A Great Wall Is Coming Down Between Chinese and U.S. Brands
No longer will the two largest economies in the world build brands as though they’re worlds apart. Just as Sony established the cachet of electronics “Made in Japan” in the early 1970s with the introduction of the Emmy-winning Trinitron color television, and Hyundai paved the way for South Korean brands in the mid-80s, Chinese brand names are poised soon to hit the mainstream U.S. market and will change what it means for something to be “Made in China.” Similarly, a wider array of U.S. brands will make inroads into the People’s Republic of China. Western brands and Chinese brands will comingle, here and there. Lenovo was just the start. A full-fledged competitive and mutually beneficial relationship will be formed.
While this new cross-border economic reality has been among the aspirations of Chinese brands and non-Chinese brands for quite some time—93 Chinese companies are listed on the NASDAQ and the South China Morning Post reports 30 more Chinese companies could list on U.S.-based exchanges this year—it is, perhaps, closest to fruition for digital media companies. Alibaba, the Chinese ecommerce giant which is also preparing for an American IPO, likely on the New York Stock Exchange, recently announced that two of its U.S. subsidiaries are coming together to introduce a new ecommerce site for fashion and jewelry called “11 Main.” The name brings to mind the address of a store in a Middle American town center, not a Chinese-owned brand.
However, a meat-and-potatoes brand name hasn’t been required for Chinese brands to make inroads. Alibaba.com sees more monthly traffic from the U.S. than household names like Sears.com, Macys.com, and NPR.org, among many other recognizable names, according to Alexa. And Alibaba isn’t alone. Baidu.com, the Chinese search engine, attracts more U.S. traffic than the online home of ABC News and ehow.com. QQ.com, the portal for a Chinese messaging service owned by Tencent, is more popular than People.com, Kayak.com, and sfgate.com, San Francisco’s daily newspaper site. Taking a broader view than just what’s happening in the U.S. shows us that, as of this writing, Sohu.com is ranked by Alexa 27th in the world, and sina.com.cn is 13th in the world.
While these developments here and abroad are taking place largely outside the perceptions of many mainstream U.S. media consumers—and even media companies—the growing prevalence of these sites is an indicator of things to come. Large American publishers should not be surprised to see competitive pressure from the Chinese. Rather, they should be prepared for it.
Just as Chinese-owned digital media have wedged into the U.S. market, many U.S.-based sites generate significant traffic in the People’s Republic. Amazon.cn, for example, is the 40th most popular site in China, with Google.cn coming in at 54, and Yahoo.com ranking 60, according to Alexa. Non-Chinese companies have long aspired to expand into the Chinese marketplace, and the ubiquity and expansion of digital media and technology there makes that easier than ever before: 618 million people use the web in China, according to the China Internet Network Information Center, and there are 1.24 billion mobile users in China, reports the Ministry of Industry and Information Technology of the People’s Republic of China. Moreover, figures from the Interactive Internet Advertising Committee of China (IIACC) put online advertising revenues in the People’s Republic of China for 2013 at ￥63.9 billion, approximately $10.3 billion, up nearly 49 percent over 2012.
To help this burgeoning relationship and marketplace continue to grow and mature, IAB announced recently the launch of IAB China, the 42nd formal licensing of the IAB brand, this time to the IIACC, an organization that has worked with IAB for many years to make progress on shared objectives. IAB, founded and headquartered in New York, has established through licenses an international network of IABs, in the Asia Pacific region, Europe, Africa, South America and North America, that work collaboratively toward the same goal: to build a sustainable global digital marketing and media marketplace. This international intention clearly aligns to the new IAB mission statement: IAB empowers the media and marketing industries to thrive in the digital economy.
We believe our joint efforts will help provide Chinese companies with greater access to the U.S., and offer ambitious businesses around the world the chance to navigate better the complexities and opportunities of the Chinese marketplace.
One of the principal ways we expect to help each other grow is by enabling Chinese media owners to leverage already cross-border IAB technical standards and guidelines. This advancement would benefit both Chinese and non-Chinese companies alike, empowering publishers to scale their platforms and brands to scale their advertising across China and across the world more easily.
If we can build a seamless and trustworthy global digital advertising economy, competition will be on an international scale for sure, and navigating cultural differences and technological proclivities would still be substantial, but the rewards promise to be exponentially larger than those we can reap now.
About the Author
David Doty is EVP, CMO & Head of International at the Interactive Advertising Bureau.