Recently I participated in the television program Brain Storm. The topic for discussion was branding. A main question raised was how and when Chinese brands, especially in fashion or cosmetics, will achieve the status of premium brands such as L'Oreal or Armani.

Many interesting things were said during the program that I would have liked to have made more comment on. Of course, in-depth exploration of issues is not easy in a short television program and, in any case, the audience certainly would prefer to hear from my more famous fellow panel members such as for example Mr. Zheng Yonggang, the president of ShanShan. So I will take the opportunity here to discuss some of these branding issues.

First, it was clear that having famous Chinese premium brands was a matter of national pride for many in the audience. One young man declared with some emotion that he definitely wanted to pay 500 RMB for a ShanShan T-shirt. Personally, I never understand why anyone, rich or poor, would pay 500 RMB for any T-shirt, ShanShan or Armani. But I am a Dutchman and the Dutch are not famous for wasting their money. As well, the Dutch are not famous for premium brands. Holland has famous companies such as Philips but few premium brands.

It is possible to have a strong economy and strong companies without having brands and products made especially for people who have too much money. An international Sony manager once made a very interesting comment to me on this. He said, "¡­ one thing Sony should try to learn from Philips is how to sell to poor people worldwide; this they do much better than we do." I have no statistics on whether this is true or not, but the point is very interesting: There is no shame in making excellent products and sell those products, in big quantities, at prices normal people and even poor people can afford.

Some audience members criticized Mr. Zheng for not having Chinese premium brands. This criticism is a terribly wrong way of thinking. The purpose of business is to do things that make business sense, not things that satisfy managerial- or TV audience- ego.

For example, Volkswagen recently brought out a very high priced Volkswagen, the Phaeton. The commercials show people inspecting the car and expressing total disbelief that this Volkswagen Phaeton is actually a Volkswagen rather than a BMW or a Mercedes Benz. Unfortunately, few people bought the Phaeton. The whole project to make Volkswagen a more premium brand has been a very expensive waste of money that implicitly told the regular Volkswagen customer that Volkswagen is ashamed to have them as customers, that Volkswagen managers would prefer to be BMW managers. So here is an important message: money is the first objective of business, not prestige. If you forget this message, those who remember this message will put you out of business. Think of business like soccer. Do you want players who try to look good for their girlfriend in the audience? Or do you want players who think only about winning the game?

So will China have premium brands? In the long run, of course China will. Why? Because people like Mr Zheng focus on winning the game, not on looking good, and therefore employ millions of people who can send their children to school, and some of those children will drop out of school and start a company (like Dell or Microsoft) to become world leader in industries we never heard of today. Successful economies produce premium brands and premium companies. Just look at the recent emergence of Samsung as a premium brand. But what about the short run? Well, you can always learn from TCL or Lenovo and take over famous companies abroad. Lenovo made money first, and then purchased the premium brand IBM PC/Thinkpad. If you don't want to wait to grow your own tree, you can always buy someone else's tree.

What about premium brands in consumer goods like clothing, cosmetics, foods and beverages? Can China compete? Look at Heineken and Budweiser. Heineken is a brand for average people in Holland. Budweiser is a brand for factory workers in America . Both are global premium brands, but only outside their home country. Pizza Hut is a premium brand in China with a sophisticated and varied menu. I promise you that when you go eat at a Pizza Hut in the USA that you will be disappointed. They are premium outside the US, but only outside the US, both in the reality of their product offerings and in the perception of their customers.

China has many regular brands that could and will be premium brands outside China. When Chinese brands go outside China they become more special, especially if they are based on Chinese culture and origin. Jahwah's Liushen could probably be a premium brand outside China, promoted as based on 5000 years of traditional Chinese medicine. I imagine Liushen should sell in America for twice the price of American soap brands. Qi Nong a wolfberry wine made by Jiangzhong group, is another example of a product/brand that can sell perhaps for a higher price outside China than inside China. It is easier to be a premium brand outside your own country because you are more special outside your own country.

So there will be many Chinese premium and super premium brands, both inside China and even more so outside China . But this will happen only if managers keep their eye on the ball, keeping their companies profitable and their people employed. Chinese luxury brands will not create economic success for China. Chinese luxury brands will be the result of the economic success of China.