Contemporary Logistics Development of Corporations

Contemporary Logistics 08 (2012) 1838-739X
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Contemporary Logistics
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Independent Brand-building is a Key to the Survival and
Development of Corporations
Jie YANG1,*, Yang SUN2
1. College of Economics and Management, Hebei Polytechnic University, 063000, P.R.China
2. School of Foreign Language, North China Coal Medical University, 063000, P.R.China
KEYWORDS
Independent innovation,
Brand-building,
Intellectual Property Right (IPR)
ABSTRACT
Enhance the innovation capability of domestic corporations and promote their independent
brand-building with self-owned IPR (Intellectual Property Right) are playing important
roles in the improvement of their international competitiveness. This paper proceeds with
the significance of brand-building in the survival and development of corporations; and
then sets forth the truth that the value of the brand originates from its independent
innovation, i.e. it is the brand with self-owned IPR that have an edge in the market
competition; finally, this paper brings forward feasible solutions to the promotion of
corporate brand-building in terms of concept renovation, Research and Development
(R&D) investment, independent IPR granting, talents attraction and cultivation, and
government function efficiency.
© ST. PLUM-BLOSSOM PRESS PTY LTD
1 Introduction
Along with the booming of economic globalization, competition among countries becoming a largest part manifested in that among
corporations, multinational corporations in particular. Directly set, it is in the fierce competitive collision among brands, which have
become important embodiment indicative of national competitive power. Therefore, improving independent innovation capability,
enhancing independent building of brands with self-owned IPR have been key approaches to the promotion of key competitiveness of
domestic corporations and their overall power in snatching market share home and abroad.
2 Significance of Independent Brand-building in the Survival and Development
of Corporations
2.1 The brand of a corporation is the special passport to international market
*
Corresponding author.
Email: [email protected]
English edition copyright © ST. PLUM-BLOSSOM PRESS PTY LTD
DOI: 10.5503/J.CL.2012.08.014
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At present, the competition among corporations has broadened from domestic market into global market; meanwhile, corporate
resources have been allocated in a larger dimensional scope, transcending beyond national boundary, which gives birth to an optimal
resources allocation system featuring in worldwide resources flows. With the development of economic globalization, Chinese
corporations carve into an era of “Dancing with wolves”. As far as the current inferior status of Chinese corporations is concerned,
they can win competitive advantages and run faster than their foreign competitors only by independent innovation strategy that will
generate more brands with self-owned IPR.
2.2 Brand-building is strategic focus of promoting corporate key competitiveness
An outstanding brand not only represents excellent performance, high quotation and lucrative profits, but also attracts millions of
thirsty consumers to willingly pay tens or hundreds of times higher price for the brand products. Independent innovation in 20th
century features in initiative and domination; those multinational corporations with well-known IPR brand products or services have
exerted leading influence on global competitiveness. Although China has become the third largest trading country in the world, with
approximately 200-product outputs ranking the first, 90% of domestic import and export corporations are operating the original
equipment manufacture (OEM) [1] for foreign brands, with quite few self-owned world-class brands and fragile competitive power.
China today can only be labeled as a big “manufacturing nation”, rather than “manufacturing power”; China is strong in production
but weak in brand-building. Therefore, for a corporation without a remarkable product brand, it cannot stand out in the market simply
relying on good quality and lower price; it should take all kinds of factors into consideration, such as quality, package, advertisement
and reputation, with the focus on independent innovation capability that must be promoted by upgrading key technology. Therefore,
Chinese corporations should depend on innovation to build up their independent brand names with self-owned IPR acknowledged by
the whole international market. Only in this way can export product mix of Chinese corporations be constantly improved, from
primary bulk products with low added value to ones with high added value, and from traditional way of production focusing on price
and cost competition to comparative advantages in technology and brand-building.
2.3 Brand-building --- an inevitable choice for corporations to win competitive initiative
Since the reform and opening-up, Chinese corporations take initiatives to import advanced foreign technology and managerial
experience, which greatly close the gap with overseas competitors. However, under the circumstance of globalization, international
competition becomes more and more violent. In some fields involving key technologies, on the one hand, for the sake of
safeguarding their self-interest，it is impossible for some developed countries and multinational corporations to transfer their most
advanced technologies to us; On the other hand, lacking key technologies with independent IPR, Chinese corporations will be
hampered in building up their own brand names, whose products cannot rank among the top and merely ran aground in the inferior
status of value chain, struggling for survival. For instance, when a Chinese corporation exports a DVD by the selling price of $32, it
has to pay the foreign patent fee of $18, plus $13 as the cost, and thus only $1 left as the profit [2]. Excessive low profits render
