International Law

Splitting Your Brand In China? Be The Funnel.

By Dan

I have been working for years for a very experienced and very sophisticated client who manufactures and sells product in China. Many years ago, this company was doing incredibly well in a foreign country when, all of a sudden, its leading seller of its product cut my client loose because it had secretly developed its own manufacturing of a competing product. My client had no real connections in this country other than the company that had now spurned it and so it had essentially no choice but to simply leave.  

This company is now obessed with not getting shut out of a country again and so it makes sure never to be beholden to any one company anywhere. It does this by always having at least three companies in China doing its manufacturing (even though this ends up costing them more) and selling its product through various distributers, with none given an exclusive other than for certain limited geographic areas. 

I thought of this client today when another client sent me a fairly old blog post describing how various foreign auto manufacturers have "split their brand" in China and asking me what I think of that. The blog post is by David Wolf and it is entitled, "Brand Splitting: Don't Try This At Work." It is an excellent post and though it extols what my client is doing, it also warns against doing it at the customer level as that has a strong potential to weaken your brand. 

It makes for very interesting reading and I recommend it.  

Full post as published by China Law Blog on February 15, 2011 (boomark / email).