Tom Doctoroff
Northeast Asia Area Director, Greater China CEO
J. Walter Thompson/Bridge
Jun. 3

Biography of the Speaker 

Tom leads one of the largest and quickly-growing communications groups in China, J. Walter Thompson/Bridge. His unique combination of regional and China experience has made Tom a leading expert in the cross-border management of brand architecture and brand building.

Tom arrived in the PRC in 1998 as the Managing Director of JWT Shanghai. In 2002, he was appointed Northeast Asia Area Director ( China , Taiwan , Hong Kong and Korea ) and Greater China CEO. Under his stewardship, JWT Northeast Asia has emerged as one of the region's most synergistically integrated, creatively dynamic and strategically insightful networks. In 2003, Tom was named Regional Agency Head of the Year by the region's leading marketing and advertising publication, Media magazine.

Some of JWT's key clients include: Unilever, the Diamond Trading Company (formerly DeBeers), Motorola mobile phones, Nike, Ford, Nestle as well as several local enterprises such as Lenovo computers and 999 pharmaceuticals.

Between 1994 and 1998, Tom was based in Hong Kong as a Regional Business Director, managing several of JWT's largest multinational clients across Asia Pacific (including Pepsi, Philip Morris/Kraft and Citibank). He started his advertising career at Leo Burnett in Chicago . Tom completed his undergraduate studies at Northwestern University ( Evanston , IL) and his MBA at the University of Chicago .

Introduction to the Speech

But questions remain. How powerful are local players? How deep is their brand equity? Is consumer preference based on "shallow" attributes such as awareness and price or are they beginning to boast active consumer preference vis-à-vis MNC products?

Leveraging numerous cases and advertising examples, our discussion will attempt to sort through the myths and realities of this critical cluster – i.e., what local companies are doing right and what they're doing wrong. We will dissect their modus operandi and pinpoint what MNCs must do to shield themselves from a competitive tidal wave racing toward the shore.

Speech Text

(Excerpts from the speech given at CEIBS. Content rights reserved by the speaker and CEIBS. Use of the content must be with the prior approval from CEIBS.)

Today's conversation is going to be a little bit specific, because I'm going to start off criticizing local brands. Then I'm going to talk about the progress that local brands are making. Then I'm going to talk about what the multi-nationals are doing to fight local brands. Yes, there are differences between local brands and international brands – they face different challenges. But brand equity – building a brand, no matter where you are, has some basic fundamental truth. A brand is not just a name; it includes all the associations with the name. The difference between a name and a brand is really the difference between a mouse and the Mickey Mouse. The biggest economic problem today in China is there are too many goods, to much over-capacity. As a result, there is negative price. There is deflation in many sectors. There is what we call commoditization. Commoditization means people don't see the difference between one product and another product, as a result the profitability of individual brands go down. When the profitability of individual brands go down, the entire Chinese economy suffers. What is the solution to that? Charging high prices. But the only way for companies to charge high prices is to have brands that consumers are willing to pay more for. So what we are really talking about today is the sustainability of Chinese enterprises.

