>>>98th Canton Fair
Sky-high international marketing costs, meager profit margins and lack of recognition from international buyers are believed to be the three biggest obstacles in the development of Chinese name brands on the world market.
The conclusion was based on a survey that tracked 41 export-oriented businesses from Jiangsu Province, a leading exporting province in east China, at the ongoing 98th Export Commodities Fair in Guangzhou.
Fifty-three percent of the 41 companies said their production is largely based on an original equipment manufacturing (OEM) basis, 36 percent said they export their own brands and the remaining 11 percent said they produce both embedded products for OEMs and their own.
Of all the deals struck between overseas buyers and these 41 companies at the fair, 50 percent involve OEM products, 21 percent Chinese local brands and the remaining 29 percent unbranded Chinese products.
According to the survey, at least 1,000 export-oriented companies in Jiangsu Province, one of the fastest growing Chinese regions, have not even registered any trademarks overseas and less than 10 percent of the local businesses are exporting their own brands.
Most of the companies surveyed said staggering international marketing costs are the biggest obstacle in their endeavors to establish their name brands on the world market.
Advertisement spending, for example, often tops several million US dollars and is hardly affordable to many firms. Costs for other necessary marketing events, such as opening up a logistic service 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.
On the other hand, most exporters in Jiangsu Province have for long relied on quality -- as well as low costs to survive on the international market. Heated competition among themselves, which sometimes results in suicidal price slashes and counterfeit goods, often discourages exporters from spending much on their own brands.
The fact that many international buyers do not recognize Chinese brands also frustrates exporters' brand-nurturing enthusiasm. Buyers that visit the export commodities fair in Guangzhou, particularly those from the United States and the European Union, often seek to make profits by embedding low-cost Chinese products with their own brands that are often well established at the destination markets.
According to foreign trade officials attending the export commodities fair in Guangzhou, the same obstacles plague many other exporting provinces, too, and it's high time for all Chinese localities to foster name brands by offering preferential treatment to brand name businesses.
China's Ministry of Commerce and six other government agencies issued a circular in June urging the nation to foster a number of internationally recognized name brands by 2010.
By then, at least 40 percent of China's export-oriented companies will have established their own name brands and exports of Chinese brand name products will have accounted for more than 20 percent of the country's total exports.
The circular also says that domestic businesses having established their own brand names in the international market will be given easier access to bank loans or direct subsidies by the government in support of their effort in technological upgrading, research and development of export products. These companies will also be given top priority in government procurement programs.