Rush to own branding leaves OEM players out in the cold

Stuart Biggs

Last week's Hong Kong Electronics Fair resembled a four-day screenshot of the state of the industry.

Unusually high first-day attendances, more exhibitors and official survey results all suggested a growing optimism for the months ahead. Participants said there had been more buyers, more sales and more opportunities at the fair, held at the Hong Kong Convention and Exhibition Centre.

But on closer inspection, the event also mirrored the make-or-break challenge lesser-known players will have to overcome.

This year, the Hall of Fame exhibition showcased the products of 150 companies from eight countries.

And the barrier to entry? Original equipment manufacturers (OEMs) could not apply as companies had to have their own brands to promote.

Out of 2,000-odd companies jostling for attention, 150 took the lion's share of the glamour and prestige.


This is not to say that those companies did not deserve the recognition. Far from it. From Green Will's home appliance designs to the stylish audio equipment of Beijing-based Shockwave, there was enough quality on show to suggest a new generation of brands from China and elsewhere have the research and development capability to chance their arm overseas.

For companies lower down the electronics food chain, however, not having a brand must seem like a version of caste segregation - the difference between media coverage, higher premiums and brand equity, and invisibility in a sea of other no-names vying for attention.

So much value and prestige lies in branding and original designs that OEM has almost become a dirty word, especially for public relations staff desperate to placate shareholders and woo potential investors.

As countries in Southeast Asia, and potentially in Africa, enter the low-cost manufacturing game, the need for Chinese manufacturers to step up the value chain is increasing, which is why so many companies at last week's fair were showing off their original designs and explaining their Hall of Fame strategies to become the next IDT or Haier.


IDT executive director Alain Li said one element of branding was 'how you differentiate your product in a fast-moving market'.

The need to stand out from the crowd was the dominant theme at many booths - from audio companies competing to provide the loudest noise pollution to sales staff explaining how their MP3 players had more functions than an iPod.


But while companies such as Shockwave showed they have grasped what the branding game is all about, with innovative designs and a name to match, others illustrated the idea that manufacturers here and on the mainland do not have the design and marketing expertise to make it overseas.

For some companies, the pressure to produce own-branded products creates the spectacle of a baby trying to sprint before it can crawl.

Even as one executive proudly announced 'aggressive' overseas expansion plans for his company, its exhibition display of hastily assembled personal audio products cried out for a little less aggression and a lot more progression.


While the simple addition of a colour screen to an MP3 player does, in theory, better the specs of Apple's dominant iPod, the player is unlikely to win significant market share from Apple if it feels like it is about to disintegrate at any moment.

Apple's influence on the MP3 market was visible from the plastic scroll wheels to the iMac icons that featured on rival players.

Of course, the iPod is not the only MP3 player on the market, and designs can be successful in their own right regardless of how they compare.


Market analyst IDC estimates that global revenues from MP3 players will reach nearly US$58billion by 2008 - enough to accommodate players at all ends of the spectrum.

But what is striking is that many companies appear to talk up their prospects as own-brands without demonstrating any of the capabilities of the brands they aspire to compete with. Apple knock-offs are more likely to attract patent lawyers than cash-rich investors.

Likewise, the electronics companies that produce the most striking designs are probably wasting valuable effort if their logos and business cards do not reflect a dedication to design and innovation.

In the uphill struggle from invisibility to market prominence, every little bit counts.

As always, the electronics fair was memorable for the vast array of gadgetry on display, and for the companies whose vision and innovation continue to set new standards in the Asia-Pacific region.

But it also revealed why design talent commands such a high premium, and why not all companies are in a position to stake a claim to it.