Local brands mainly emerged in the late 1990s. I will talk about the progress they made in a very short time. The key thing I want to start off with is the income growth in China . We all know that the low-income segment is about 70%, particularly the bottom of 20-30%. The income growth for this segment has been much less quick than that of the top 20%. The upper income quintile has grown by on average for the past several years 9.7% per capita income for a year. That's incredible. That's after inflation. There is nowhere else in the world that has experienced that type of upper-quintile income growth. And what have MNCs done? They have focused on that top quintile. But the reality is not just the top quintile, the urban elite. There is another reality in China , the masses. The values, the economic income, the price sensitivity, the disposable income of the masses is much, much lower. So focusing merely on the top10-20%, the multi-nationals have left a huge bottom of the pyramid uncovered. This is a population of about 300 million Chinese people, either in the cities, or migrated into the cities – people that are becoming urbanized every year. This mass urban population has largely been ignored by the multi-nationals. Because the prices of the multi-nationals have been too high. Look at some of the examples. The price premium of some basic daily-use segments -- hair, 50% over local brands; (By the way, this is 2003. In 1998, the price premium was even greater for hair, which was about 150%.) skin, still very high, 250%; soap, 39%; sanitary, 71%. When you have these price premiums, the penetration of international brands, is going to be relatively low. So there is a huge, what we call, a white space at the bottom of the pyramid, actually 2/3 or 4/5 of the pyramid. The MNCs have not addressed that. The market of local brands have gone up considerably over the last 5 years across a wide variety of daily goods. Hair, 4 years ago used to have 22% share, now, local brands have 47.5% share. Skin, local brands now dominate the market, with 54.1% share. Soap is 51.9%. Sanitary is 65%. So there is huge opportunity, huge areas that local brands can competing in. What do local brands offer? We believe that Chinese people are not loyal to one local brand in particular. Chinese people don't love local brands. There are no MICKEY MOUSEs of local brands. Because they are basically operating on a price-value dimension – low price, affordable price. Let's talk a little bit about myth and reality.

What I am trying to say is, just because somebody is local doesn't necessarily mean that they really understand the local consumer. Chinese consumers don't prefer local brands because somehow on average they touch the heart of Chinese people more than multi-nationals do. In fact, multi-national brands have much more active preference at this stage than local brands, though that will change. The reality is that local brands tend to have weak equity, weak active preference, weak images and associations that sustain a long-term loyalty and price premium. And therefore they usually compete on price. Let's look at an example. Take tow local brands: Tsing Dao and Reeb. The degree of brand help, on the bottom is awareness. That's the most basic thing. Then when it comes to loyalty, velocity, future momentum. We call that bonding. Tsing Dao and Reeb are very known brands. Everybody knows them. Their presence is universal. But if you go to bonding, emotional bonding and actual loyalty to the brands, Tsing Dao and Reeb, despite their fame, don't have heavy involvement with consumers. Not just beers, if you go to white goods, Xiao Tian Er, Changhong, again very high awareness, but negative bonding. Even Electrolux, which is a very little known international brand – it spends very little on promotion and advertising, still, because of the fact that it is in fact an international brand, the loyalty that consumers have to it, the emotional investment that consumers have with it is actually higher. This is not healthy for Xiao Tian Er and Kang Jia. Again, Nao Bai Jin and Ang Li, huge presence, not bonding. Caltrate D, little presence, better bonding. So local brands for the most part are closer to consumer's pockets than minds and hearts. The local consumer is voting with his pocket. He dreams about Nike, but he still buys Li Ning. Li Ning is one of the best local brands. A key success factor is low price. For most cases, local brands act as low-price substitutes for JV brands. Two examples, Da Bao and Wahaha AD calcium. Da Bao skin care – dreams of beauty accessible to the mass market with a price of 17.8% of key international brands. Wahaha AD calcium is a nutritional dairy product priced at 1 RMB per bottle, within the reach of the average consumer. It penetrated the market based on price. A preliminary conclusion is that we have to make sure that we don't think that local brands are succeeding because of brand loyalty. They are succeeding because of penetration driven by price.

