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Wang Lao Ji – China’s Herbal Tea

by on August 7, 2010

Ask anyone associated with business who is the next (or current) world superpower and a large percentage of the sample would say China.  In fact, 44% of Americans believe China is the current leader in economic power.  Only 27% think it’s the United States.  However, if you ask that sample of a notable Chinese company, and I’m sure that sample couldn’t come up with at least a few, compared to the amount of American companies one could name.  That’s because Asian (in particular Chinese) companies have not been diligent in promoting their brand.  For example, it has taken Asian companies such as Samsung and Hyundai (Korean) and Toyota (Japanese) decades to claim their spot on the world stage.

However, that tide is turning.  Chinese companies with the potential to become global brands have emerged – and stronger than ever.  These companies have abandoned their decades-old belief that they should only compete with their low prices, rather than building the values of their brands.  Two main examples of this brand-building include sports apparel maker Li Ning, competing head-to-head with Nike and Adidas,  who opened their first retail outlet in Portland in January.

Another example of clever brand building is Herbal tea maker Wang Lao Ji, based in Guangzhou.  Although a bottle of its tea costs double the price of Coke and Pepsi in China, Wang Lao Ji is taking market share from them both, which is the main reason Coke tried to buy, unsuccessfully in 2008, China Huiyuan, the top Chinese pure juice brand. Wang Lao Ji is  China’s market leader in canned drinks, with about $2.5 billion in sales. The company’s marketing campaigns emphasize health and a way of life that resonate with Chinese consumers.

Wang Lao Ji, understanding the power of word of mouth and viral marketing in China, has taken social media head on with advertising via YouTube, and several influential blog sites in China.  Because of China’s censorship issues – including the country’s shutting down of Twitter and Facebook, censorship of Google, and the country’s most recent shutout of Foursquare, Chinese companies must get creative in reaching out to the masses in mainland China.  Because, according to McKinsey, the Internet – and social media – are not going away anytime soon with Chinese netizens, with 92% of Chinese netizens still using social media.  According to the McKinsey study, social media continues to be a trusted source of information for the Chinese.  The Chinese are by far more interested in word of mouth recommendations than their western counterparts.  66% of Chinese consumers would be influenced in purchase recommendations of friends and family, while just 38% would be in the US and UK.  By contrast, 66% of UK and British consumers say that free sample could sway them, compared with 20% in China.

While Wang Lao Ji has taken tremendous strides in the social networking strategies, there’s much still to be done.  Its expanded presence on Facebook catering to Westerners, while expanding its presence on QQ, Baidu, and 51 will further establish itself as a global brand.   And, continuing its focus on blogs like Best Herbal Teas will continuously reinforce to its Chinese netizens that its product is superior, while continuing to increase word of mouth advertising in China.


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2 Comments
  1. Dave- Great insights. After reading your post, you drove me away from my original topic to delve more into China brands. I am smarter now, thanks to you. -Ryan

  2. I liked both of your examples of Wang Lao Ji and Li Ning and how you used them as examples of successful Chinese brands. Your main assertion that “Asian (in particular Chinese) companies have not been diligent in promoting their brand” struck me as a bit of an overstatement if you were talking about Chinese brands promoting themselves within China. I could see your point potentially if you meant Chinese brands needing to do more to brand themselves and build awareness globally. If that indeed was what you wanted to focus on, then your two examples of Chinese brands don’t really support your conclusion that “that tide is turning” because I don’t believe either are close to a widespread global awareness. What about Chinese brands like Lenovo or TsingTao? They would be much closer on that spectrum of global brands coming out of China. There was a great piece on this topic over at BusinessWeek back in 2006 that would have added some good context to your post as well: http://bit.ly/9EnWTL. Your main argument seems to be that today, four years after that article was written questioning China’s inability to build global brands like the Koreans and Japanese that you mention, China DOES have the ability to build global brands. That is a strong conclusion and point of view, but there needs to be more proof in your post about that indeed being the case. And if instead you wanted to just focus on a success story of a brand within China (Wang Lao Li) then your post made a lot more sense because you didn’t have that added pressure of demonstrating how this was (or could be in the future) a global brand. (4)

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