How time-honored China brands became timeworn
Print Edition
JINGHUA tea. Three Star toothpaste. Zhangxiaoquan scissors. Ya’erman light bulbs.
The names may not ring a bell with foreigners, but to older Chinese people these time-honored brands are the equivalent of Nestle, Coca-Cola or Palmolive in the West.
The problem is that many venerated brands in China now sit in history rather than on shop shelves. Nowhere has that loss been more keenly felt than in Shanghai, birthplace of so many once famous names: White Rabbit candies, Bright ice cream, Hero pens, Shanghai wristwatches, Seagull cameras and Forever bicycles, to name but a few.
“They are the great assets of the city,” said Shao Yuling, secretary-general at Shanghai China Time-Honored Brands Association. “They have defined fashion in the past. We want to help some of them make a comeback so they aren’t lost forever.”
In the minds of older generations, these brands will never be forgotten. But ask a young person about the most famous names in ice cream, pens and watches, and the likely answers will be Haagen-Dazs, Mont Blanc and Swatch.
At the national level, the Ministry of Commerce defines a time-honored brand as one with a history of at least 50 years, possessing strong Chinese characteristics, distinct regional features, high commercial and cultural value, and an unblemished reputation.
In Shanghai, an estimated 286 brands meet the criteria. Forty-one of them have been around more than 100 years ago. However, ninety-two of them have gone belly-up.
How times have changed! In the golden era of esteemed Chinese brands in the 1970s, young people just had to have four things before getting married: a Forever bicycle, a Butterfly sewing machine, a Shanghai watch and a Red Lamp radio. All the brands were from Shanghai.
“‘Made in Shanghai’ used to be a promise of quality and fashion,” Shao said.
In the 1930s heyday of Shanghai, more than 80 percent of Chinese brand names were registered in the city. That dominance continued until the 1980s, when China’s open door policy to world trade began to usher in imports of foreign goods.
Suddenly, anything foreign was considered more sexy and more reliable than anything domestic. As competition increased in the consumer market in the 1990s, many home brands used to resting on their laurels just couldn’t compete and found their cachet slipping into oblivion.
Brands suffering
Shi Zhangqiang, chief executive officer of Shanghai Jin Kun Cultural Development Group, said factories making domestic brands suffered from staid management, loss of professional staff, inadequate distribution networks and a dearth of competitive, innovative spirit.
“Many of them struggled in a rapidly changing world,” Shi said. “It has been a huge project to study why China’s time-honored brands foundered while foreign brands have remained the apples of the eye among consumers.”
There are many of cases to study.
Some companies failed because they had no experience competing against more sophisticated Western products.
A classic example was Jinghua tea. The Beijing-based company was taken over by the Anglo-Dutch conglomerate Unilever in 1999. At the time, company officials said they hoped the takeover would give them valuable insights into how successful foreign companies are run. Instead, the brand all but disappeared in subsequent years.
In 2007, Beijing Tea Corp bought back Jinghua in what it called an effort to rescue the brand. But the once prized tea has yet to scale its old heights, when it dominated the Beijing market with an 80 percent share and racked up annual sales of 300 million yuan (US$48.7 million).
Mismanagement has also been a villain in the demise of many homegrown brands.
Wangmazi scissors, a Beijing brand started in 1651, went bankrupt in 2003. Analysts said the company strayed too far from its core products of knives and scissors, becoming involved with pens, rubber and tables, among other merchandise.
“They are like mountains of gold,” Liu Ruiqi, chairman of wool producer Hengyuanxiang Group, said of venerated old brands. “If you continue to chip away at their value and don’t explore new lines, they will soon become hollowed out.”
Warrior Shoes Co, founded in Shanghai in the 1930s, illustrates the importance of a company keeping up with the times.
The brand was all the rage back in the 1980s but found itself losing favor when foreign names like Nike and Adidas hit the market. Warrior responded by improving its designs and quality to keep old customers and attract new ones.
Fang Qilong, general manager of Warrior, said innovation is the only hope for the survival of time-honored brands.
“Fierce competition has forced companies like us to think smarter,” Fang said.
The company also increased the number of its outlets by moving into franchising.
The strategy is working. Warrior has become a fashionable brand among young people. Fang said the company’s sales may surpass 700 million yuan this year, up from 100 million yuan in 2009.
Can these old brands really rise again in prominence and appeal to a new generation of consumers? It depends on how they make use of the past, work hard at the present and look ahead innovatively to the future.
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