The 'soda war' between Genki Forest and the two colas (Coca-Cola and Pepsi) is in full swing. Sugar Tobacco Wine Weekly initiated a discussion on 'domestic brands vs. the two colas' and invited me to share my thoughts. I wrote the following on 'Food Industry Headlines':

Every industry will experience a reversal where domestic brands overturn European and American brands. A few years ago, it was the apparel industry led by Li-Ning's 'guochao' (national trend), which has already reversed. Recently, it's the soda industry led by Genki Forest, and in the future, there will be more industries. With China's development, consumers can now look at European and American brands on an equal footing or even look down on them. If one company succeeds in challenging them, like Li-Ning or Genki Forest, it will attract collective challenges from the industry. And because these challenges incorporate local Chinese elements, they are called 'guochao'.

After writing that, I felt I hadn't said enough. It's not something that can be explained in one sentence, so I decided to write a longer article.

First, let me directly quote the views of marketing expert Miao Qingxian:

"In recent years, our local enterprises that compete on technology and production have made great progress, many already leading internationally: our aircraft carriers have been launched, large aircraft have gone into service, high-speed rail has swept the world, and mobile payment has amazed foreigners. The Chinese market that Jobs looked down on has seen Huawei's market share surpass iPhone's.

But precisely in industries with little technological content, or where competitiveness cannot be shaped by compressing production costs, industries that need marketing to create differentiation and brands to drive growth, we have failed repeatedly, miserably:

Luxury goods, apparel, diapers, cosmetics, daily chemicals, and in food: milk powder, infant food, candy, biscuits, puffed snacks—basically crushed. Local beverage companies have bright spots like Wahaha, Nongfu, and JDB, but they have long been suppressed by the two colas, Red Bull, and Master Kong. Only in industries with regional protection or cultural barriers, like tobacco, alcohol, tea, and milk, can local companies hold a stable leading position."

This is Lao Miao's view in his article 'How Professional Is the Marketing Profession?' I've kept it all along, just to read this sentence repeatedly.

Lao Miao's point resonates with me, but he states it more clearly than I could. China's high-tech achievements are breaking through one by one, even becoming national icons. But mass-market brand marketing, which lacks technological content and is purely in the marketing domain, is just beginning to break through. Of course, the brands I'm talking about are those that can compete with multinational brands.

High-tech and brands have been two shortcomings since the reform and opening-up.

High-tech has a higher threshold and should be harder. Although high-tech requires overall national strength, once breakthroughs are made—like the atomic bomb, satellite launch, or aircraft carrier—the world acknowledges them. High-tech is a 'hard truth'; it's easier to demonstrate, just a matter of being hard enough.

China is already a major producer of consumer goods; many multinational brands are made in China, even many luxury goods. But we can produce them, yet when we put our own brand on them, not only do Europeans and Americans not recognize them, but Chinese consumers themselves didn't for a long time.

Why? Because brands are not a 'hard truth' but a 'soft truth.' This echoes a common marketing saying: Perception is greater than reality.

Fortunately, the breakthrough in mass-market brands has begun. Starting with Li-Ning's guochao, the apparel industry has already reversed the trend against multinational brands.

Genki Forest, which has been hot in the past two years, is similarly leading the soda industry in a reversal. Reversals require timing; the time wasn't right before, but now we're at the tipping point.

Now let me talk about this 'soft truth' of brands.

A brand, in business, refers to a corporate brand. For example, Apple, Huawei, Coca-Cola—these are corporate brands, where the entity is the company or one of its products.

When discussing brands, we can't talk about corporate brands in isolation. Because brands are a big family with many entities.

National brands, industry brands, regional brands, corporate brands, personal brands. The entities are respectively the nation, region, industry, company, and individual. These form an interconnected brand cluster. Taking any one in isolation may not explain things clearly.

National brands: the US, China, Japan, South Korea, Switzerland, Vietnam... each country has a brand image. There are global rankings of national brands.

Chinese shoes, German cars, the American NBA, Swiss army knives, Chinese table tennis, Brazilian football... when a country is associated with a strong industry, that forms an industry brand.

Wall Street finance, Hollywood movies, Silicon Valley high-tech, Paris perfume, Yiwu small commodities, Inner Mongolia dairy... when a region combines with a dominant industry, that forms a regional brand.

Huawei, Xiaomi, Apple, Coca-Cola, Genki Forest... these are usually called brands, but they are actually corporate brands.

Steve Jobs, Elon Musk, Ren Zhengfei, Yao Ming, Ye Maozhong, Teacher Liu Chunxiong... these are personal brands. Except for Teacher Liu Chunxiong, whose brand awareness is low, the others are well-known figures and influential brands.

