Is China's counterfeit goods market tarnishing the reputation of its homegrown brands?
Chinese brands, such as Huawei, Oppo, Xiaomi and Alibaba, could suffer from negative brand perceptions in international markets as a result of China’s notorious counterfeit goods market.
Is China reputation for cheap counterfeit goods tarnishing its homegrown brands?
Despite an increase in quality and value from Chinese products and brands, analysts believe there is a danger they will be smeared by the counterfeit market and the country's "outdated" reputation for producing cheap products.
China’s growing presence on the global stage and the increased influence its companies, brands and products are having internationally has led to a flurry of anti-counterfeiting activity in recent months. Last month, Alibaba chairman Jack Ma issued a public call for stricter laws and harsher penalties to curb counterfeiting by claiming it “wrecks havoc” on innovation.
Reports that domestic brands such as Huawei and Oppo have also become targets of counterfeiters, has raised issues about how China’s home-grown brands are being affected as they move into overseas markets.
“Counterfeiting is not a disease that only effects foreign brands, there are a lot of great Chinese brands that are also suffering from these issues,” says Louis Houdart, founder and global director of Creative Capital, a branding and design agency in China.
“The government is really starting to crack down, because when Chinese brands are also being counterfeit it is a big issue for the image of China,” said Houdart.
With China’s leading tech giants Alibaba, Baidu and Tencent increasing their influence in the United States through partnerships and investments, and its domestic brands Huawei, Oppo and Xiaomi closing the gap on Samsung and Apple in the handset market, it is important for these companies, and for China, to reassure the world of its quality.
While the anti-counterfeit issue is not a new one, this year the Chinese government has imposed stricter regulations on the counterfeit goods market, according to Jason Lee, a senior analyst at market research company CMR.
“Every year the Chinese government says it is cracking down on the counterfeit markets but what differentiates this year from previous years is the steps the government is taking,” said Lee.
“They are requiring a number of different market departments to monitor the market, on the manufacturer side, the wholesale side, as well as the consumer side. This is different from previous years, but, we will need to wait to see the results of this.”
Lee continued: “Alibaba calling on the government is a strategy to earn trust from overseas investors and customers. Alibaba is heavily expanding into South East Asia, North America and South America and, to earn the trust of overseas customers, they need actions that can help reassure those customers about the products.”
Helen Saunders, head of intelligence and operations at Incopro, a company which works with brands to protect IP said Chinese brands would have to work harder to overcome negative perceptions.
“The attitude in markets like the UK used to be; if it’s made in China, it must be poor quality. While that’s not the case anymore, and there’s very good quality products coming out of China, this association with the Chinese counterfeit marketplaces is in people’s minds and they are less trusting of something that has been made in China.
"From a Chinese business perspective it does have a degree of damage and these Chinese brands, that are producing good quality products, are now facing the exact same challenges that other brands in the world have faced,” said Saunders.
The challenge for Chinese brands, and for China in general, is to shake off the reputation for cheap and counterfeit goods and to educate international consumers about the higher quality products and brands that are made in China.
Houdart said: “If we look back 20 or 30 years, when Japan first started producing cars everyone was laughing, but nobody is laughing anymore because Japan produces beautiful, high quality, well-designed cars. It was the same with Korea, and now it is the same with China. There are a lot of great quality Chinese brands, and the western world might not yet be aware of it, but they are growing up in terms of content, design, production and quality.”
Lee said: “When you look at Huawei and Xiaomi they have helped improve the image of made in China products. Huawei sales have grown incredibly fast in the last three years and the company has continued to launch and sell better products with a good price value.
“Consumers in Thailand, for example, love the Huawei products and believe they are excellent value. They believe Chinese products are no longer cheap and the quality is impressively higher, these brands have helped improve the entire reputation of the made in china product,” said Lee.