Shanghai Street View: Branding The Zone

Shanghai FTZ gets in the zone

In brand-obsessed China, it seems that even something as abstract and esoteric as a free trade zone (FTZ) can become a mingpai, or famous brand. That’s my quick assessment, on reading that our city’s highly hyped FTZ is getting ready to embark on a nationwide campaign to spread its name and business model as it approaches its first anniversary.

More broadly speaking, this move by the Shanghai FTZ shines a spotlight on the Chinese obsession with famous brands. As a China resident of many years, I’ve noted this fascination with mingpai has a long history in modern China dating back to well before the current reform era. But this latest move to create a “brand” around the new FTZ seems a bit extreme, and perhaps indicates it’s time for China to tone down its obsession with famous names.

Of course I’m being just a little facetious by saying our FTZ is trying to develop a real brand, since no such official initiative has ever been announced and the focus is clearly on creating an economic development area. But the amount of media coverage and publicity around the zone is almost the same as creating a brand, and the “FTZ” moniker has taken on an almost brand-like feel in the short time since the launch of this experimental new area in Pudong.

Our beloved FTZ has certainly developed a name for itself over the last 8 months. The zone, officially known by the unruly name of China (Shanghai) Pilot Free Trade Zone, has been in national and especially local headlines ad nauseam since its launch just before the October 1 holiday last year. I haven’t seen any official tallies, but I suspect a search on zimaoqu, the Chinese term for FTZ, would turn up thousands of headlines and other references in local media alone in the last 8 months.

Yet I’d be curious to get a media expert’s opinion on how successful the FTZ has been at developing a brand image over that same period. My guess is that such an expert would say the FTZ has been hugely successful at raising awareness of its name, but that there’s still quite a bit of confusion about what exactly the brand means among business leaders and the general public.

That could be problematic for our beloved FTZ if it’s really serious about trying to spread its brand across the country. According to one of the zone’s top officials, the FTZ will soon name an initial batch of other institutions around the country that will seek to replicate its model aimed at testing out reforms of China’s financial system.

I won’t go into much detail about the campaign here, since much of it looks quite technical and boring to average readers. In effect, FTZ managers want to turn their concept into a sort of franchising program, similar to what McDonalds (NYSE: MCD) does for most of its restaurants in the US.

That model has a central organization develop basic business models and guidelines, which other operators can then follow to open their own outlets under the same brand name. Such a strategy is good not only operationally, but also provides a consistent image of the brand in consumers’ minds. In this case such consumers would be the businesses that operate in this new generation of zones.

The big problem is that no one seems quite sure of what exactly the FTZ brand stands for, besides the broader concept of financial reforms. One of my good friends recently registered a company in the zone, but openly admitted he had no concrete business development strategy about what he could actually do there. Instead, he said he was taking the action on the hopes that the zone would eventually offer lower import taxes for luxury goods.

If I were one of the zone’s operators and really wanted to follow this franchise-like strategy, I would seriously consider hiring a branding consultant to manage the process more effectively. For starters, such a consultant would probably suggest abandoning the zone’s current unwieldy name and adopting something more user-friendly. The term “FTZ” is slightly better than “China (Shanghai) Pilot Free Trade Zone”, but neither name really seems to conjure up images of economic prosperity and business friendliness, 2 of the zone’s core values.

But in all honesty, I would advise the zone’s managers to focus less on brand building and national expansion, and set their sights on finalizing policies about what exactly the FTZ will be. That central goal should take top priority over any plans for creating a national brand.

The fascination with famous brands certainly has a long history in China, dating back to the earliest days of the People’s Republic. During my days in Beijing in the 1980s, people happily spent their limited funds on such brands, paying big premiums for prized items like Flying Pigeon bicycles and Butterfly sewing machines. In those days brand names were especially important because they helped to guarantee high quality levels of the products people bought.

But in the current day when communications are much better and consumers have many ways to make informed buying decisions, the concept of famous brands seems just slightly outdated and far less important than it used to be. Accordingly, perhaps the Shanghai FTZ officials should focus less on spreading their brand around China, and pay more attention to creating a well-designed product that will truly help to advance the country’s financial reform.

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