Now I'm going to talk about briefly 3 areas in which local brands are sub-optimized before I go to 3 areas in which local brands are making tremendous progress selectively. First, local brands tend to focus on brand recognition rather than brand equity. Do you remember the name? The question is just about brand awareness, it's not brand equity. Brand equity is about "What does that brand stands for, beside basic quality and a reasonable price?" When I talked about Pepsi, what does Pepsi stands for? You cool. When I talked about Nike, what does Nike stands for? Just do it. Demonstration of individualism, initiative. Let consumers remember the brand's name is important, especially there are so many competitors in Chinese market. But it needs to be more than that. For example Slek. Slek came into the market in 2000. At that point, it immediately captured 9% of the market. Its presence was everywhere. But there were not key benefits or key values that were ever communicated as part of the Slek brand equity that were different in any way from other competitors. So as a result, Slek share in 2001, 2002, and 2003 dropped like a stone. So it comes in like the wave; then it goes back out. Waves come in, waves go out. And that's what happened to Slek. Another example is the commercial of Unicom and Yao Ming. Yao Ming is popular because it represents Chinese understatement. Yao Ming is subtle. He is understated. When Yao Ming plays, he plays with understated cool. And what he has done is he defeated NBA the brash Americans. So Yao Ming is a challenger. He is a successful, smart challenger, just like China Unicom. But how does China Unicom use Yao Ming? How much does China Unicom spend on Yao Ming? 5 million US dollars. That's a waste of several million dollars. It's basically saying China Unicom big, Yao Ming tall, same thing, good quality go. Now take another example, a western brand Kodak. We all know that Kodak is known for the Kodak Moment. Brand equity is built on Kodak's role in consumers' lives. All Kodak communication for years was built around this theme. When you want to capture a moment, digitally or by films, compact Kodak, Kodak captures the moments of you life. Most local brands still seem to think that brand awareness, presence, scale is the only thing that counts. Brand awareness is important, but it's not sufficient. It is necessary but not sufficient.

The second weakness of local brands is what I call "Manufacture-speak" rather that "Consumer-speak"—what companies want to tell their consumers about themselves as opposed to what consumers are interested in. In advertising we talk about "consumer insight". It defines and explains our basic motivations and preferences. It answers the question why. All great communications come from a consumer insight. The consumer perspective, not the manufacture perspective. Look at this recent Haier G5 commercial. The five goods all technological babble that nobody understands. "0.62 precision display; Line scanning 100 hrz; Professional 5.1 dolby sound; Human Design Global Hi Clarity, Unlimited Compatibility". It's a laundry list of claims that nobody remembers anything. what does the brand stands for? Nobody knows. Haier is such an important brand in China , but it does not make the most of its advantages. When people think of Haier, what will they think of? The Chinese brand with a lot of different products. That's not enough to sustain a price premium. Haier could be doing much better by communicating that it understand consumers' lives. Another example: Konka. I just read these words. "All things in the world start from particles. Konka's special DSP digital super-fine matrix, leaps from analog lines to digital particles, reaching 2 million pixel display. (Super: Revolution from lines to particles)" I have 2 questions: What's a line? What's a particle? It's engineer speak rather than consumer speak. The message is confused. In contrast with that, Sony Trinitron Campaign focuses on a single message of durability and reliability. Actually it's a very Chinese value and it's very important for price-sensitive consumers. The whole message is about its durability. By the way, Trinitron is its cheaper model. Philips PDP focuses on the single message of "feels like watching a movie in a theatre."