Poor soil doesn't grow crops. The above five brand systems form an interdependent, step-by-step progression.

Some are crops, some are soil.

What rose first in China was regional brands, not corporate brands.

What is a regional brand? It's when peers in a region collectively build a brand for an industry (category).

Wenzhou lighters, Wenzhou buttons, Yiwu small commodities—these are regional brands. To this day, I don't know any famous brand names, but the industry advantages of these regions are well-known.

The naming characteristic of regional brands is: Region name + Category name (industry name).

A regional brand is not a brand of a specific company, but a brand of an industry or category.

When these companies cluster, even if each is small (long tail), as long as the overall scale forms, a trading market emerges. For example, the Yiwu small commodities market.

Zhejiang's economy is developed because every city and county has an industrial cluster, concentrating the main domestic enterprises in that industry.

The characteristic of China's economy is that relatively developed regions either have a large enterprise or an industrial cluster.

Henan's GDP has long ranked 5th, contrary to many people's impression of Henan being backward, because Henan has over 200 industrial clusters. For instance, a township in one county concentrates 80% of the domestic steel tape measure enterprises.

Without famous big brands, they collectively form an industry category brand. The internal division of labor in an industrial cluster is like a large company with orderly division, where each enterprise specializes in a certain field.

At some point, an industrial cluster usually gives rise to one or more large enterprises that become well-known brands.

Regional brands are known domestically early on, and at some point may become world-famous, like Wall Street finance, Hollywood movies, or Yiwu small commodities city.

Next, industry brands rise.

What is an industry brand? It's when peers in a country collectively build a brand for an industry (category).

The characteristic of an industry brand is often: Country + Category (industry). For example, Chinese apparel. An industry brand is the collective image of a country's industry. Europeans can rattle off China's advantageous industries, but they don't know any famous brand names.

The similarity between industry brands and regional brands is: Category advantage, or industry advantage.

The difference is: Industry brands are often known by country, while regional brands are known by region. Chinese apparel vs. Wall Street finance—one is a country, the other a region.

Small countries often have fame in one or several industries, like Switzerland, which has Swiss watches, Swiss finance, and Swiss army knives. I bought a Swiss army knife while traveling in Europe, but I still don't know the brand. I just knew to buy a Swiss army knife.

After the reform and opening-up, Japan first influenced China with two major industries: Japanese film and TV, and Japanese home appliances, later Japanese cars. This is a collective brand image.

When South Korea rose, it influenced China with Korean dramas, cosmetics, apparel, home appliances, and mobile phones.

In the global division of labor, having a few advantageous industries creates global influence.

The concept of national brand isn't discussed much, but there really is a global national brand ranking, similar to the World Brand TOP 100.

What is a national brand? It's the global recognition of a country's people, things, and affairs. For example, recognition of passports, national persona, and also overall product recognition.

There are three paths to forming a national brand:

1. Comprehensive national power, including politics, economy, and military. This is the privilege of great powers.

2. Being located in a developed economic zone. For example, small European countries are also looked up to because Europe as a whole is a developed economy.

3. National rise, with some industry brands gaining recognition. For example, South Korea.

The image of Chinese enterprises going global is not about corporate brands going global, but regional and industry brands collectively going global. Although Europe and America don't recognize corporate brands, they recognize 'Made in China.'

When countless Chinese regional and industry brands go global, China's national brand has already ranked high.

When the national brand ranks high, corporate brands get their chance to shine.

Personal brands are not just about individuals; they are also related to the brand cluster.

Brazil is a football powerhouse, and Brazilian football stars, even third-rate or fourth-rate, easily get media coverage in China. This is an industry brand boosting a personal brand.

Chinese basketball is mediocre, but since Yao Ming went to the NBA, his status and value changed, stamped with the NBA label. The NBA is an American industry brand that boosted Yao Ming's personal brand.

Hollywood stars easily become world-famous. Chinese top stars walking the red carpet in Europe and America may not get coverage.

How do American experts go global? An expert writes a popular article, and immediately a publisher invites them to expand it into a book. Then, rights are licensed to publishers in different languages worldwide. Then, they register a website, set up a consulting firm, and conduct consulting activities around the world, becoming a world-class expert.

Because of the national brand boost, American experts' operations become an industry chain. The operations of famous American figures may be similar.

Perhaps one day, Chinese experts will get the same treatment. Wait for China's national brand to rise! This is the privilege of experts from powerful countries.

The soil that carries corporate brands is: national brands, industry brands, regional brands.

Wang Sicong is famous because he was born into the 'Wang richest family,' carrying the bloodline of the 'Wang richest.'

Corporate brands, besides their own efforts, also have national brand blood, industry brand blood, and regional brand blood.

