China's Businesses Boom, But Its Brands Don't

RENEE MONTAGNE, host: Quick - name a Chinese brand, just one. The fact is, after 30 years of bone-shaking, mind-bending economic group, everyone knows about brand China, but few can name a specific Chinese brand. As we continue our series on China, NPR's Rob Gifford tells us the reason for that is not just economic.

ROB GIFFORD: In a bustling market near the center of the Cambodian capital Phnom Penh, 24-year-old Soray Peah is testing the ringtones on a cell phone she wants to buy.

Ms. SORAY PEAH: (Foreign language spoken)

GIFFORD: I'll definitely buy a Chinese-made phone, she says, because they're cheap, even though the quality is not great.

Ms. PEAH: (Foreign language spoken)

GIFFORD: But she doesn't know any Chinese brands, and in fact the brand she is going to buy is a fake Nokia, copied in China and sold throughout Southeast Asia. This reputation for Chinese-made goods holds inside more upscale stores in Phnom Penh, as well.

Manager Tha Vy runs a smart store in a mall, selling electronics.

Mr. THA VY (Electronics Store Manager): No, we don't have Chinese brands. We've got only Korean brands and Japanese brands, because the Chinese products came to Cambodia for the first time, the products were very poor quality.

GIFFORD: So, a store manager in Cambodia puts his finger on a key point of China's rise: cheap T-shirts and fake mobile phones: fine. IPads and laptops assembled for foreign companies: fine, too. But Chinese brands? It's not really happening yet.

GIFFORD: Half a world away, in Camden, South Carolina, American workers are attaching the seal on a refrigerator door. This is the American factory of Haier, a Chinese company that's probably the closest China gets to a known international brand.

Mr. GERALD REEVES (Manager, Haier): I think we got good people. We got good management. We got good products.

GIFFORD: Manager Gerald Reeves says Haier is making quality goods, so it hasn't suffered from the image of low-end, made-in-China products.

Mr. REEVES: I don't know that it's really been a challenge, because it says Made in the USA on our boxes. And a lot of people don't even realize this is a Chinese company, truth be known.

GIFFORD: Haier, he says, is investing plenty in research and development to keep their quality high.

Mr. REEVES: We've got some R and D upstairs. If you're going to build products for an American market, you need to have Americans, for the most part, designing those products.

GIFFORD: But many analysts say that Haier's limited success may, in some ways, be the exception that proves the rule. They attribute China's inability to develop and innovate to problems within China that go deeper than just the development of brands - a lack of legal protection, for a start.

Mr. PAUL FRENCH (Access Asia): If you're going to innovate, if you're going to be entrepreneurial, if you're going to create and invent things, you need a legal system that can protect your invention.

GIFFORD: Paul French of Shanghai consulting firm Access Asia has lived in China for nearly 20 years.

Mr. FRENCH: The government should take the lead on that, and an independent legal system needs to be able to do that and to respect the rights of entrepreneurs and innovators. And at the moment, that is simply not the case, here.

GIFFORD: French says intellectual property right is one of many issues that need to be dealt with if China is going to move up to the next level.

Mr. FRENCH: The big picture would be the environment. The big picture would be social welfare - health care and pensions, particularly. But then it would be education and the ability for students and academics to challenge the consensus, to challenge the official version of things. We need to have freedom of the press so that confidence in the stock market can be maintained. We're going to need better ethical and corporate governance, and that's going to mean a lot more transparency, both from government and from corporations.

GIFFORD: Any one of those issues on its own would be hard enough to reform. The fact that China needs to reform all of them is a monumental - not to mention dangerous - task. Modern Chinese society is simply becoming too complex to be contained within the old political and social framework.

And it's not just Westerners who say that some of the entrenched cultural and political attitudes have to change. Take education, for instance.

Dr. SHI YIGONG (Dean of Life Sciences, Tsinghua University): This room is very similar to what I used to have at Princeton University.

GIFFORD: Chinese-born scientist Shi Yigong went to the United States in the 1990s to gain a Ph.D., and rose rapidly to be a full professor of molecular biology at Princeton. In 2008, to his colleagues' amazement, he decided to give up his tenure and return to become dean of life sciences at Tsinghua University in Beijing.

He says he owes something to his homeland. Shi, like most people here, knows there is one word that sums up the challenges ahead.

Mr. SHI: Of course, it is the system. China do have a lot of talented scientists and engineers. People are very smart in China. But the mechanisms for people to apply their talents, for people to innovate, are not there yet. That needs to be resolved.

GIFFORD: But the system, and indeed the culture, is very difficult to change. And Shi very honestly admits that he sees the problems even in himself. He encourages his graduate students to innovate and to challenge their teachers in a way the Chinese education system does not. But he realized recently when his own children get home from school, the only question he asked them was: Did you listen to your teacher today?

Mr. SHI: For someone who stayed in the United States for 18, 19 years, who's been really influenced by Western culture, still the question was: Did you listen to your teachers? You know, we are told to listen. We are told to accept. We are told to - not to doubt about authority. So I think that element is very hard to do away with, because that's part of our culture.

GIFFORD: Observers point out that discouraging students from questioning teachers is a political issue, too. If you start to let kids question authority, who knows where that's going to end up?

And anyway, surely you can't have all these reforms and continue to be a one-party state, can you?

Mr. FRENCH: Yeah, you know, people said you can't have private property ownership in a one-party state.

GIFFORD: Consultant Paul French of Access Asia again.

Mr. FRENCH: People said you can't have a banking system that gives out loans and mortgages in a one-party state. People even used to say you can't have a one-party state where people are just given passports and allowed to fly off to other countries, because none of them will ever come back. Well, turns out, you actually can have a one-party state and those things, right? And, you know, we're off the map here. I think we're going to find that there's a lot of things that you can have and still have a one-party state.

GIFFORD: We are, indeed, off the map, here. The extraordinary experiment that is modern China – staggeringly（驚人的） impressive, though brutally flawed - is utterly off any map that has ever gone before.

And there's possibly just one thing that could be more difficult to implement than the transformation the Communist Party has made in China over the last 30 years, and that's the transformation it needs to make over the next 30.

Rob Gifford, NPR News, Shanghai.
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