The third weakness is inconsistency. Messages that remain consistent, flexibly consistent over time, take route. If you change messages every time you air commercial, every year or every two years, you are effectively reducing your brand. We all know that to launch a brand cost you more money than to sustain a brand and to build a brand. But successful brands are build on a long term platform. But how could we be consistent in an environment that is changing so fast? The fact is you can be. For example, Marlboro. Marlboro was introduced in 1954. It is still one of the most powerful brands in the world. This is despite the Women's Liberation Movements in the US . This is despite the 70s which was a sexual liberation. This is despite the discovery of the new man. This is despite the anti-tobacco laws and the communication restrictions. This is despite product proliferation as a healthier cigarette comes out to the market with less tar and nicotine. The Marlboro man, the concept of untamed, rugged, masculine Western individualism has been sustained as an American ideal for 50 years. And it has grown with the time. It has adapted around the times. It's like bamboo, solid but flexible. And that's what a brand has to be over time. Now, let's take for example Lulu Fruit Juice. Each new commercial represents a different strategy. And this is over a period of 4 years. I'm going to play 3 commercials that were aired between 2000 and 2004. The first one talked about the naturalness of fruit juice. The next commercial is about 2 benefits: make your kids smart and mother pretty. And finally, Lulu commercial No. 3 talks about family bonding. Contrast that to 2 Procter & Gamble brands that have maintained a dominant position in China since their launching in early 1990s. P&G is extremely skillful in China . P&G is masterful at owning a consumer insight, at owning a Chinese insight. Safeguard soap: Since 1991 it has been in the market and it has been unified around one key theme – family protection. Chinese people, unlike Western people, believe that the outside world is not safe, that there are risks of invasion, of illness. Chinese mother's primary goal is to protect the welfare of the child, to make sure that the child is ok. A Western mother's goal is to transform the child, to make the child bigger, taller and smarter. A Chinese mother wants her child to be perfectly normal. And germs are a threat to that. So Safeguard from the very beginning has always been talking about germs kill. Of course, I don't mean the past 10 years of advertising all look like this. Of course the brand has grown and it has deepened. The next commercial I'm going to play for you is much more an emotional ad. While the first ad focused 15 seconds on the doctor and then the microscope and the science, for this commercial, the doctor is dead and a mother's love comes through. And then finally they have been flexible enough to talk about product versification in terms of shower gel which is a much more expensive cleaning product than soap. Safeguard soap has enjoyed a 20-30% share for every year for the past 10 years. When people say that Chinese consumers aren't loyal, I say that's not true. You simply give them a reason to be loyal. The other brand which has maintained over a 20% share for 10 years at a price premium of about 60% higher than the market average is Rejoice shampoo. Rejoice shampoo was launched in 1991 with the core value being what soft and smooth hair linked to the confidence to the women. This brand has thrived and blossomed over time. Here is an early commercial for 1991. That's the beginning of emotional agreement. That's the beginning of a woman who can turn head, a woman whose confidence comes through her soft hair. That confidence has been natured over time. Here is a very famous commercial for 1996. And the confidence is coming through more obviously where a Chinese woman doesn't want to stand out. This is what the Rejoice woman seems to find for the very first time, but again, rooted in soft and smooth hair. And finally 1999. It's about a woman's dream. Who says a woman can't be a mechanical engineer? A very consistent brand and again a brand that is diversified in various product forms but has remained the core of confidence. Another example is Dove chocolate. This doesn't have such a long history. But chocolate marketing in China is a very complicated theme. Why? Because Chinese people don't like chocolate that much. Because it is heavy, you only eat it once in a while. What is their equity? Their equity has been from the very beginning silky texture with this very powerful visual of chocolate silk. That was successful but still a niche product. Dove really took off with the introduction of its light biscuit – chocolate-coated wafer. Because it is much lighter. So Dove has a very smart strategy to transform an occasional indulgence into a everyday snack. It penetrated the snack isle, not the chocolate isle. Because it has to find silkiness both visually and sensorially as its core equity it could stretch to launch a new type of product.

So, these are the 3 weaknesses of the local brands. However, there is some real progress. We only started to see this 3 years ago. These is no question that Chinese brands have scale and mass. It's only a matter of time before they become full, 3-dimensional brands. They can become world leaders. They are beginning to make progress in 3 ways. The first way is the most basic. This is the use of inspirational tag lines and icons to represent visually the value of the brand. So at the most basic level, memorable tag lines and icons are increasingly common means for local companies to build brands. In fact, when we work with local companies, the first thing they want to talk about is the tag line. Now this is not a great way to build a brand by first focusing on the tag line. The tag line. should come out of one's position. But still, it's better to have a tag line. that means something than one that does not. For example: Hai Wang, health creates the future. The cigarette: Da HongYing, victory's wings. So this is a masculine cigarette. V for victory. Bird, mobile phone weaponry. A mobile phone is not just a mobile phone. A mobile phone is not just communication, a mobile phone is my weapon on the business field. So mobile phones are like a gun. You don't just have technology, you've got a gun that you shoot your competitors deadly. Haire, forever sincere. So, because it's big, because it's Chinese, they are starting to talk about service, reliability, dependability. And that's what Hair's value at actually. It's its after-sale service. My favorite one was the Apple, JingZheng DVD. Ripened technology, JinZheng DVD. Da Hong Ying is a cigarette. In television ad, you can not talk about cigarette smoking, but you can talk about masculine achievement. And then whenever you talk about its in store communication or print, you've got the same visual of the V. It got the visual consistency. The posters on merchandise all look very consistent. Another example is the JinZheng DVD player. This apple ad is about 2 or 3 years ago. It came to represent ripened technology, something that was finally delicious. So the first thing the local brands are doing right, the most basic thing, is tag lines and icons.

