Wanda's savvy acquisitions need name

Company plans for future growth in Europe but also should be building its brand

Planning permission has now been granted for one of London's most ambitious and audacious construction projects, the One Nine Elms plan financed to the tune of 400 million pounds ($625.6 million; 508.3 million euros) by the ever-acquisitive Dalian Wanda Group.

This development, the first to be built by Dalian Wanda in the United Kingdom, will see the construction of two towers, measuring 200 meters and 160 meters.

These will include 439 private residential units, 52 "affordable" homes and a 187-room, five-star hotel.

But it is not just this current European expansion, at a time of continuing austerity measures in the UK and across most of Europe, that is most remarkable. It is the sheer size and scale of the group's expansion plans in the next few years alone.

Dalian Wanda, headed by China's fourth-richest man, Wang Jianlin, with a net worth of $13.2 billion according to Forbes magazine, has diversified successfully in recent years and now boasts a portfolio of companies with activities in real estate, tourism, hotels and entertainment.

Wang has stated publicly that expansion into the UK, which will by no means be restricted to London, will contribute significantly to the group's aim to become a $100 billion company by 2020.

But is this blind, reckless ambition without any clear, cogent strategy? It is not. It also has nothing to do with any egotistical leadership.

Instead, Dalian Wanda is part of a new breed of Chinese company that is plotting a path to global expansion, and in so doing investing substantially in a lackluster European economy.

Evidence of Wang's calculated and crafted expansion strategy can be found in recent takeovers. Last year, for example, Wang paid 320 million pounds for the highly prestigious UK luxury yacht builder Sunseeker, and the year before Wang splashed out a cool $2.6 billion for the American cinema chain AMC. The AMC acquisition remains the biggest takeover of a US firm by a Chinese organization.

Further evidence of Wang's and Wanda's ambitions can be found with just a cursory comparison between the current company valuation, $30 billion, and the 2020 goal, $100 billion.

But most interesting and portentous about Wanda's acquisitive expansion activity is the clear intention to pursue growth via international markets only. Further, Wanda's spotlight appears focused mainly on the most developed countries and cities.

Existing commitments include plans in London, Madrid, Chicago and Los Angeles, but recent rhetoric from Wang suggests that an even broader international base will be established and very soon.

Once again beneath these apparently over-ambitious aims lies an extremely well thought-out strategy. Wang maintains that the growing number of wealthy Chinese with an eye for investment and property overseas in the most fashionable European and US cities lies at the heart of Wanda's international expansion plans. What better than a Chinese property company to ensure that wealthy Chinese buyers receive the most suitable deal and service across international markets?

At a time when the Chinese economy continues to slow down, overseas expansion makes a lot of sense, but even more so when the most fashionable global cities are concerned. Wang is committed to establishing Wanda in each of the 10 largest cities in the world over the next decade.

In order to finance this breathtaking expansion, Wang now has plans to raise a proposed $3.9 billion from an initial public offering of shares of Dalian Wanda Commercial Properties Co Ltd.

Further support for Wang and Wanda's expansion plans came recently from credit-ratings firm Fitch Ratings. In November, Fitch reported that they were "positive to Wanda" in the longer term.

One of the reasons for Fitch's important vote of confidence in Wanda's long-term future is the meticulous preparation the company carries out when evaluating and then implementing an overseas expansion project. Furthermore, the Wanda management has on numerous occasions made it abundantly clear that they do not show any favoritism toward possible partner organizations from China.

Instead, a rigorous examination of each potential collaborator's competitive situation and suitability is conducted, leading to an unbiased and informed decision.

Wang has also professed a certain humility by making it clear that key to Wanda's overseas success is their ability to learn and learn quickly and adapt to each, often very different, international city.

But Wang and Wanda seem to not have paid much attention to any brand building strategy.

The conglomerate's vast array of business interests could be grouped into the following categories: real estate, tourism, hotels and entertainment (cinemas). But what we have not seen is any attempt at brand building within or even across these broad categories.

While each scheme and project naturally has its own name and, therefore, some sort of brand identity, it is also extremely important that Wanda provide some additional "brand stamp" that serves to enhance the offering and build trust and credibility generally.

Simply rubber-stamping each individual project with the name Dalian Wanda will probably not be the best way forward. The current corporate name is both too long and incompatible as a second brand name where such diversity exists across product categories.

Instead Wang and Wanda should opt for a range brand building strategy. Range branding involves a strategy in which an organization, often with a substantial and diversified product portfolio, develops separate brand names for each of its different range of related products.

Examples can be found in many industries. Heinz and Green Giant are examples of range brands in the food industry and Gillette's Oral-B brand is another example of a brand that stretches over a range of related products.

If Dalian Wanda is to come anywhere near achieving Wang's objective of a $100 billion corporate brand valuation, then it is highly likely that strong, emotional brand names will play an essential part in such an enormous financial valuation.

Introducing a fresh association very soon, by way of an emotional range brand name is, therefore, a necessary step in Wanda's expansion plans.

Individual product brand naming will prove far too time-consuming and expensive and will deny Wanda any form of important brand cohesion as it expands globally.

Range brand naming, however, with a suitable name for each of the current categories such as hotels and cinemas, offers an extremely attractive alternative.

The corporate name should remain part of the overall brand identity but fade as the range brand names achieve increasing, international awareness and hopefully positive and emotional association.

So, what should these range names be and how could emotional meaning be achieved?

Here Wang and Wanda have to demonstrate even greater confidence and determination by constructing range brand names that build positive, emotional association with Chinese culture.

Association with ancient China in particular will, without doubt, resonate with the European and US urban consumers. Such brand names will also prove extremely difficult for the competition to emulate or launch any sort of effective counterattack.

Wang has shown tremendous tenacity and clearly possesses a remarkable business brain, but the boldest and most decisive move into brand building, range branding and Chinese brand association is now sitting on Wang's shoulder.

Giving the cold shoulder to brand building at Wanda will certainly lead to failure to reach Wang's 2020 aim of a $100 billion company valuation.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer in marketing at Southampton Solent University's School of Business. The views do not necessarily reflect those of China Daily.

Zhang Chengliang / China Daily