May 19 (NBD) -- The 2018 Chengdu Global Innovation and Entrepreneurship Fair is being held in southwest China's Chengdu on Saturday. Economist Peter Karl Kresl, Co-founder and President of Competitiveness Project (GUCP) Beijing, China, delivered a speech elaborating on the correlation between branding and urban competitiveness.

Photo/NBD

Below is the full script of the speech.

When I told my friends that I was going to spend a week in Chengdu at a very interesting conference, invariably the response was “Oh, will you get to see the pandas?” This is what Chengdu is to the average person who lives in the rest of the world, if they know Chengdu at all. Is this adequate for the people who work in Chengdu and who are proud of their city – isn't Chengdu more than pandas, important and cute as they are? Paris is more than croissants; Chicago is more than the stockyards, Tokyo is more than cherry trees – so what of Chengdu. 

This gets us to the practice of branding. Companies spend considerable effort to brand themselves - Mercedes Benz, Christian Dior, Levi’s jeans, Apple and other firms all have carefully developed and managed brand identities.  The brand gives them a certain place in the market and the image of quality or affordability or durability in the mind of the consumer. 

But we can see how this can go wrong when a company such as Volkswagen does something that damages the image, such as cheating on diesel emission tests, or when a major bank, such as Wells Fargo or HSBC, is found to have laundered funds from illegal activities or deceived its customers.  In these instances the brand now conveys deception or illegality or some other unacceptable activity.  A successful brand has to be developed, nurtured and maintained scrupulously.  

Most of you are specialists in business enterprises, and you all have some understanding of how important a company’s brand is to its long-term vitality.  I doubt there is much I could tell you about corporate branding that you do not already know. My special interest is in cities and in their competitiveness in a competitive world, that of the struggle for economic activities, corporate locations, talented and skilled workers, and reputation in a world of aggressive cities all interested in obtaining the same things.  Nonetheless there is a strong linkage between the brand of a city and the possible branding of the companies that operate within its boundaries.  So how is a city to succeed in this global competitive struggle and how can it work to benefit its local business enterprises?  

One example from recent history will illustrate effectively how this can be done.  In 1871 France lost the Franco-Prussian War and was humiliated into ceding to Prussia two of its provinces, Alsace and Lorraine, and the city of Strasbourg.  France was known as a country that specialized in agriculture that was renowned for its famous wines and cheeses, for oysters and seafood, as well as for art, music and culture in general.  Britain was known for ship building, bridge building and steam locomotives, while Prussia was renowned for manufacturing, heavy industry, and war material.  What could France do to alter its international image, and perhaps even its self-perception?  The solution was to build the Eiffel Tower!  French engineer Gustav Eiffel proposed the tower, for the World’s Fair in 1889 as a symbol of this alternate image of France.  In retrospect we can see the Tower as a graceful and impressive structure, but immediately the Tower was attacked by artists, musicians, sculptors and architects who, of course, saw it as an affront to the image of France they had so carefully developed over centuries.  The beauty they had worked to create was insulted by what they saw as the Tower’s ugliness.

In reality the Tower served no practical purpose, in that it housed neither offices nor apartments, nor was it particularly beautiful, as things in France naturally should be.  But what the Tower did was declare to the world that France, having successfully constructed this complex structure of industrial steel, was a nation of engineering, of metallurgy, of manufacturing, of steel construction, and, indeed, of modern industry.  France, having branded itself in this way, gave legitimacy for its manufacturing firms to brand themselves similarly and to hold their heads high internationally.  They too could be a nation of automobiles, of ships and trains, of factories and of advanced manufacturing – and ultimately of the TGV!  In 1964, the Tower was actually given historical landmark status.  This successful exercise in ‘city branding’ has given inspiration to hundreds of other cities to undertake branding exercises, exercises that have similar positive impacts on the firms that are identified with that city.  