But as you can see, in many cases a linkage with very clearly defined brand benefits is still missing. That, too, is changing. Because more and more are starting to base their positioning on what I've talked before, that is the Chinese insight. Insights are fundamental motivations for behavior and preferences. Some insights are very functional. Other insights are emotional. Liushen Shower Gel. Chinese consumers comfort with natural. Chinese believe that society corrupts. And also technology dirties us. Anything complicated can pollute our soul. So when it comes to soaps and shampoos, Chinese really respond well to natural ingredients. Because it represents a back to nature safety. Liushen is now the No 4 brand in liquid shower gel market, which is a huge success because it is operating at a relative high price. Yili milk is also able to tap into the fear of "contamination" or invasion of bad elements, to build around a natural platform. Wan Da Shan – This is a real breakthrough. This is infant goods. Infant goods is very difficult for local brand to crack. Because they have to be very value-added and expensive. The international brands, because of their nutritional credentials, their safety and scientific innovativeness, have always been able to dominate the market. Wan Da Shan is the first local brand to build significant share in infant food. What is the key insight they are using? We talked about a little bit before about the mothers' needs to protect their infants. Mothers' need to protect the child. It's not transformation; it's not making a child smarter, happier and healthier. It's about keeping the child, particularly the vulnerable infant, safe. So they have focused on immunity. All of the international brands are over here in transformation, but they have tapped with Chinese insight of immunity. So the support they use is actually a very credible support, the immunity and ingredients from the milk of a pregnant cow, which is a local belief. This is an example of an average commercial that is rooted in a very strong insight. Result: No. 5 brand in a very profitable market segment with a share of 6.2%. Skyworth TV – What is Skyworth TV's position? It's about healthy TV. keeping your kids safe when they're watching TV. A very Chinese insight based on again the same protective needs. So particularly on the lower end of the spectrum, consumers are very protective. People that have more money in China tend to be much more optimistic. But people who are not as economically comfortable tend to be much more productive. And therefore you have television that are safe for your kids. Results: Skyworth is now the No. 4 brand and its price is selling above average. Now, Diaopai. Of course, Diaopai gets into the mass market. Diaopai gets into a mass Chinese fear of disaster. Many Chinese people, particularly ones that don't have a security, are afraid of losing it. Diaopai is talking about empathy into the insecurity of the laid-off workers. And they are putting a value proposition in an empathetic context. The economy proposition is "Why use a lot when you can use a little?" But of course it's not just price. It's talking about family bonding. It's talking about reliability. It's talking about a value proposition. It's talking about a value proposition that is rooted in comfort. The end line is "Mom, my love will never be laid off." So really it's linking the ability of the child to help the mother and the family and yet reinforce family value at the same time. It's brilliant stuff. And what's the results: 33% share. And this is despite the fact that Diaopai's average price, despite being sold on a value proposition, is higher than market average. That's brand equity. You can sell based on value and charge more. Gui Bie Wan. We know the most important of Confucius Wulun is father and son. What they are doing is taking a ginseng product and they're putting it in the context of gifting occasion. But they're wrapping the gifting occasion as a son's way to express a son's love and respect for the father. This is a Chinese insight. And it is a Chinese product. And this is a successful product. So it's gifting to parents. And ultimately it's talking about older parents and the needs to repay their parents after you become independent but still needing to convey your dedication to parents. At the end, the son says, "Dad, I remember your birthday."

