The monogram group branded entry into the us market for chinese c ompanies

Branded Entry into the U.S. Market for Chinese Companies

Presented to Young Presidents’ OrganizationThe Monogram GroupOctober 11, 2011

Copyright 2011 The Monogram Group, Inc.

Distribution is very different in the US vs. China, and because that is top of mind for every Chinese company, we have to start there.

National Retailers

Branded Products

Innovative Products

• Dominates products competing on low price (not

available anymore)

• A strong brand gives retailer reason to stock

the product (Chinese companies’ best choice)

• Creates its own category, highest

chance to gain distribution

Private Label Products

OEM Model

Good enough for client specs

Cheapest price

FOB only

Transactional focus

Trade shows, friends’ intros

Immediate sales

No consumer contact

Low margin, high volume financials

Branded Model

Excellent quality, own design

Competitive price

Entire logistics & customs continuum

Relationship with buyers and consumers

Marketing and sales support

Longer sales cycles with many factors

Understanding, serving consumers

Much higher margins and creation of brand value

The Old Reality vs. the Future Opportunity

The Five Prerequisites every Chinese company needs to have to consider the US market.

Excellent product quality (ideally, innovative products)

Clear, realistic business objectives

An international talent team

Appropriate financial resources

Patience (minimum 2 year time commitment)

...which lead to The Five Factors every Chinese company needs to master for success in the US market.

New product development tailored to US market needs

Willingness to adapt business practices to US standards and methodologies

Insights about consumers/customers who buy their products

An understanding of the wholesale and retail process

The differences between OEM and Branded business models and how to do both concurrently as a transitional stage

The Proven Path to securing US distribution.

The Chinese CEO and Board of Directors need to consider the following:

Are you committed to going global and building a brand as the best long-term strategy for your company?

Do you have a team you can trust and authorize? If not, can you hire the management team you need?

Do you have the financial strength and patience to do develop and execute on a minimum 2-3 year plan?

Will you commit to proper due diligence and the flexibility to adapt to local market practices?

Monogram’s market research study into US consumers’ attitudes towards China and Chinese brands.

Research Objectives and Methodology.

Understand American attitudes to China and the quality and price of Chinese branded products over time.

Determine American openness to Chinese branded products.

Explore the necessity of American consumer familiarity with Chinese brands and brand advertising.

Surveys were conducted online in 2007, 2008 and 2011.

Sample is demographically representative of the US market.

Americans appear to be getting more comfortable with Chinese products.

0%

15%

30%

45%

60%

24%

45%

17%

53%

20%

38%

200720082011

% Americans agree that:

I will not buy foods from China because they may have unsafe chemicals or additives.

I think Chinese products are a much better price and value

than American made products.

All countries have an increased perception of being low priced, with China the clear price leader.

0%

20%

40%

60%

80%

US Japan China

71%

28%

7%

60%

17%

3%

45%

17%

5%

200720082011

Perception of Manufactured Goods as Being LOW Priced:

Chinese manufactured goods still reside in the “Low Quality/Low Price” quadrant. The long-term goal is to move into High Quality/Low Price.

0%10%20%30%40%50%60%70%

0% 20% 40% 60% 80%

United StatesJapan

Hig

h Q

ualit

y

Price/Quality Ratios

Low Price

High Quality/High Price

Low Quality/High Price

High Quality/Low Price

Low Quality/Low Price

China 2011

NokiaHyundai

HaierTsingtao

LenovoRed Dragon

Lotus BlossomChery

ChangyuMaotaiBaidu

Ping An

0 20 40 60 80 100

2334

89

1414

1819

9395

Even the biggest Chinese brands were virtually unknown to American consumers, scoring the same awareness levels as brands we fabricated.

% Americans Aware of the Brand

And that low awareness (along with a poor overall image of Chinese quality) correlated to low scores on quality perception.