A quite different experience with branding took place in what has become known as Silicon Valley.  Here there is no single metropolitan area or city, but rather a set of several cities in the Santa Clara Valley – San Jose, Palo Alto, Sunnyvale, Cupertino and Mountain View.  In 1957 after Sputnik, President Eisenhower turned to Fairchild Semiconductor to make transistors for the space program. After this Hewlett-Packard, Stanford University, and many other companies developed.  William Shockley, the inventor of the transistor moved to Palo Alto to care for his ailing mother and had an impact on the activity of these firms for many years.  No municipal authority came up with the term Silicon Valley; rather it was first used in a local newspaper in 1971.  Hence the term was developed to describe what the firms in the area were actually doing – using silicon for manufacture of semiconductors for use in solid-state devices in computers and micro-electronics.  This led to very sophisticated research to create new products and, of course, new firms.  In a sense this was a bottom-up process, from firms to the city or region than the typical top-down, from the city to the firms.  From the beginning there was no reference to anything but high technology research and development – assembly of products was to be done elsewhere.

In the case of the Eiffel Tower, we have a government designing a project that would have an inspirational impact on the nation’s industrial firms, whereas in Silicon Valley, business firms and entrepreneurs engaged in activity to which outsiders gave a descriptive term.   Similar to this would be the industrial district in Germany, the Ruhr – no advertising agency for city official designed this designator, it just evolved out of the industrial work that was done by the firms located there, and the term came into use locally in the mid-19^th century and internationally in the years following the First World War.  It is clear that the companies in these regions all benefitted from location in Silicon Valley or the Ruhr, in that it gave them an identity that was very positive, it linked them with other very successful companies, and made it easier to attract desirable skilled workers.  The brand of the company was tightly linked with the brand of the region.

An example that runs counter to this is that of the Research Triangle Park, in the state of North Carolina in the US.  This is a research center that was the idea of a couple of individuals who saw North Carolina as a somewhat backward state, but that had three universities in close proximity to each other: Duke University, the University of North Carolina and North Carolina State University.  They took the idea of a research center situated in the midst of these three research universities to Governor, and after much discussion the idea was approved in 1955.  A year later there was a new President of the University of North Carolina who supported strongly the Research Triangle Center idea.  It took another decade before the idea was realized when IBM located a large research facility there.  It soon grew to become perhaps the most successful research park in the US.  It now has over 200 companies and 50,000 workers, all in research.  The Center is owned and operated by a private Research Triangle Foundation.  Hence, it offers yet another model of how to develop a brand, that of “collective entrepreneurship”.  In this instance the idea and the actual brand existed before there were any structures or activity in the area and it was realized by individuals in the private, university and government sectors. – a purely top-down approach to branding.

On the other hand, the identity or brand of a region or city that is in decline also extends to the identity or brand of most of its component companies.  In declining regions or cities of the US, such as those in the old rust belt the malaise extends to firms that are based there.  They all decline together as they cannot establish a linkage with one or more firms in stronger and/or rising region or city.  The same may be true for cities in the North-East of China.  The best option for these firms is often to relocate to another region and to work to re-brand themselves in a more positive image.

The difficulty those in charge of a city or country have in publicizing their message about the local brand, is clearly shown when Britain was trying to project the image of a country that was cool, creative and innovative, a survey of promotional literature from scores of British towns promoted images of knights in armour, country peasants and the glorious past. Where were the visional leaders and the risk-takers?  What were those who design company brands to do?  Go with the solid past or with the possible future? Was it all irrelevant to them so that their branding was utterly up to them with no assistance from government, national or local?

City and company branding

The purpose of branding for a city is to create an image of the city in the minds of consumers, tourists, businesses, other cities, and, of course, of its own residents and of the city administration itself.  Some of the brands capture some recognized aspect of the city such as Chicago the Windy City, Paris the City of Light, Rome the Eternal City, New York the Big Apple, and San Francisco the City by the Bay.  They are a short-hand way of capturing some identifier that conveys meaning to the user, but they need not convey anything that captures the economic activity of the firms located there and that they can build on for their own image or brand.  Some are aspirational in that they seek to elevate the character and status of the city: Atlanta the Athens of the South, Boston the Athens of America, Edinburgh the Athens of the North (of Britain) are all examples.  Others are humorous: Gallup (New Mexico, US) Drunk Driving Capital of the World or Cape Hatteras (North Carolina, US) Graveyard of the Atlantic, in recognition of the vast number of ships on the bottom of the sea nearby.  The imagination seems to be unlimited here.

