgraded industrial competition that is to be driven by branding strategy in the future.

Waiting for next release…..

For contact with the author, please email to shanshan@towermind.com;

For contact with the editor, please email to yangls@skiplifting.com