In the jewelry, cosmetics, and apparel industries, how many companies once adopted foreign names, called 'brand clinging,' hoping consumers would confuse the bloodline.

Brands with blood have inherent advantages. According to reports, a certain American car brand has a fashionable image in China, but in the US, it's a 'grandpa's classic car.'

A certain apparel brand claims to be international, but its main market is China, and its website is only in Chinese. This exploits the brand blood of the country of origin, plus information asymmetry.

Therefore, a brand is not just a company's affair, but also a region's (regional brand), an industry's (industry brand), and a country's (national brand) affair.

Some might say this is brand bloodline theory. Of course, top brands are about bloodline. The World Brand TOP 100 is mostly from Europe, America, Japan, and South Korea, and now China has some. Other countries occasionally appear, but the concentration is higher than the scale-based 'Fortune Global 500.' You need good origins, and you also need to work hard yourself.

Many years ago, when some experts lamented that Chinese brands weren't competitive, I said the time just hadn't come.

Chinese enterprises going global roughly follows a four-stage process.

Stage 1: Don't recognize Chinese quality, but recognize Chinese prices. In the first stage, it's all about cheapness.

Stage 2: Recognize Chinese quality, but don't recognize 'Made in China.' Good quality and low price shouldn't be Chinese manufacturing!

Stage 3: Recognize 'Made in China,' but don't recognize Chinese corporate brands. Industry brands are strong, but corporate brands are weak.

Stage 4: Recognize Chinese brands, but don't recognize Chinese high-end (symbolic, luxury) brands.

Currently, the world's perception of Chinese brands is transitioning from Stage 3 to Stage 4.

A country's four stages of brand growth are exactly how regional and industry brands lift the national brand, and the national brand lifts corporate brands.

This is the truth behind the rise of corporate brands.

When discussing national brand rise, we must address another goal: In brand competition between countries, what is a brand?

It's like asking the same person: Which is more prestigious, graduating from China's top university, Tsinghua, or America's top university?

Or, suppose the same person holds passports from different countries, which one is easier to travel the world with?

Two American professors actually studied this. For example, if an American brand is produced in Vietnam (OEM) and then sold in China, does its brand power change?

Of course it changes. Because recognition of the American national brand differs from recognition of the Vietnamese national brand. So, corporate brand recognition is mixed with national recognition.

Or, without national recognition, it's hard to have brand recognition.

When we talk about brand rise, it involves the issue of recognition of European/American vs. Chinese national brands.

In the early days of reform and opening-up, when faced with multinational and Chinese brands, which country's brands did Chinese consumers, within their purchasing power, recognize more? Of course, multinational brands. Because consumers looked up to Europe and America, and looked up to European and American brands.

Similarly, when European and American consumers, within their purchasing power, recognize which country's brands more? Of course, multinational brands. Because consumers look down on China and Chinese brands.

When talking about multinational brands, I often say that brands are psychological looking up. In other words, the brand chain is also a contempt chain.

Consumers have different psychological feelings toward brands from different countries, roughly three types: looking up, looking level, looking down.

Before the reform and opening-up, Chinese consumers overall looked up to Europe and America, so any European or American brand entering China was a famous brand. This was determined by national and industry brands.

The reversal has occurred in recent years, as post-90s consumers have begun to look at Europe and America on an equal footing, or even look down on them. This is confidence. Hence, the phenomenon of Li-Ning leading Chinese apparel brands to overturn European and American brands with 'guochao' a few years ago.

In the past two years, Genki Forest has surged, and some call it a duel with cola. Actually, it's still about how consumers treat Chinese elements vs. Western elements.

Regional brands, industry brands, national brands, corporate brands—this is the order of brand rise.

National brand rise has both hard power and soft power. Hard power is politics, military, high-tech, etc. This is a head-on clash; if you're slightly behind, you lose. High-tech is like this. For example, China's high-tech is already impressive, second only to the US. With high-tech, people have to acknowledge you.

With hard power, soft power will gradually follow.

What is soft power? It's discourse power, especially the discourse power of values. For example, what is popular, fashionable, or high-end—when quality is solid, this is about values. The high-end and brand power of mass consumers are essentially value capability, which is soft power.

Coca-Cola's global expansion was linked to World War II; that's soft power following up. But soft power lags behind hard power. Even with hard power, people may not be convinced. For example, although the US GDP accounted for 56% of the world after WWII, that's hard power, but it truly gained global discourse power only after the 1956 Suez Canal incident, when Britain and France lost to Egypt, and these old powers became America's followers.

In global brand rankings, the US dominates high-tech, and China has a place in high-tech too. But in mass consumer goods, the US doesn't have absolute dominance; there are many European and Japanese companies.