However, there is a more serious side to city branding and how it relates to the branding done by the cities and the companies that are part of that urban economy.  One danger is that inviting outside professionals to manage the place branding exercise may open the city officials to charges that they are ignoring, or distorting parts of the place’s character, history or even population.  Local residents must be central to the initiative, since the aspirations they seek to realize are best understood by themselves and must be integral to the lives they live and wish to live.  Outsiders often adopt with little accommodation to the local situation an existing strategic plan for branding and marketing that they have developed for another situation.  As the architect Eero Saarinen stated, “Only little can be accomplished in civic improvement, unless the people of towns and cities themselves, individually and collectively contribute their positive support”.  These words are often not followed, and it has been estimated that 86 per cent of city branding initiative fail within the first year.  One of the leading consultants in this area has stated: “Many consider that branding is purely a function of marketing communications and they do not take into account the behavioral, organizational and community-wide implications that successful place-branding can bring”. 

What of Chengdu?

The task of Chengdu in its city branding is somewhat complex.  When I was here in 2006 I was told, with some pride, that Motorola had a facility here and that Intel was close to completing its new facility.  There were several universities including a university of technology, over one hundred small tech start-ups and a highly educated labor force. Clearly, the city was on a positive path to becoming a major research and technology city.  This was the image that city wanted to project.  I was very pleased to be asked to speak at this conference so I could see how Chengdu has developed, and in the next several days I will have that opportunity.  But when one examines the information about some of the tech centers, one finds them advertising high tech activities, retail and parks, but also dormitories – dormitories for whom? For the 87,000 researchers with advanced degrees, many of whom are from “Ivy League universities” - or assembly workers?  High tech firms in Silicon Valley and in Seattle do not mention support of dormitories, rather they celebrate the fact that they support fleets of buses that transport highly paid and highly skilled workers from the corporate research facility to desirable living areas in San Francisco or downtown Seattle.  The image given is quite positive about the desirability of the company as a place to work and about the high level of the research work that is done in these facilities.

A cautionary note.  Charles Landry, has argued that a city that is trying to become a ‘creative city’ should never refer to itself as a ‘creative city’ – “let others do that by respecting what you have achieved”.  Do things, conducting research, helping new firms to file for patents, holding high-level seminars and conferences, and so forth, that will give the image to others that Chengdu is a creative place to study, live and work.  Do not force it.  St. Louis constructed its Eero Saarinen Gateway Arch, and they then declared St. Louis was the “Gateway to the West” – one New York poet responded that it was perhaps better seen as the “Exit from of the East”!  A city cannot always control the use of its brand.

Chengdu will have to be very skilled in shaping the image of the city that the outside world creates for itself.  In doing this it might be of value to stress the following:

- Chengdu is not an old, declining, contaminated industrial city,

- Chengdu has many aspects that make it an attractive place for tourism and for living, from the Panda Research Center, to Sichuan cooking, to a city with many urban amenities such as parks and recreation facilities, close to many attractions, and so forth,

- Chengdu is a city of higher education with universities specializing in music and art, in teaching, in sport, and, of course, in technology and engineering, petroleum, science, finance and economics, information technology, and technology,

- As a city of high technology and research, Chengdu should not emphasize electronic assembly and other low skill activities, important as they are for providing employment for lower skilled residents,

- Chengdu is also a well-connected city with direct air linkages with cities in Europe, North America and, of course, throughout Asia, and it is Air China’s second hub, after Beijing, 

- Chengdu is also attractive due to a lower cost of labor and of living than in China’s coastal cities.  

Conclusions

I would like to leave you with the following several conclusions about branding:

1)There is a close relationship between a city and its resident companies when it comes to branding.  The brand should come out of the activities of the companies.

2)Companies are linked through a common brand with the nature of the competitiveness of the city in which they operate.  This way they are most likely to have good relationships with other firms in the city region.

3)There are many successful examples of effective city branding from Paris to Silicon Valley to Seattle to the Research Triangle, and Chengdu could learn from studying some of them.  It is most effective when the cities have things in common with Chengdu.

4)Chengdu has great potential to work to establish, in the minds of individuals, companies and cities throughout the world, a brand or an image of the city Chengdu seeks to create.  Conferences such as this, but explicitly international in focus and participation are an excellent way to get the rest of the world to become aware of Chengdu and its competitive advantages.  This is perhaps the best form of publicity. 

Email: lansuying@nbd.com.cn