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China – Where American Brands Get New Life

Lee Hower
August 29, 2008 · 2  min.

Reading Time: 2 minutes

Having just returned from a vacation in China for the Beijing Olympics, I’d be remiss if I didn’t spend a moment with a quick impression from business life there. I’ve been to Hong Kong before, but this was my first trip to the mainland. And since my work as a startup guy and now VC has been focused mainly in the US, I’ve been a casual observer at best on China’s continued startup boom.

I’m not a brand marketer by training, but am constantly fascinated by the underlying causes of the rise and fall of brands. I’ve blogged on the topic before, which ironically is the most visited post on my site and for whatever reason Google saw fit to make the top result for “brand vs. product” searches. What struck me, as a leisure visitor, wasn’t the creation and growth of all the exciting new companies that are being built but rather the revival of American consumer brands that often have eroding value back home.

While the US market is a giant money pit for GM, sales in China are growing rapidly thanks to brands like Buick. Yes, that Buick… the one that few Americans under the age of 55 would ever choose to associate themselves with and is in terminal decline in the US is a luxury icon in China, alongside German brands like Audi.

Holiday Inn is thriving in China, with everything from luxury towers in Shanghai, Shenzen, and Beijing to more pedestrian hotels in the interior cities. Here in the US the brand (part of the Intercontinental Group) has been a laggard and has largely been relegated to the budget segment with the Holiday Inn Express flag.

Of course it’s not just the domestic Chinese market. Electronics brands like IBM’s Thinkpad (not really a dying brand, but now owned by Lenovo formerly Legend Computer) and the old Westinghouse brand (now owned by Chi Mei – Taiwanese company with manufacturing both there and mainland China) have been acquired by Chinese companies and then strengthened in the US and other overseas markets. And many strong multinational brands that are based here in the US (Coca-Cola, Starbucks, Nike) are doing very well in China too. But it was interesting to observe the successful repurposing of brands in new geographic markets.

I look forward to ordering a Tab cola while web surfing on a Commodore the next time I’m in Beijing…

Lee Hower
Lee is a co-founder and Partner at NextView Ventures. He has spent his entire career as an entrepreneur and investor in early-stage software and internet startups.