Sky-high international marketing costs, meager profit margins and lack of recognition among international buyers are the three biggest obstacles in the development of Chinese name brands on the world scene.
These conclusions were based on a survey that tracked 41 export-oriented businesses based in Jiangsu Province, a leading exporting area in east China, at the ongoing 98th Export Commodities Fair in Guangzhou.
Fifty-three percent of the companies surveyed said their production is largely devoted to original equipment manufacturing, 36 percent export their own brands, and the rest said they do both.
Among the deals struck between overseas buyers and the 41 companies at the fair, 50 percent involved OEM products, 21 percent Chinese domestic brands, and the remainder unbranded Chinese products.
According to the survey, at least 1,000 export-oriented companies in Jiangsu Province, one of China's fastest growing regions, have not registered any trademarks overseas, and less than 10 percent are exporting their own brands.
Most of the companies surveyed said hefty international marketing costs are the biggest obstacle to establishing their brands in the world market.
Advertising spending, for example, often tops several million US dollars and is hardly affordable for many firms. Costs for marketing events, such as opening a logistics network abroad or setting up a stand at an international expo, are also too high for domestic businesses that are struggling on meager profit margins.
Most exporters in Jiangsu Province have long relied on quality and low costs to survive in the global market. Heated competition among themselves, which sometimes results in suicidal price wars and counterfeit goods, often discourages exporters from spending significantly on their own brands.
The fact that many international buyers do not recognize Chinese logos also frustrates exporters' brand-building enthusiasm. Buyers who visit the export commodities fair in Guangzhou, particularly those from the United States and the European Union, often seek to profit by embedding low-cost Chinese products into their own brands, which are usually well established in the destination markets.
According to foreign trade officials attending the fair, the same obstacles plague many other exporting provinces as well.