April 15th, 2009The Rise of Asian Brands
Sony, Lenovo, BenQ, Tata, Samsung, Singapore Airlines…What do all these names have in common?
If you’ve guessed that they’re all Asian brands, take a bow.
But there is more to those names than their geographical antecedents. All of them are also globally recognized brand names.
This is a crucial point to note in the current buzz that’s surrounding the rise and rise of Asian brands these days. Indeed, that trend is no longer big news. Instead, the question that is everyone is asking now is: are Asian brands becoming a threat to established global brands?
To my mind, that’s a no-brainer too. They already are a threat, and established global brands need to sit up and take notice of them. There is plenty of evidence to show why.
For instance, just five years ago, who would have thought it possible that the media would be writing about Japan’s Toyota overtaking the USA’s General Motors as the world’s largest car manufacturer by next year. Or think of the power of Korean consumer goods brands Samsung, which has zoomed more than 20 places up the BusinessWeek rankings of the top 100 global brands in just four years. Samsung now weighs in at number 20. Samsung has also been one of the biggest gainers in terms of brand value, according to Interbrand.
In fact, between 2001 and 2005, the number of Asian brands in the BusinessWeek top 100 has doubled to eight. This is no small achievement – especially if you consider the fact that this period has also seen intense and merciless global competition in which powerful incumbent brands from developed economies could delve into their deep pockets to win market share in the new emerging markets.
In fact, to borrow a phrase from the Great Helmsman, I would even go as far as to describe this as the Great Leap Forward for Asian brands – and one that is far more genuine and deep-seated than the Chinese experiment ever was.
What’s happening? What’s changing? It is principally Asia’s own rapid rise up the value chain of marketing and branding. Some years ago, management guru C K Prahalad had observed that “cost and quality advantages are necessary but not sufficient for sustained value creation”.
It was a prescient comment, not least because, barring Japan (which was often counted out of Asia as a result), the Asia of yesterday didn’t appear to show the ability to build major brands, let alone global ones. Asia’s image just a decade ago was that principally of a supplier of commodities and, slightly later, an outsourcing backyard in which the key driver was a cost advantage.
In short, Asia was the low-cost, low-tech producer of a range of goods and services for the world. Brand values and brand promise did not extend beyond this basic proposition.
What changed all of this was globalization, powered by the signing of the World Trade Organization Agreement that, ironically, so much of Asia initially feared and resisted. The relentless exposure to global competition forced Asian companies to look at ways of surviving, and they learnt the lessons about consumers and consumer markets the hard way.
As Ho Kwon Ping, Executive Chairman of the Banyan Tree Group, rightly said, “Branding has become a hot topic for Asian companies which are no longer able to compete purely as contract manufacturers and now need to directly ‘own’ the end consumer.”
Learning the hard way is also a good way to assimilate a message. Thus, Asian companies were able to leverage their existing advantages and harness them to the new challenges and opportunities. Armed with a strong focus on product quality, a well-educated and competent workforce, growing financial resources and strengthening infrastructure, Asian brands slowly began to emerge.
It helps too that Asians have a passion for technology and gadgetry and a base of robust IT and tech-based education that could be parleyed into a significant advantage in strong and inexpensive R&D.
So, Asian CEOs have begun to understand just how much a strong brand can enhance shareholder value. They understand that to succeed, a brand is not just about slick advertising or public relations but a holistic integration of many business functions. Most critically, too, they now understand that to optimize the brand creation exercise, CEOs must lead from the front.
So, are the upstarts about to upstage the incumbents? Of course, I must hasten to clarify that, with exceptions, most Asian brands still have miles to go before they achieve quite the same level of durable dominance as the big global brands from the western economies. But a decade from now, I am confident that it will be a very different story.
Why do I say this? Well, precisely because of the emerging trends in the global economy. Increasingly, as global companies fragment and disintegrate, proprietary technology and global brands (Lenovo, Tetley and Thomson being good examples) are up for sale and Asian corporations have leveraged this development in an opportunistic manner to acquire and power themselves up the product and brand development ladder.
This apart, the experience of supplying to diverse global companies has stood many Asian companies in good stead, allowing them to develop an amazing talent to rapidly localize product, brand and communication.
Going forward, the challenges really lie in the intangibles, in building the emotional connect with consumers and establishing significant mind-share. This is harder to do than merely creating great products. It requires an intense mindset change with Asian corporations. Jennifer Rice of BrandMantra defines a brand as “The idea of a company that resides in the mind of your stake-holders and is created by what the company says (marketing) and does (operations).”
Many of Asia’s brands have developed on the back of a large, captive and young population that offer the ready-made advantages of scale. But Asian corporations are rapidly beginning to realize that the path to dominance does not lie in xenophobia; it lies in understanding the needs of customers everywhere. Global customers demand the same thing. They’re saying, “Give me what I want, at the price I am willing to pay. Value my patronage.”
Asian brands have the opportunity of developing a Unique Selling Proposition in terms of promising features and price with a reassurance of service and building an emotional connect. Can they do it? Well, no one said the journey was going to be easy, but history has shown that Asians never run away from a challenge.