China's power to dominate

Until China cracks the cultural code involved in branding and marketing it will remain in many ways

Everyone especially new US President, Barack Obama, is well aware that America's position as a global superpower depends heavily on its economic performance.

And figures last week which revealed national income dropped by an annual equivalent of six per cent in the previous quarter must be worrying not only to the US Treasury but also to the State Department.

By contrast, things are much better in China. The world's third-largest economy is still expected to register growth of around eight per cent this year and has, in any case, huge currency reserves - nearly $2 trillion - with which to ride out the current financial storm.

And China is beginning to flex its military muscles - witness, for example, its growing naval presence in the Indian Ocean in order to control and dominate the shipping lanes transporting goods and raw materials, especially oil, between Africa and Asia.

It is also using soft power to good effect. A recent tour by Chinese President, Hu Jintao, of four African countries – Mali, Senegal, Tanzania and Mauritius - resulted in a number of trade deals and loans for a variety of infrastructure projects: bridges, roads and airports - designed to promote "friendship" and boost "win-win cooperation".

It would be easy then to make out a case that the current decline in US economic fortunes is a taste of things to come.

Indeed, there is already a substantial body of opinion that says that before too long the US and its less powerful allies will have to budge up and make space so that China can take its rightful place at the head of the world’s political table.

That China's economic growth will continue is pretty much guaranteed but my guess is that the effects will not work out in quite the way the country’s various cheerleaders are predicting.

Why?

Well, the late Ernest Gellner, a social anthropologist, made a telling point when he observed that a key feature of most modern economies is that work is "semantic and communicative rather than physical".

In other words, mastery of language and other cultural idioms - signs, symbols and metaphors – becomes progressively more important while working in fields and factories ends up having a marginal significance.

This brings us neatly to the world of brands and marketing for goods, services and places amongst other things. The amount of cultural capital that has been built up in relation to these semantic-communicative activities in the world’s advanced economies - especially in the US - is huge. And unlike a lot of agricultural and manufacturing techniques this knowledge is not easily acquired or transferred.

Leaving aside the oil and gas producers the most powerful nations (even allowing for the current economic turmoil) are those which have control of a significant number of internationally recognised brands which by earning vast amounts of foreign exchange not only keep the global economy moving but also generate and maintain political-military status and prestige.

And it’s revealing that in the 2008 "Best Global Brands" list of goods and services compiled by Interbrand the US has eight of the top 10 global brands - Coca-Cola, IBM, Microsoft, GE, Intel, McDonald's, Disney and Google - and 52 of the top 100 which is clear evidence of its economic status and power.

Most of the remaining brands – including familiar everyday names like L’Oreal, BMW, Prada, Shell, Nestle, Nokia and HSBC - are clustered in European countries including Finland, France, Germany, Italy, the Netherlands, Switzerland and the UK.

Apart from Japan which includes Honda, Sony and Nintendo among its eight brands the only other Far Eastern country to make the list was South Korea with Hyundai and Samsung.

So where does this leave China? There are some important national brands – the Chery compact car, Flying Pigeon bicycles and Prima televisions, for example – but none of these look capable of genuinely penetrating the international marketplace any time soon.

And that absence of bright, shiny Chinese-owned brands that appeal to consumers in advanced economies is a fundamental problem for both the country’s economic and political progress. It’s clear that until China cracks the cultural code involved in branding and marketing it will remain in many ways just the world’s biggest factory.

It also means, of course, that for better or worse the era of US–Western economic and political domination is far from over.

Dr Sean Carey is Research Fellow at CRONEM, Roehampton University