Shaun2Shaun Rein   by Fantake via Flickr

Chinese brands might have been competing on prices and distribution in 2005, in 2010 they are moving up in the value chain and worry Western brands, writes Shaun Rein in Forbes. Quality and image-building have entered China’s board rooms.

Look at Google. Our research suggests that Google failed in China in large part because consumers believed that Baidu had far better Chinese-language search capabilities, not just because of an unfair playing field. In head-to-head search comparisons we conducted, Baidu’s results weren’t necessarily much better than Google’s, but its branding as the site that knows Chinese better than Google and that has technology as good has helped it dominate. Unused to serious local competition, Google was slow to roll out local services and marketing campaigns that would resonate with Chinese consumers. Similarly, Ctrip, an online travel site, is beating up Expedia, and Taobao, the online auction site, remains far ahead of eBay. They are better branded, and they fit the needs of local consumers better.

 More trends multinational companies have to watch out for in China in Forbes: rising labor costs and the new focus on domestic consumption.

Shaun Rein is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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