Chinese corporations much difficulty in investing enough capital into independent R&D. As a vicious circle, without self-owned IPR
technologies, Chinese corporations cannot truly become competitive, even though it would expand its business scope. Therefore,
only by constructing the foundation of independent technological innovation and making more self-owned IPR technologies and
famous brands, can our corporations obtain initiative in international competition.
3 Relationship Between Independent Innovation and Brand-building
3.1 Independent innovation is the premise of brand-building
The Brand is an important intangible asset of a corporation, indicative of corporate image and product quality. Independent
innovation is the premise of brand-building. The innovative achievements with self-owned IPR lay the foundation for making
competitive brand; without independent innovation, brand-building would become "water without a source" or "a tree without roots",
for the essence of brand is none but key or core technologies with self-owned IPR. A lack of brands with self-owned IPR has become
the main factor that restricts China's economic development. Therefore, the shortage of a considerable number of world-class brands
hampers China from being a both great and competitive power.
Under the condition of keen international competition and economic globalization, the era of mechanical imitation has passed away,
which indicates that only independent brands can enter international market. Since independent innovation is the foundation of
self-owned brand-building, without which, Chinese corporations cannot put out high-quality products with excellent performance and
huge marketing share, let alone renowned brand names. If Chinese corporations would like to become time-honored and create
permanent brand names, they must first be self-dependent and build self-owned brands by the promotion of independent innovation;
then they should improve positive interaction and achieve reciprocal benefits between self-owned brand-building and independent
innovation.
3.2 Brand-building is a goal of independent innovation
Independent innovation is not equal to brand-building, for brand-building is the goal of independent innovation. Only when the
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achievements of corporate independent innovation are ultimately reflected in the brands, could real competitive edges be obtained.
Constant innovation is the eternal driving power of brand building. Brands and products are closely linked, and any product has its
life cycle. According to the current situation of international competition, technological innovation capability is promoted on a daily
basis and products renovation becomes faster and faster, which contribute to the continuous shortening of product life cycle. The
Narcissus, ducklings and other brand commodities having been popular at a time in the market now nearly die out due to weak
technological innovation capability, which indicates that the brand-building should rely on constant independent innovation to
survive and develop [3]. It should be noted that each industry ought to have its own developing dimension. According to the
economics, there is no sunset industry, but only the declining technology, because sunset industry is the one whose technologies are
declining, but no sooner are there technological breakthroughs and renovations than it stops to be a sunset one. Therefore, the targets
of independent innovation for each corporation should be to enhance the vitality of self-owned brand.
4 Measures to Improve Independent Brand-building
4.1 Renewing ideas and firmly establishing the awareness of independent innovation
Ideology, concepts or ideas, once formed would guide and control people’s behaviors with great force. Concept renovation is the soul
of corporate independent innovation. Keynes once said, "Ideology can change the trajectory of history." Independent innovation is
not only a challenge, but also an opportunity for corporate development; therefore, Chinese corporations should face the challenges
and seize the opportunities, strengthening the entity concept, the market concept and innovative ideas. Employees and managers
should keep pace with the era and have a clear understanding of the ideology that "No innovation means the death", lifting
independent innovation and brand building into strategic level and targeting at the market needs while establishing an independent
innovation management system in line with marketing and economic laws, with the purpose to explore a brand-new way under
current circumstance, i.e., to achieve sustainable development through building up self-owned brand. Establishing the ideology of
independent innovation should possess an open and outward-looking and international-based vision driven by the enterprising spirit
that advances with the times.
4.2 Laying solid financial foundation for brand-building by increasing investment
The fact that almost every world-class corporation has self-owned cutting-edge technology and knockout product enlightens Chinese
corporations to foster competitive advantages during the process of R & D, through transforming technical advantages into product
advantage. To achieve this goal, they need to increase investment on R & D, for key indicator of corporate R & D expenditure is its
proportion in total sales. Generally speaking, when the proportion is 2%, the corporation can be survived; up to 5%, it can be
competitive. According to the statistics, China's large and medium-sized corporations devote only 1.7% of its total sales into R & D,
compared with 3 % in developed countries; moreover, only two thirds of Chinese corporations have R & D institutes [4]. Therefore, at
present, the key to promote independent innovation capability lies in increasing the investment on R & D; in order to realize this goal,
the focus should be on the formation of incentive mechanism and system for R & D.
4.3 Implementing independent IPR strategy and enhancing corporate key competitiveness
IPR is the embodiment of scientific and technological innovations and an important legal weapon aiming at protecting scientific and
