As the Expo approaches, many countries are hoping that being seen in Shanghai this summer will pay off in financial terms. One of the side effects most widely touted by the media and participants is the impact it will have on the Chinese perception of a given "national brand." The nation-branding rhetoric argues that large-scale participation in the Expo will produce a positive image that can, ideally, lead to increased revenues in China for all the companies from that country.
It helps that of the anticipated 70 million Expo guests, 65 million will be domestic Chinese, mostly college graduates with above-average expendable incomes. According to the results of a survey conducted by marketing research firm Ipsos, 69% of respondents planning to attend the Expo have at least a bachelor’s degree and an average monthly salary exceeding US$1,320.
"A huge section of Chinese purchasing power will be at this Expo," said Frank Lavin, chairman of the steering committee for the non-profit USA Pavilion organization. "The broader conceptual point of just orienting Chinese consumers more toward international activity will definitely take place … In a conceptual sense, it will be a step forward in internationalizing Chinese consumer preferences and consumer consciousness."
The most anticipated pavilions belong to global heavyweights like the US, France, Australia, Italy and the UK. While few countries can boast tension-free relations with the world’s most ambitious developing nation, there has been a concerted effort among foreign governments to put differences to one side. They have committed funds and manpower to participate in what some are trying to promote as the "economic Olympics." (The epithet hasn’t stuck.)
Established reputations
These nations’ global statures already ehance their national brands in the Chinese market, especially to products that are strongly connected to their national identities said Tom Doctoroff, CEO of JWT Greater China. Chinese consumers who are shopping for luxury and quality already know that Germans make good cars, French make good wine and Italians make good clothes.
There is even spillover to related sectors. J.P. Lam, general manager of the Shanghai office of French marketing firm Octagon, said that his company can also capitalize on its French origins, marketing itself as possessing the kind of "foreign expertise" that appeals to Chinese firms, particularly those that aspire to French cachet.
The US is especially confident about the perception of its national brand in China. Being known for high standards of quality and safety, rather than a unique product, the American stamp lures a wide spectrum of consumers to a variety of products. "We’re not known for fashion or chocolates. Whatever it is we do, we’re known for quality," said Phil Barnham, head of project management group B&L, the firm overseeing the construction of the US pavilion.
This means that nations that have already carved positive space in the Chinese collective consciousness just have to show up at the Expo and play to their stereotypes. "If the Italian pavilion has a fashion show or the French pavilion has a wine-tasting, that will make a good impression," said Doctoroff.
Not all nations were created equal. Some countries have been wooed by China for a single product or commodity they can offer but attempts to diversify their exports have been rebuffed by consumer unfamiliarity or domestic protectionism.
Copper-rich Chile, for example, is trying to use the Expo to increase its exports of wine, fruit and other agricultural products to China. "Of course copper accounts for a significant part of Chilean exports to China, but we want to increase the variety of exports and put more emphasis on other products," said Hernan Somerville, the commissioner general of the Chilean pavilion. "Chilean wine is a good product for the price and its presence [at the country’s pavilion] is going to be a major step in introducing it in China."
Australia also has some work to do in this regard. The country’s trade with China is primarily based on commodities such as iron ore and coal, and it wants to use the Expo as a platform to launch its international "Building Brand Australia" program. The goal of the program is to inform China and the world that Australia is not just a producer of iron or or a renowned tourist destination, but also a source of clean energy, clean food and a great place to get a university education.
India, on the other hand, is expecting less of a quantifiable return, said J.J. Shrikhande, chairman of the Confederation of Indian Industry’s (CII) Business Forum China. While Indian trade with China is the subject of many disputes, Shrikhande said that the Expo is more important as an opportunity for cultural exchange between Asia’s largest and fastest-growing economies. He doesn’t necessarily see it as a way to promote Indian business in the short run.
So what exactly will a flashy pavilion buy at the Shanghai Expo, if not a better reputation, more consumers and more investment opportunities? Ultimately, participation in this Expo may only have a slight influence on the bottom line, and relying on pavilions to push exports is not likely to work in the absence of other advantages. Norway, for example, is secure in the knowledge that Chinese consumers recognize the country as a source of quality, innovative products, but its main advantage is not its national image but a more measurable hard capability in advanced technology.
Joerg Beiler, vice-president and area chair for Greater China for Norwegian conglomerate DNV, pointed out China isn’t yet capable of producing the technology provided by Scandinavian firms. Norwegian technology will therefore maintain its popularity regardless of the impression the country’s pavilion makes.
Politcal payoff
The benefits of being at the Expo may be more political in nature. Referring to the near failure of the US pavilion project to get off of the ground, the American pavilion’s Lavin argues that the US$60 million ultimately plowed into the project is still worth it.
"I think it would have been enormously harmful to bilateral relations if we had not participated," he said. "I think it would have been perceived by many Chinese as an insult."
It seems then that being at the Expo is not as important as not missing it. For most countries, participating can’t hurt, said JWT’s Doctoroff. "[But] the linkage between improving the image and improving the business is something I would not bet on," he said. "The results will be more amorphous."