Why Chinese Trust Local Brands More

Chinese brands are more than holding their own in the court of public opinion in China against western firms, according to my alma later WPP’s latest Top 100 Most Valuable Chinese Brands study.

Local brands the mainland Chinese most trust are:

Why Chinese Trust Local Brands More image mosttrustedchinesebrands2014Why Chinese Trust Local Brands More

A few things jump out of the table above:

  • The fact that a majority of the most trusted firms are now privately-owned
  • The high level of trust placed in Baidu, despite its legacy of selling search placements, paid deletion of online comments, video copyright infringements and other misdemeanours
  • The absence of (and therefore relatively low trust in) well-known global Chinese companies, notably Lenovo.

Most noteworthy is that the study finds that Chinese companies/brands are (and indeed have been for some time) as trusted or more trusted in the China than their foreign peers, something that may come as a surprise to many outside the Middle Kingdom and to plenty of foreigners living in China.

Why Chinese Trust Local Brands More image chineseversusforeignbrands 2014Why Chinese Trust Local Brands More

Assuming the data is accurate, and putting aside concerns that the findings go against the grain of other (pdf) studies and that trust differs significantly by category (German cars and Italian luxury still get the nod in China), how is it that so many Chinese firms are building local reputations that are just as strong if not stronger than those of their foreign peers?

Some brief thoughts:

  • They understand local consumers and stakeholders better than their foreign competitors
  • They provide increasingly useful, valuable and high quality products
  • They have kept prices affordable, at least relative to some foreign firms eg. Starbucks
  • They are actively improving customer service and other functions
  • They provide many local Chinese with jobs
  • In an environment in which patriotism is being played up by the authorities, Chinese companies are seen as Chinese (though this can work both to their advantage and to their detriment)
  • Government and official media (CCTV) campaigns against foreign firms such as Apple and GSK are helping seed doubts about the quality of foreign products
  • Foreign brand failures eg. Fonterra’s botulism scare earlier this year, have given local brands an opportunity to cast themselves as caring and responsible.

As the study shows, companies of all types are generally held in fairly low esteem in China. And the Chinese are notoriously price conscious and fickle – brand loyalty remains low in the country. As competition intensifies and food safety and pollution issues continue (as seems likely), trust will become an increasingly important factor in purchase decision-making in China.

Going forward, it will be interesting to see which Chinese companies manage to win the real trust of their domestic customers and other stakeholders, and how they go about it. Equally interesting will be to see how foreign companies react. Surely even the German car makers won’t be able to rest on the laurels for too long.

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