Asia's brand-less success can't continue for long - Laurel West, The Economist

By Sumantha Rathore , afaqs!, New Delhi | In Marketing | January 25, 2011
Titled 'Brand and Deliver', the report by Economist Intelligence Unit discusses the current state of branding in emerging Asia.

On the first day of Global Brandscape, presented by the BBC and The Economist, Laurel West, director, industry and management research, Asia, Economist Intelligence Unit discussed the current state of branding in emerging Asia. She spoke about how companies in Asia are tackling the next critical stage of evolution by harnessing the power of brands.

West presented the report by Economist Intelligence Unit (EIU), titled Brand and Deliver: Emerging Asia's New Corporate Imperative, where she put forward the lessons that needed to be learnt from companies in Japan and South Korea, which have already succeeded in building global brands.

She pointed out that power was shifting from the West to the East. And, keeping the current state of branding in emerging Asia in mind, it was important to understand that while in the past, emerging Asian multinationals could manage to thrive without creating strong brands, it wouldn't be the case in the future.

"Asian companies have grown into large businesses without using the power of branding, until now. It is so especially in China, where various companies benefitted from low-cost models, urbanisation and protected markets," said West.

She added that this "brand-less success" couldn't continue for long. "They (Asian companies) will have to shift from being brand-less to brand conscious, if they want to survive in the long run."

She explained that the cost advantages hitherto enjoyed by Asian companies were fading fast. With markets opening up and competition getting intense, these companies would face stiff competition from their Western counterparts, which have honed their branding skills over the years.

According to West, branding was not just about succeeding in the local markets, it was also critical when going global. And, the increasing number of outbound M&A deals from India and China was a testament to aspirations. However, she added, Asian companies would find it difficult to succeed in 'going global' without a strong brand.

She cited the examples of a few Chinese brands, which have been rebuffed in their attempts to go global because of the absence of clear identity. These brands were viewed as mere extensions of the government. Similarly, an Indian automobile company faced resistance when it announced plans to acquire Jaguar from Ford, though the deal went through later.

West cautioned that Asian companies needed to understand branding strategy better. They also needed to make fundamental behavioural changes. She elaborated that companies in Asia had so far competed on price and had operated with a trading mentality, which was often short-term. Engineers or finance professionals, with little understanding of soft skills, also ran a large number of Asian companies. The transition to building a brand required changing this behaviour as brands must be managed from the very top.

West said that though there were many routes to going global with a brand, targeting emerging markets first offered the best chance of success. Companies should always remember that quality and safety are the two most critical elements in determining the success of any brand.

She also pointed out that one of the biggest challenges facing Asia's emerging multinationals was the 'country of origin effect'. Asian brands were perceived inferior because they came from an emerging market. These brands must recognise both the positive and negative aspects of their origin and heritage.

The first day of the two-day conference was held at The Oberoi, New Delhi. The second day of Global Brandscape is being held in Mumbai today.

afaqs! is one of the partners at Global Brandscape.

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