China's high-tech is hard power, but mass-market brands are soft power. There's a time lag between the two. First, China's high-tech hasn't been prominent for long; second, its lead isn't enough. So, mass-market brands are lagging a bit.

Another time lag is that domestic reversal happens first, then foreign markets follow. The post-90s consumers' attitudes toward domestic and foreign mass-market brands changed first, truly showing 'national confidence' and 'cultural confidence' as mainstream media put it. Therefore, like the guochao in apparel, more industries (categories) will see Chinese elements respected, and companies that master local elements will gain discourse power. That's the day Chinese brands reverse domestically.

But don't expect mass-market brands to show soft power abroad too early. This isn't just about hard power; it's also about the history that supports that power. The US GDP surpassed Britain's in 1895, and the US was a big winner in WWII, but it took a long time for old European powers to accept it.

Although Europe and America have been weak recently, with high-tech falling behind, they are still strong in luxury goods. That's because their hard power has a long history.

Before the Opium War, except for its glorious past, the Qing Dynasty's hard power was clearly lagging. But its luxury goods at the time, like porcelain, tea, and silk, were still very popular in Europe and were the main reason for the Qing's trade surplus with Europe.

Mass consumer brands are a reflection of a country's soft power. It's not a company's problem; it's a country's problem.

Back to the article's theme: Is it harder to do high-tech or mass-market brands? High-tech is hard power; brands are soft power. There's an order to showing power.

I've finished the main theme, but let me add a few extra words.

Multinational brands entering China had every advantage in branding. Coupled with Western marketing theory, at one stage, Chinese marketing was an enlightenment of Western theory plus multinational brand cases.

But when you start with a good hand, you shouldn't lose badly at the end. Although there are individual cases like Coca-Cola and P&G that have succeeded continuously in China, over a 40-year span, it doesn't look like what marketing-savvy companies would do.

Is it that Chinese local companies are 'too cunning,' or are multinationals 'too incompetent' in marketing? This is a question worth asking.

China's brand operations have indeed followed the growth path of regional, industry, national, and corporate brands. But multinationals' operations in China are indeed questionable.

When Chinese corporate marketing was repeatedly questioned, I was one of the defenders. 'Chinese-style Marketing' is the defender's statement.

Learn from multinationals, but do what Chinese companies should do. This is the marketing characteristic of successful Chinese companies.

On one hand, the Chinese market is too special. Not doing well in China can't be entirely blamed on multinationals. But adapting to the market and consumers is the basic logic of marketing. Market specialness is not an excuse.

On the other hand, looking down on consumers and the Chinese market. These are mistakes that marketing-savvy companies shouldn't make, but multinationals have basically made them all.

The same applies to Chinese companies: we were once looked down upon, so we shouldn't look down on others in the future.

When status changes, people change. That's human nature. But success goes against human nature, and sustained success even more so.

Let me add one more topic about brands.

If Chinese mass-market brands are weak, how did world-scale mass consumer goods companies emerge?

Brands are of two types: one is well-known brands, the other is premium brands.

One type: at the same price, they sell more than competitors. Well-known brands are this type. The competitive focus is cost-performance. Towels and toothbrushes are this type. China's first breakthrough was in well-known brands, and being well-known domestically is enough.

The other type: at the same quality, they sell for more. These are premium brands. Apparel, cosmetics, and many mass products fall into this category.

Industries with premium brands are often called symbolic industries. Besides quality parameters described by indicators, there's also brand symbolism. Buying an LV bag, the key is the little LV logo.

Category attributes can change. For example, home appliances were a symbolic industry in China over 20 years ago; people would rather eat pickles for three years to buy a TV that was 1,000 yuan more expensive than a domestic brand. Now, home appliances have long lost their symbolism and entered cost-performance competition.

Symbolism means that besides the product's use value, it also symbolizes something. When purchasing, symbolism is important.

China's development is about many once-symbolic industries falling into ordinary cost-performance industries. The World Brand TOP rankings are partly high-tech and partly symbolic categories.

Quality is for your own use; symbolism is for others to see. In plain terms, it's using objects to add value to people, using brands to gild your face.

The mass consumers I'm talking about in this article refer to this type.

Another reason is that China is big enough. China's industry leaders, even if they don't do international markets, can still make global lists. This is thanks to China's large population. Years ago, marketing expert Jin Huanmin said we should cultivate world-famous brands in China.

Be the industry leader in China (scale), gradually upgrade structure as Chinese consumers change (structure), and wait for China's strength (discourse power) to go international and gild the world. This is the brand path for mass consumer goods.

Source: Teacher Liu's Digital New Marketing (ID: liuchunxiong1964), Author: Liu Chunxiong

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