technological advantages and opening up market. Only through self-innovation and legal protection of new inventions, and building
up independent intellectual property rights, can Chinese corporations transform scientific and technological strength into legal rights,
technical advantage into product advantage, and then into brand edge , so as to control the market and to enhance corporate key
competitiveness. Without independent IPR and self-owned brands, independent innovation is invalid and aimless, losing direction
and momentum. With the advent of knowledge economy age, intangible assets, such as brand, patent, technical know-how play an
increasingly crucial role, and thereby Chinese corporations must control and protect self-owned intellectual property rights through
independent innovation in terms of technology, management and mechanism.
4.4 Emphasizing talents attraction and use; inspire the staff to establish independent R&D incentive system
Production competition is the essence of modern market competition; technological competition is the essence of production
competition; talent competition is the essence of technological competition; independent innovation competition is the essence of
talent competition. Bill Gates once said, "If twenty top talents of our company are lured away, Microsoft will become a footy one".
This description illustrates the key role played by talents in the innovation. Only by creating a fine environment where talents can
fully display their capability, can Chinese corporations have a chance to win the final victory in market competition. Hence, it is
necessary to improve the construction of high-level innovative talents in accordance with the requirements of independent innovation
capability and strive to cultivate a large number of world-class scientific and technological elite talents having both ability and
integrity, especially to train a group of young and middle-aged high-level experts; meanwhile, Chinese corporations should attach
due importance to the mechanism innovation, striving to create fine social environment which encourages and supports the talents to
dedicate themselves into their careers and to form the mechanisms beneficial for talents to fulfill their potential [5]; moreover, Chinese
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corporations should establish material and spiritual incentives to retain and attract all kinds of talents, to inspire their passion for
creativity and bring into full play their potential genus.
4.5 Strengthening the government's responsibility; creating a favorable macro-environment
To enhance corporate independent innovation capability and promote independent brand-building demands government support.
Therefore, it is the role of government to establish efficient system and improve social environment. The government should create
legally-bound environment that enables business innovation and brand building, market environment and policy environment.
Creating a law environment needs to establish and complete laws and regulations encouraging innovation and protecting intellectual
property rights and to strengthen law enforcement and punishment of IPR infringement; building a market environment needs to
promote the formation of market order featuring in fair competition, monopolies disintegration, deregulation of markets access,
differential treatment elimination, in which various types of corporations can compete on an equal footing, innovative pressure
increases, and thus Chinese corporations must value independent innovation and brand building as means of winning the competition
in the market; creating a policy environment need to have appropriate incentive policies in the fields of taxation finance, government
purchase and so on. For instance, in taxation, the government should implement step by step a consumption-based and value-added
tax, accelerate depreciation of corporate R & D facilities, and continue to carry out preferential tax policy to perfect and improve the
development of high-tech corporations [6]; for government purchase, it is necessary to give independent IPR products preferential
right to be listed in government purchase catalog, and through the exemplary role of government purchase, the government can exert
positive impact on national awareness and marketing behaviors, and thereby increase the popularity and influence of independent
brands.
5 Conclusion
To enhance independent innovation capability and promote independent self-owned IPR brand building have become the important
ways of improving Chinese corporate key competitiveness. Independent innovation is a prerequisite for brand building; and brand
building is the goal of independent innovation. To this end, Chinese corporations should act in the following aspects:

Vigorously promote their own brand-building and renovate concepts;

Foster awareness of independent innovation;

Provide adequate financial supply by increasing investment on brand building;

Implement independent intellectual property rights strategy;

Enhance key competitiveness;

Attach great importance to attracting and using talents;

Establish incentive mechanism to encourage staff to dedicate to independent research and
development;

Strengthen the Government's functions, and create a favorable macro-environment.
References
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4.
[2]. HUANG Qiuli, HUANG Yumin, Independent Innovation: Opinion on New Brand Ideology [J], Experts of Business Circle,
2005, 12.
[3]. ZHENG Xinli, Different Approaches to Improve Independent Innovation Capability [N], People’s Daily, 2009, September,
19th.
[4]. JIN Siyu, Independent Innovation and Corporate Development [N], China’s Corporations, 2009, May, 8th.
[5]. ZHANG Ruimin, Inner Controlling Factors and Countermeasures of Henan Corporate Independent R&D, Corporate Vigor,
2006, 6.
[6]. Independent Branding: Objects of Corporate Innovative development [N], People’s Daily, 2006, September, 11th.
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