Recent reports state the GlaxoSmithKline is to target China’s £16bn-a-year soft drinks market with its Lucozade energy drink.  The Chinese version of Lucozade, which will be reformulated with a stronger flavour, will have a new brand name that will translate literally as ‘excellent suitable glucose’.

The decision to launch the brand in China is part of a wider GlaxoSmithKline strategy to target emerging markets with its consumer and pharmaceutical brands.  The company is also said to be planning to launch products (as yet unnamed) in Mexico, Brazil and the US.

Lucozade, which until now has largely focused on the UK and Commonwealth markets (85% of its sales are generated in the UK and Ireland), is often heralded as successful example of rebranding and relaunching a product.

Originally launched in the 1920s as a glucose supplement for the infirm, by the late 1970s the drink was only available in chemist shops.  In 1983, Lucozade was repackaged and relaunched as a soft drink – or, to be more specific, an energy drink.  The logic behind this move was that it was easier to sell ‘energy and empowerment’ as a proposition than ‘recovery’.

To find out more about our branding services, please click here.

Alternatively, to learn more about our market research in the food & drink sector, please click here.

Following our last blog post – a sector update on the Chinese automotive industry – we spotted an interesting article in last week’s AdAgeChina entitled “Great Wall is China’s Turtle in the Race to Build Global Car Brands” by Yang Jian of Automotive News China.

Great Wall Motor Co. is a small Chinese automaker. But its recent achievements provide some food for thought for its domestic peers who may be seeking to enter new or more developed markets such as Western Europe and America.

Between 2005 and 2007, a number of own-brand Chinese passenger vehicle brands – including Chery Automobile Co. and Zhejiang Geely Holding Group Co., Hebei Zhongxing Automobile Co. and Changfeng Motor Co. – displayed their vehicles at overseas auto shows.  In addition to participating in foreign auto shows, Shengyang Brilliance Jinbei Automotive Co. sent its vehicles for crash tests in Europe in 2006 and 2008, but the ratings received were very low.

After recognising the difficulties of meeting the stringent safety and emission standards of the European and American markets, most of these Chinese companies had, by late 2008, given up on any immediate-term plans to introduce their cars into these markets.  Some have this year looked into the possibility of merger and acquisition opportunities, which would effectively be a ‘short-cut’ to enter these new markets but, to date, no meaningful progress has been made in this area.

Great Wall, however, has adopted a different approach and strategy – one which can be summarised as more low key but more persistent – hence the article’s reference to ‘the hare and the tortoise’ fable.

Great Wall sold about 125,000 vehicles in 2008, with around half being exported to other developing markets.  It has yet to send its products to exhibitions in developed countries.

Instead, the company has been focusing its efforts on building, improving and upgrading its vehicles so they will meet the standards of these developed automotive markets.

In June of this year it began exporting three vehicles to Australia after certifying them for the market there.  In September it has managed to certify four of its models for the European Union – and with it has become the first domestic Chinese auto manufacturer to clear all the regulatory hurdles necessary to launch its vehicles within this market.  Great Wall has also, this year, begun preparations to design cars in line with U.S. safety and emission standards, with the aim of certifying them for the American market.

While its vehicles may be certified for the European market, Great Wall must still focus on building a suitable distribution network and put much effort into marketing before it can sell its products there.  But few would deny that with the slow, steady and solid progress it has been making of late, the company seems to be well ahead of its contemporaries in the race to crack Western auto markets.

For more information on our research experience in the automotive industry, please visit: http://www.b2binternational.com/China/b2bsectors/automotive.php

Better than expected economic data from China are likely to raise hopes that the world’s largest emerging economy could help to pull the rest of the world out of recession.  The National Bureau of Statistics announced an 8.9% jump in industrial output in May, compared with a 7.3% rise in April.

Sources: CBBC, Xinhua, Financial Times, Wall Street Journal, FCO Country Updates and other news sources.

In an article for the latest issue of China-Britain Business Review, Lord Davies of Abersoch, Minister of State for Trade and Investment, acknowledges that the global downturn has served to highlight the importance of emerging economies, insisting that their continuing development will prevent the world economy from entering a deeper recession this year.

There is no doubt in his mind – nor in that of many experts – that China will be a key driving force in helping the global economy to recover.  China is already the world’s third largest economy, ranks among the fastest growing, and still has massive potential for growth.  China has not and will not be completely immune to the effects of the recession, but in contrast to most countries, whose economies are expected to contract this year, even the most pessimistic projections suggest that China’s growth for 2009 will be over 6%.

From a UK perspective, China is the United Kingdom’s fastest growing major trading partner, with UK-China trade having grown at double-digit rates for the last decade.  In addition, British businesses are now the biggest European investors in China.

Britain and China have already developed excellent trade relations, and both countries and their respective economies will only benefit further from increased ties.

Market research specialists such as B2B International can conduct market entry and market assessment studies across both the UK and China – and indeed the rest of the world – which are tailored specifically to your company’s needs.  A number of organisations – UK Trade & Investment and China-Britain Business Council to name but a few – are also on hand to offer further general advice and information.

For any businesses interested in investing or expanding into China, or simply wishing to get some idea of the potential this vast country has to offer, why not contact one of our offices?

China: +86 (0)10 6515 6642, beijing@b2binternational.com 

UK: +44 (0)161 440 6000, info@b2binternational.com 

USA: +1 914 761 1909, newyork@b2binternational.com 

A recent article in China Daily reported that European companies in China remain optimistic and committed to the country, in spite of difficult economic trading conditions.

According to the survey conducted by the European Union Chamber of Commerce in China, most European companies (70%) represented in China have reported positive profitability for 2007.  62% expect to have remain profitable throughout 2008, when they look back at the end of the year.

The survey also indicated that SMEs in China tend to be more optimistic about future profitability than their larger counterparts. 

Joerg Wuttke, who is president of the European Chamber, commented, “This year’s survey re-confirms that the Chinese market is the most important emerging market for European businesses, and given the global slowdown it might actually rise in significance.”

It is growing domestic demand within China, rather than exports, which appears to be of fundamental importance.  More than 70% of respondents to the survey claim their principal focus is to produce goods or services for domestic consumption.  This compares with an equivalent figure of 49% two years ago.

 With two-thirds of the firms interviewed generating less than 10% of their current global revenue in China, it would appear that this country still offers massive growth potential.

However, it should be noted that the expected 62% profitability for 2008 is this survey’s lowest recorded figure, indicating that China, like so many countries, may be starting to see signs of the global economic downturn.

 Chamber members are thought to be anticipating slowdown in the automobile and services sectors, but European companies are generally positive about their prospects.