NokiaHyundaiLenovo

Lotus BlossomHaier

Red Dragon Tsingtao

CheryMaotai

ChangyuBaidu

Ping An

0 10 20 30 40 50 60 70

35556

811121314

4565

% Americans Believe Brand is High Quality Based on Name

Several product categories have recovered from their 2008 lows in purchase consideration.

0%

10%

20%

30%

40%

50%

60%

70%

Tea Clothing Computers Silk Fabric Electronics Toys Cell Phones

38%41%43%

46%46%47%48%

54%

25%

41%

21%

45%48%

29%

46%

54%

38%

45%46%

52%55%

32%

50%

63%

200720082011

% Americans Open to Purchasing

HerbalProducts

Brand familiarity and advertising have increased significantly in importance over the past four years.

0%

18%

35%

53%

70%

42%

67%62%

35%

48%

69%

36%

45%

67%

200720082011

% Americans agree that:

It is important that a Chinese company that

wants to sell their products in US has an

English language website that is written in excellent English.

It is important that I purchase Chinese

goods from a brand with which I

am familiar.

It is important that I have seen

advertisements for a Chinese brand before I will buy their products.

Case Study:Yuzhou Green-Ship Garden Supplies Producing Co., Ltd.

Green-Ship is a $7.5 million manufacturer of unique flower pots and planters made from a patented composite material.

$5 million in sales in Europe and $2.5 million in the US, all under private label. They have no domestic market.

Founded in 1993, they own over 20 Chinese patents for their manufacturing of their products.

They are completing the construction of a new factory in Qingdao that will allow them to triple in sales.

Monogram was hired in January 2011 to create a US brand and build distribution to dramatically grow sales with independent garden centers.

Original OEM Green-Ship branding.

New US brandmark and tagline

New Product Catalog

New Product Catalog

Case Study:Goldwind America

Goldwind is the fourth largest company in the world in wind energy.

Monogram was hired in February, 2011.

Objective: Help Goldwind establish their US brand in North and South American markets in order to overcome political, technological and sales challenges.

Strategy: Create a brand grounded in core values that will resonate with an American/Western audience, such as innovation, hard work and tenacity.

North American trade print campaign.

North American trade print campaign.

Corporate and Product Sales Collateral.

Corporate and Product Sales Collateral.

Corporate and Product Sales Collateral.

Trade Show Flash Modules (select screens).

PERMANENT MAGNET GENERATOR THE LEADERS IN PMDD TECHNOLOGY

Higher powerto weight

ratio

Significantlyreduced

mainenancecosts and total

Technology accolades

Generator cross section

High powergeneratingefficiency

Superiorpower qualityand grid code

compliance

A sustainabletechnology

THE SUPERIOR GENERATOR FOR ECONOMIC WIND ENERGY CONVERSION

GOLDWIND PMG TOUCH SCREEN

BENEFIT FEATURE

High powergenerating efficiency

THE LEADERS IN PMDD TECHNOLOGY

Permanent magnet generator (PMG) eliminates the need for electrical field excitation and associated losses present in induction-type generators.

future machines are brought online.

Superior powerquality and gridcode compliance

Sustainable technology

Higher powerto weight ratio

top-head-mass.

PREVIOUS MORE FEATURE BENEFITS

Now is the time to take action, but be prepared and support the plan with your best efforts and resources.

The recession has driven US consumers toward “value” brands, and they are more willing to accept creditable Chinese brands than ever before.

Conduct professional research and develop a 5-year plan, and then put your resources against it and be patient. If you do it correctly, it will greatly pay off.

Be open minded about the need to adapt to US business practices and market realities.

For more information, please contact:

The Monogram Group233 S. Wacker Drive, Suite 410

Chicago, Illinois 60606 USA

Tel: +1 312-726-4300Fax: +1 312-726-4308

www.monogramgroup.comwww.monogramgroup.com.cn

Scott Markman, Presidentsmarkman@monogramgroup.com

John Yang, Director of China Departmentjyang@monogramgroup.com

Direct: +1 312-268-6687