Chinese original equipment manufacturers (OEMs) export billions of dollars worth of consumer products every year, stocking foreign retail outlets from pile-'em-high hypermarkets to the swankiest designer boutiques. Many of these products are shipped emblazoned with the logos of well-known global brands, to be sold at huge mark-ups that manufacturers can only dream about. Until recently, Chinese manufacturers seemed content with a system that brought them solid - if not stunning - profits. But as domestic competition increases and companies come under pressure from contractors to produce faster and cheaper, profit margins are shrinking. The solution appears simple: produce self-branded products commanding higher premiums, just as Japanese and South Korean electronics companies did in the 80s and 90s. 'There is a huge opportunity for Chinese manufacturers to gain a competitive advantage and credibility abroad by developing their brand,' says Paul Feldwick, executive planning director at advertising agency DBB. 'It is possible to achieve purely sales-based growth as the lowest cost producer but ultimately OEMs remain dependant on the next contract. As soon as the rules of the market change or you are no longer the cheapest producer, you are dead in the water. If you have a strong brand you can survive by other means.' The concept appears simple, but few Chinese manufacturers have attempted it. Many of those who have tried saw their branded-in-China products - often identical to those bearing the most lucrative insignias - lying forlorn in the half-price corner of department-store basements. Consumers will almost always pay a hefty premium for, say, a Sony tape deck over a Sonni. It does not matter if both rolled off the same Chinese assembly line. Even Huizhou-based TCL Corp, one of the world's largest television manufacturers, decided against marketing its own brand outside Asia, opting instead to use the brands - including United States mainstay RCA - and distribution channels owned by French joint-venture partner Thomson. Likewise, TCL-manufactured handsets will ship under the Alcatel brand name in European and Latin American markets, under the terms of the joint-venture partnership between the two companies. Lenovo Group, China's largest computer maker also announced recently it would put plans to tap overseas markets on hold, despite the fact that its name change from Legend was approved by shareholders for precisely that purpose. If two of China's best-known manufacturers decide they are not ready to take on the biggest Japanese and western brands, does that mean brand-building is too difficult, too costly, or not worth the risk? 'Brands are not an annuity, but they do give the best assurances for long-term cash flow,' says Mr Feldwick. 'Big brands have the potential to live for a very long time.' Brand-building requires the investment of significant resources over time. Advertising is one aspect of brand-building that Mr Feldwick says takes years to bear fruit. 'If you want to make a quick, 12-month profit, don't advertise,' he says. 'The case for advertising is essentially a long-term one.' A report last year by consultants McKinsey suggested that the branding ineptitude of Chinese manufacturers boiled down to a simple lack of marketing skills. 'The question is less whether Chinese companies can make the grade in product features and quality and more whether they can develop marketing strategies for branded goods,' the report said. 'We think that these companies have a long way to go.' But Mr Feldwick says that even marketing skills are sometimes not enough to secure a brand against fickle consumer trends or criticisms that are outside the company's control. 'Ultimately managing a brand is like sailing a ship - the elements are sometimes behind you and sometimes against you.' Nevertheless, the overseas branding success of Qingdao-based appliance giant Haier Group, or the clever brand-acquisition strategy of Hong Kong-listed power-tool maker Techtronic Industries, may encourage more Chinese manufacturers to take the risk.