China’s Ministry of Commerce recognizes 1,000 companies as time-honored brands. Called Laozihao, these companies have endured the tests of China’s metamorphosing markets, particularly the challenges that have sprung up since the 1970s, when the country’s opening-up policies resulted in a deluge of international brands.
“Most of China’s time-honored brands are endangered. But it is good to see some of them, or more exactly very few of them, are at least seeking a breakthrough by reevaluating and meeting the demands of the ever-changing market,” said Kang Yan, vice-president of the China division of Roland Berger Strategy Consultants, one of Europe’s Major Consultancies.
Expanding from their traditional markets and adapting to new cultural climates has allowed companies like Wuyutai, a tea company, and Ruifuxiang, a silk shop, to survive and thrive in challenging times.
Wuyutai has been renowned for tea since 1897, but it was able to update its brand and appeal to a younger demographic by introducing maccha green tea ice cream, which has been all the rage on Beijing’s Wangfujing Street for the past three years.
Sun Danwei, Wuyutai’s general manager, said sales of the ice cream can be as much as 20,000 yuan ($3,170) in one Wuyutai store on a typical Saturday. Wuytai has found additional success by launching tea-flavored chewing gum and tea mooncakes. They are also working on tea-infused health and beauty products.
Wuyutai’s total revenue in 2009 was 540 million yuan and 590 yuan in 2010. Wuyutai achieved 20 percent year-on-year growth in 2011, Sun said.
“Time-honored brands are not necessarily old-fashioned. People usually see the old brand Coca-Cola as modern because it has such a dynamic and trendy image,” Kang said. Much of Ruifuxiang’s success in recent years has come from expanding upon their traditional image as a silk shop.
“People are more likely to buy ready-to-wear clothes, so we sell half fabrics and half finished goods,” said Wang Qiang, Ruifuxiang’s sales and marketing manager. “In order to maintain our tradition and target high-end customers, we have not quit selling cloth, so we provide new services like tailoring accordingly. After all, Ruifuxiang started off by selling fabric.”
Today, Ruifuxang offers silk scarves, pajamas, and qipao, as well as quilts that are popular gifts for Chinese newlyweds.
“Time-honored brands live longer than others mostly because of their pursuit of and insistence on certain core values,” Hang said. Because most of the Laozihao comapanies were founded by scholarly businessmen during the feudal era, Confucian values like integrity and honesty have helped these brands chart troubling economic and social waters for generations.
“That means quality is the soul of a company. China is developing at a high speed and it is a fast-paced era. If a brand, not only a time-honored brand, wants to become a global brand, it has to be persistent and resolved in pursuing quality,” Kang said.
photo credit: jean wang