China isn’t shipping out as much stuff as most experts expected. Over the weekend, Chinese officials released data on exports, and the numbers revealed an unexpected decline of 0.3% in September from the same month a year ago.
While a 0.3% drop in this metric isn’t a disaster, it is a huge disappointment when compared with expectations. Most economists, as well as China watchers like me, were expecting exports to increase by about 6% during the month. The lackluster metric throws into question the now popular notion that the global economy continues to strengthen, albeit at a slow pace.
However, despite the wider miss in the export metric, there is one segment of the China export market that’s still going strong, and that is Chinese technology.
Now, I realize that Chinese technology brands aren’t exactly household names. In fact, there is not a single Chinese brand listed in the InterBrand top 100 global companies list. Yet the lack of profile doesn’t negate the fact that China-based Lenovo (LNVGY) now is the world’s largest PC maker.
Moreover, when it comes to the all-important electronic gadget, the smartphone, four of the 10 biggest manufacturing firms (by shipments) are based in China. Chinese companies also comprise about half of the top 10 LCD TV manufacturers. So, China’s got the manufacturing heft — it just doesn’t have the branding weight.
Let’s face it, when it comes to electronic brands, Chinese manufacturers are woefully behind the likes of U.S. competitors like the ultra-high-profile Apple (AAPL). South Korean electronics maker, and Apple rival, Samsung Electronics (SSNLF) now has become a huge global electronics brand. In fact, it’s Samsung that could be a role model for Chinese electronics companies looking to boost their brand profile globally.
Recall that it was just a few years ago that Samsung was an also-ran brand in the smartphone space, and considered a cheap imitator of Apple’s iPhone. Of course, Samsung stepped up its game big time with high-quality Android-based smartphones with functionality equal or even better than the iPhone. Samsung now is the top producer of cell phones in the world, and part of that transformation has been a huge push by the company to build its global brand awareness.
According to Nomura Securities analysts Leping Huang and David Hao, several Chinese electronics makers are taking steps to increase their respective brand profiles. Smartphone brands such as the Huawei Ascend, the Lenovo Vibe and ZTE’s (ZTCOY) Firefox OS model all are being marketed as high-end phones with unique options.
Last year, when Huawei introduced the Ascend P1 S, it billed its product as the “world’s slimmest smartphone” at 6.68 mm. Meanwhile, ZTE, which manufactures phones for Verizon (VZ) and many other companies, hopes to increase its brand presence with its line of the recently introduced Firefox OS-based smartphone.
Of course, one way to boost your brand’s image is via a high-profile spokesperson. For example, Lenovo has tapped NBA superstar Kobe Bryant to be its spokesperson. Not to be outdone, ZTE decided to sponsor an entire NBA team, as it has partnered with the Houston Rockets franchise to help promote the respective brands.
If the push for a higher profile by these China tech companies is even half as successful as the Samsung model, we could be looking at some strong up and comers in the months and years to come. More importantly, if these China tech brands catch the eye of the smart money, then we also could see their respective stocks take on a high-profile, bullish profile as well.
As of this writing, Jim Woods did not own any of the stocks mentioned here.