Now the third strength is product development and innovation. I'll quickly introduce 3 original product concepts that are again based on Chinese insight. Local brands, of course. Many people say in China that the last great Chinese invention was gunpowder. And that certainly is not the case. There are 3 very good product innovations. The first one is Sanyuan breakfast milk. This is based on the fact that Chinese mothers work. Time is pressed. People in the morning need nutrition because breakfast is the most important meal of the day, but I need something convenient. So they've come up with the idea of morning nutrition made easy – a 3 in 1 drink, a milk with egg and cereal. Now the example of Su Yi Xian. The insight of course is that this is an MSG-free bouillon. The Chinese are beginning to realize that MSG is not safe, but it tastes good. So they come out with a vegetable bouillon without the MSG. This is a Chinese product innovation. And then finally, although I criticized Haier, I want to come back and say something I do respect about Haier and that's its product innovation. It really does understand how consumers live their lives. And its product diversification and development of uniquely Chinese format is quite impressive. Here they turned their mini-refrigerator into the way to penetrate the American market. Their target market is the students' dormitory. They now dominate a large share – 45% -- of the US compact refrigerator based on innovation.

The conclusion is that local brands are innovating. Local brands are basing their advertising communication on more and more consumer insight. And they do have aspirational tag lines They are making progress. The MNCs are realizing it. They are doing several things to defend themselves. Now I am going through very quickly 6 strategies that MNCs are using to defeat the rising threat of the locals. The first thing is that whenever people come into China they think the easiest way to gain share is to acquire a local brand. This usually ends in disaster. Because the cultures are too different. The products are different. So they should not be doing that. You have to learn and you have to adapt. So, how are they doing it? One is taking the high ground. I mean using their value-added products, using their more powerful proposition, their cutting edge products to establish a brand equity and letting the cheaper products, the mass products provide the volume sales. This is the difference between the Volkswagen and the Buick strategy. Buick came in as a premium car. And then it started to go cheaper with, for example, the Sail. Volkswagen came in as the taxi company that falls apart fast. And they are having a much difficult time going up, which is why their Passat is always a uphill battle. Nokia, Sony-Ericsson. Of course we all realize that in China mobile phone consumers are increasingly young and price sensitive. But what are they advertising? They are not advertising their cheaper, fashionable phones, they are advertising their very high-end phones. They are using their high-end phones to establish an image that can beat that of the Bird, the Konka and the TCL mobile phones. Where are those local brand mobile phones sold? Where are they successful? Not in primary market. The well-to-do group in China will buy an international brand to help their status and image. The reason why the international brands are able to get this is because they are focusing on their high-end products to have a halo effect on all of their value mass products. Nike – Most of its shoes are sold at around 300 RMB. But its image is based on the shoes that is based on shoes like Shox for jumping and running at around 600 RMB. Sharp is focusing on its LCD TV's and having its value products drive most of the sales. So the first way MSCs are retaliating is to use their advantages to build the brand but still coming into China with a value proposition for the mass products.

Starbucks – This is the second point of how MSCs are retaliating – localize taste. Why are people going to Starbucks in China ? Few people go to Starbucks to drink coffee. China is not a coffee culture. That's why Starbucks stores in China are very different than they are in the West. In the West, it's mostly coffee and maybe you'll have some desserts on the side. Here, you have lots of sandwiches, you have pizzas, turkeys. This is the localization of the appeal. And Western brands are getting smart at localizing Western appeal. Another example is Hazeline Black Sesame. Black Sesame exists nowhere but in China . Why do we have Black Sesame occasionally? What do Chinese think of black sesame? It makes your hair black and shiny. Believe me, French people don't believe that at all. Anyhow, this is a local ingredients to a global brand. The result is a blockbuster. Within 6 months of launch, this brand had a 9.4% share. Another example is Heinz Babao Congees. Like most Western cereal manufacturers, Heinz introduces cornflakes, a breakfast cereal the Chinese simply don't want to eat. But Heinz comes in with congee with a Chinese special recipes.

