Will Dressing ‘Foreign’ Get You Farther?

Hui, Michael King-man（許敬文）

What can marketers do to improve their brand equity in a market inundated with both genuine and fake foreign products?

By Louisa Wah Hansen

In China’s fast-changing consumer market, a ‘foreign’ brand name or image is no longer the yardstick for product quality and attractiveness. Research conducted by The Chinese University of Hong Kong reveals how consumers’ brand perception is rapidly shifting and highlights what marketers should do to improve their brand equity in a market inundated with both genuine and fake foreign products.

Louis Vuitton, Nike, Nokia, Sony, Rolex — foreign brand names such as these have for a long time held a superior position in the minds of consumers in emerging markets like China. Products with foreign — in particular, Western — country origins are both prized and priced above domestic ones.

It is no surprise then that Chinese domestic marketers have been taking advantage of the premium brand equity inherent in a product’s ‘foreignness’. Many of them have successfully made use of foreign-sounding names, images, symbols and languages when they brand and market their products — all in an emphatic effort to elicit a sense of glamour, status and premium quality previously associated only with genuine foreign brands. This practice has intensified especially in the past decade, as Chinese consumers have become increasingly affluent and look to purchase foreign luxury goods to show their wealth and status.

Fake Identities Revealed

Unfortunately, dubious attempts to raise domestic brand equity through imitation are creating increasing confusion among consumers as whether a product is of foreign or local origin. Gone are the days when a product’s quality could be correctly judged simply by looking at its ‘Made-in’ label. Even if a product has all the attributes of ‘foreignness’, consumers have become more skeptical and cautious about making the automatic assumption that ‘foreign is better’. For the brands themselves, their credibility eventually suffers, causing losses to the companies.

Two domestic brands that feign their identities are V.E. Delure and Testantine, owned by Evergreen International Holdings Ltd. These brands pretend to be French in origin but are actually 100 percent Chinese.

A senior financial analyst who specializes in consumer brands in China points out that companies that promote brands with fake foreign identities such as Evergreen often end up seeing their marketing ploys backfired after consumers find out the truth. Evergreen’s stock value, for example, has dropped substantially since it was first listed on the Hong Kong Stock Exchange in 2010.

“Nowadays, it’s become more and more difficult to fool consumers,” she says. “People are getting wealthier and they travel abroad. When they realize those brands don’t exist in the West, they won’t trust them anymore.”

She says these ‘imposters’ would often differentiate their branding strategy across regions. In the more ‘backward’ regions, it is still relatively easy for them to fool the consumers. In larger cities, especially those near Hong Kong, however, consumers cannot be easily fooled. She says such a branding strategy is not sustainable in the long run and destroys a company’s credibility and value. Besides the phenomenon of “dressing as foreign,” further complicating the matter is the trend of global branding, production and outsourcing. Multinational corporations increasingly source components and products from multiple countries, making the ‘Country of Origin’ designation obsolete in some cases. Some of these corporations deliberately choose to mask the origins of their brands, while others simply do not provide explicit indications of brand origins due to cross-border acquisitions of brands or globalization efforts.

In view of these complex developments, a group of researchers decided to study what makes consumers open up their wallets and make purchasing decisions based on how much they believe they know of a brand’s origin.

A Complex Picture

The study “Non-local or local brands? A multi-level investigation into confidence in brand origin identification and its strategic implications” conducted by Prof. Michael Hui from the Department of Marketing, CUHK Business School, and his collaborators Prof. Zhou Lianxi from Brock University, Canada and Prof. Yang Zhiyong from University of Texas, is the first in the growing field of research in international branding and brand origin identification to decipher the mixed picture of “perceived brand foreignness” (PBF) and to find out how far this factor would go in terms of consumers’ brand evaluation.

By introducing a new factor, which they coined as ‘confidence in brand origin identification’ (CBO), the researchers attempted to discover to what extend consumers’ subjective belief of a brand’s origin adds to or subtracts from the value they attach to a brand that is supposedly of foreign origin.

The study has chosen China as the location for investigating consumer perception. This was a strategic choice not only because China is a fast-growing emerging market hungry for foreign products, but also because it has seen growing concerns about a potential backlash against foreign brands in recent years due to domestic brands’ aggressive imitation tactics.
The subjects of the study were young people attending a major university in a first-tier market targeted by international brands. The researchers felt that they were representative of the millions of ‘newly rich, fashion-savvy and globally-minded’ consuming generation, and would be able to effectively reflect how today’s Chinese consumers evaluate brands.

Eighteen foreign brands and an equal number of local brands were chosen for the study. A total of 210 respondents answered questions in a survey regarding the factors influencing their evaluation of brand value. They were then asked to evaluate whether each of the brands they were presented with represents something foreign or Chinese, whether they believe consumers in other countries also buy the brand and so on. Finally they were asked whether they have a high or low level of confidence and certainty in their identification of the brand’s country of origin.

Marketers: Take Heed

As the study’s authors originally hypothesized, the perceived foreignness of a brand, or PFB, is found to be no longer the sole yardstick for consumers in emerging economies to evaluate a product’s quality and value. In fact, they have proven that consumers’ confidence in their identification of brand origins (CBO) does influence consumers’ PFB. Not only that, the authors also proved that whatever impact that CBO has, it shows up as more profound for local brands than for foreign ones.

These findings pose significant implications for domestic and international marketers alike.

For domestic marketers, while their attempts to imitate foreign brands have caused increasing confusion among consumers — as well as tremendous frustration in cases where the product quality and performance turn out to be lower than expected, they still stand a good chance of benefiting from their “foreignness appeal” as long as they deliver the quality as promised. The study has shown that if a consumer is certain about the product’s origin, they automatically believe the brand has the credibility to deliver what it has promised. And this applies even more to domestic brands than to foreign brands because there is generally less doubt about the origins of most known foreign brands.

“Local brands appear to benefit more by ‘dressing themselves as foreign’ while maintaining a strong footprint with local identity,” say the study’s authors. They cite Li-Ning sportswear, Tsingtao beer and Lenovo notebook as examples of domestic brands that have increasingly adopted foreign or international appeals through the global sourcing of product or package designs, use of international celebrities and sponsorship of international events. “The ‘foreignness advantage of local brands’ may provide an explanation as to why the unique value of foreign brands is diminishing in some developing countries such as China.”

As for international marketers, it may be discouraging to hear that their Chinese counterparts have an advantage over them when it comes to the ‘foreignness appeal’, even if the latter’s appeal is feigned. Nonetheless, the good news is that they can take advantage of consumers’ beliefs in brand origin associations to promote their brand value.

The authors suggest international marketers to emphasize the geographic origin of their products through subtle reinforcements in packaging information and brand names in order to remove any doubts: “When a sense of brand origin association is successfully instilled in the minds of local consumers, brand perceptions are likely to improve as a result of reduced uncertainty and the enhanced effects of perceived brand foreignness.”

There are, however, no cut-and-dry methods to win the increasingly fierce competition in the rapidly-changing developing markets like China. Marketers need to pay close attention to consumers’ perceptions and, just as the U.S. Marine Corps’ mantra says: “Improvise, adapt and overcome.”