Ciaran Coyle, Managing Director of The Beanstalk Group, says Hong Kong is a prime location to develop brand licensing

Chinese mainland technology giant Lenovo is using this month's Beijing Olympics as a launch pad to introduce its brand to the international market. The company, which bought IBM's personal computer business three years ago, is the only mainland company to have a worldwide sponsorship of the Games. According to brand licensing consultancy The Beanstalk Group, Lenovo is just one of several strong mainland domestic brands aiming for international licensing in the next few years.

The consultancy group, which represents personalities and brands as diverse as the Ford Motor Company and the environmental group WWF, was a participant at the Hong Kong International Licensing Show last month. Managing Director Ciaran Coyle said he was impressed with the show and the number of exhibitors at this year's fair. "What we've seen at the conference is a real appetite for a lot of companies here to understand brand licensing better, and to understand how it differs from entertainment licensing, something which they are much more used to."

Mr Coyle believes Hong Kong's strong ties to the toy manufacturing business make it an ideal location to develop brand licensing. "Typically, if we are looking at the model of the licensing industry, the toy area is the first to be developed. Hong Kong has been at the heart of the die-cast industry and the toy industry for many years and has some fantastic companies that explore globally in the die-cast arena. We are seeing now, of course, how that business is developing into other areas. I think Hong Kong is a natural hub, given its relationship with the Chinese mainland, its strong relationship with the West, and its understanding of this business through the toy industry."

Understanding the market

Many Hong Kong companies are ready to shift from manufacturing to licensing. Mr Coyle said they are keen to learn what design capabilities and distribution networks, which require relationships with retailers, are needed to make it work. The key to brand licensing, he said, is understanding the consumer base and "what the opportunity is in the market for consumers to want to buy the brand extension products in this market, and beyond this market."

Good branding, according to Mr Coyle, offers an emotional connection with consumers. Each brand must have its own tailored strategy adjusted for different markets. "It isn't a one-size-fits-all strategy."

While he believes that entertainment will still play a big role in the licensing industry, he said that brand licensing is strengthening in emerging markets such as the mainland and India. "You have a very brand-savvy consumer base, very brand hungry, and they are actually keen for Western brands. But when we go beyond that, I think what we will have is domestic brands that will build brand licensing programmes." He cited well-known mainland domestic products such as goods manufacturer Haier and Tsingtao Beer, as well as Lenovo, as companies that will lead the way in developing their own brand licensing programmes. "I think that certainly it will be the Western influence for brand licensing in the next few years. Beyond that, I can see it going East to West."

Brand licensing in the spotlight

Related link
Beanstalk Group