One only needs to pick up a newspaper to sense the momentum propelling China's phenomenal growth. This year, the nation surpassed Germany as the world's leading exporter and some predict it may soon overtake Japan as the world's #2 economy. Earlier this month, Shanghai followed Beijing's 2008 Olympic games with its own dazzling, $47B coming out party: the 2010 Shanghai World Expo.

Yet behind the headlines lies an inconvenient truth for Chinese leaders. Despite the nation's sheer economic might, China has been unable to create world-class brands of its own. And until it does, China will be inhibited in its dream of becoming a true global superpower. As The Washington Post notes in the recent article, "Beijing tries to push beyond 'Made in China' status to find name-brand innovation," a lack of marquee brands means China is still relegated to being the world's factory—leaving the lion's share of profits on the table. The article cites that for every $750 Apple iPhone manufactured in its factories, China is lucky to hold onto $25. For a pair of Nike shoes, China's take is pennies on the dollar. Economic factors aside, a dearth of leading brands also means China will continue to be dependent upon the innovations, intellectual property, patents and brand experiences created by other nations.

This fact is not lost on the Chinese government, which for several years now has called upon Chinese companies to create strong global brands. Today, the government is spending billions through tax incentives, subsidies and direct investments in Chinese companies to create brands that can compete effectively on the global stage.

However, a key tactic being pursued by Chinese companies may be too short-sighted. The path for Chinese companies "going global" has yielded foreign acquisitions, including Lenovo's 2004 acquisition of IBM's PC division and the more recent purchase of Volvo by the Chinese automaker Geely. Yet, a "global brand" has as much to do with building a world-class organization as it does with having an international footprint. It is a process as much as it is an end-state. That is to say that great brands are built from the inside out, and relying primarily on foreign acquisitions alone is not a sustainable tactic for creating a world-class organization. To become a world-class organization, Chinese companies will need to commit to creating a culture of innovation, increase investments in marketing and customer experiences, and inspire employees around a sense of purpose—all with the same (if not more) energy as they do with foreign acquisitions and manufacturing.

Eric Lin is the general manger for the Siegel+Gale Shanghai office.