Third: Arbitrage on trends. By that I mean as incomes rise you can predicate that certain things are going to happen. No Western companies, multi-national companies, understand the growth curves of more developed economy. China is a developing economy and one can predicate the future. So you get in early and own the future trends. And again, this is in large part driven by rising income. For example, Kangshifu which is Taiwanese. They own instant noodles. It was a trend that began in Japan . Rising incomes and increasing time pressure resulted in a need for convenience. So Kangshifu leverage on its understanding of this trend in Taiwan to capitalize or ride on the crest of the instant noodle wave. Biore is a facial foam. As the incomes rise, the center of soap goes from bar soap to body soap to facial soap. And Biore is the market leader of facial foam. It's a small brand right now, but it will be a much bigger brand because that is the future because it grows as the market develops, regardless whether you're in China, Indonesia, Japan, America or England. Sony Ericsson – It is capitalizing on trends in Japan and about 3G and how consumers use 3G technology. So it is getting into China market right now with its camera phone. That's how it establishes its reputation.

The fourth thing the MNCs are doing is leveraging on technological innovations. JV brands have deep research and development competence. This is the key advantage the JV brands have Vs local brands. For example, Olay Total Effects. This is the first brand that has a holistic integrated anti-aging system. That's technologically driven. But even more, Rejoice 2 in 1. Rejoice came in 10 years ago with deeper pockets, more investment, better researching technology and own the 2 in 1 segment. The 2 in 1 segment is combing regular shampoo with conditioning. And now the 2 in 1 segment is 50% of the shampoo market. And it's technologically based. Unicharm Wave is a new product. A micro-fiber sweeper. So basically it's very light and you can sweep with one hand, leveraging technological advantage.

Fifth, adapt products to suit preference. Coffee – We just said Chinese don't like regular hard coffee. How does Nestle come into the market. It does it 2 ways for coffee. One, gifting, it represents coffee as a special occasion in terms of its packaging. The second thing that it does is it makes coffee very sweet. It has 3 in 1 or 2 in 1, stuff that frankly speaking that, I as a coffee lover don't consider coffee. It's like a milk shake. Nestle is trying to do the same thing that Dove was doing when it tried to introduce its chocolate as a snack, with its wafer products. The wafer is not sold anywhere else but in China . This is adapt chocolate to suit local preferences. It also adapts itself to suit local pockets. We all know Chinese consumers, especially mass consumers, are very price sensitive. These brands, particular Colgate has been very successful at extending the brand downward. It builds its image with its total effect Colgate, but the majority of its share is sold with a Colgate sub-brand for a fraction of the price (about 25% of its price) called Colgate Strong. This brand at the top, Colgate Total, is 3% of the market; Colgate Strong is 22% of the market. So Colgate together has a 25% share because it has changed its costly goods title. It still uses the top, but then it extends the brand down to build volume – Top for image, bottom for volume.

The sixth is to communicate your proposition visually. Presenting branding properties visually will powerfully and consistently communicate a benefit. My favorite is the Rejoice Comb Shot and the Dove chocolate silk, and the Cadbury's 2 glasses of milk. Western companies are very good at visual proposition of a benefit. And it is a great thing that I am finishing with the sixth point.

What we have done today is that we have talked about 3 key points. We've talked about what local brands are doing right, what they are not doing right, and what multinational brands are aggressively doing to combat the rising threat inside China of local national brands. That's what we have talked about today.

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