In our Asia’s Top 1000 Brands research, we asked consumers which brands they deem to be the strongest local brand in their country of residence.
When it comes to the top local brands from the 14 countries covered in this survey, the answers are as varied as the economies, cultures and aspirations that make up the emerging economies in Southeast Asia and India along with the more developed markets in North Asia and Australasia.
As expected, legacy brands make up the crop of the most well-loved homegrown labels with brands such as HSBC (Hong Kong), Toyota (Japan) and Tata (India) coming up tops. However, as Paul Galesloot, CEO, Asia, Oceania, Africa, Cowan, points out, it is difficult to make comparisons of the of the top-scoring brands with other local brands in the rankings due to the different categories involved. What is interesting nonetheless is that a few markets show a good mix of legacy and startup brands, especially in South Korea (Samsung, Naver, Kakao), Japan (Toyota, Rakuten) and Indonesia.
China, on the other hand, stands out as seven out of the 10 local brands named by consumers belong to categories of tech and internet economy.
He emphasises that these factors are more important than the bigger-than-life personas behind the tech brands like Jack Ma, the maverick co-founder of Alibaba, or a sense of national pride in the visibility of the Chinese brands overseas. “People appreciate that they can pay with Alipay for everything on the street, and that you can have groceries delivered to you when you order from Hema supermarket,” says Dennis Potgraven, head of strategy, Greater China, Havas Group. He believes that the results simply reflects the aspirations of the Chinese people, not to mention their rising confidence in local tech enterprises. “Tech including ecommerce brands delivers very high personal benefits and brings a lot of convenience to the consumers who want to improve their quality of life. Alibaba and JD.com (12th) open up access to a lot of cheaper and better products more than what consumers have ever experienced,” says Potgraven.
Likewise, macroeconomic factors play a huge role in shaping the choices of consumers, says Cowen’s Galesloot. FMCG brands loom large in several Southeast Asian markets such as Philippines, Indonesia, and Vietnam, in line with consulting firm Roland Berger’s findings that the region has the highest potential for FMCG growths.
There are many factors that prompt customers to choose one FMCG brand over the others, but nostalgia could be the swing factor. Indonesian and Filipino consumers love their comfort foods, judging from their choices of Indomie and Jollibee respectively. The latter goes a step further by tugging at the heartstrings and purse strings with its tear-jerking Kwentong Jollibee (Jollibee’s stories) campaigns depicting first dates at the fast-food restaurants for its past Valentine ads that went viral. Galesloot noted that both Jollibee and Indomie share the ‘Disney’ factor, whereby consumers are likely to associate the brands with positive experiences.
Marianne Admardatine, CEO of J. Walter Thompson Jakarta, meanwhile, gives a lowdown on Indonesians’ great love for Indomie. “Most Indonesians, if not all, grew up with noodles as part of their daily meals, especially for breakfast and snacks,” says Admardatine. The instant noodles was first manufactured by Indofood in 1972; to celebrate its 45th anniversary last year, Indomie released an ad showing a young boy’s journey from childhood to middle age and several momentous episodes in the country’s history including its Thomas Cup victory and the 1997 financial crisis.
Admartine contends that Indomie’s taste itself makes it a winner, and Indonesians are also proud of the brand’s massive export success especially to the African continent where it commands a 74% market share in Nigeria (Indomie sold there are nevertheless produced locally). “It might not be a brand that is digitally focused, but this brand and its taste and various recipes have become a frequent topic of discussion in the social media. You will also see regular campaigns by Indomie to elevate the conversation using pop culture and those trending issues,” says Admardatine.
Obsessions with instant noodles asides, Indonesians have also found new love for ride-sharing app Go-Jek, judging from its third placing on the rankings. Although Admardatine thinks the quick rise of Go-Jek is encouraging, she suggests that the brand hit a pause button and focus on its core services in its ventures towards mobile payment. “A worry is while concentrating on these new innovations, the old dependable service would become less satisfying for consumers,” says Admardatine.
Meanwhile, few categories or brands are encumbered with legacy than flag carriers and it has paid off for Air New Zealand, Qantas and Singapore Airlines. Yet there are plenty of outliers such as Malaysia Airlines, which is well below AirAsia, the number one local brand at the 41st spot. Cathay Pacific is placed at 35th on Hong Kong’s rankings but Korean Air is worse off without any mention on the rankings at all.
Galesloot pinpoints AirAsia as an anomaly which outperforms a legacy brand. While the low-cost carrier has hit a few bumps before this survey with its very public pledge of support to Barisan Nasional, the former ruling coalition booted out from the recent the May incident, the Malaysian carrier is marked by darker incidents. Both carriers experienced mishaps in 2014, an AirAsia Indonesia flight crashed enroute from Surabaya to Singapore but the twin plane tragedies that Malaysia Airlines faced in that year alone dealt a huge blow to the airline that was already plagued by mismanagement previously.
“For MH370, the fact that we can still remember the flight number actually carries a real experience in itself,” says Galesloot of the Beijing-bound flight from Kuala Lumpur that went missing over South China Sea. “The fact that it could not be found made a much larger impact on the brand itself, because until very recently they are still searching for it. Fewer people could remember the plane that got shot down (MH17), because one way or the other such stories escape our memory quite quickly,” says Galesloot.
Meanwhile, Korean Air, most infamous for executive tantrums including those by its 'nut rage' heiress and her sister, comes under another crisis recently with new allegations of abuse and smuggling against the wife and the other daughter of the chairman. In fact, about 75,000 South Koreans were so enraged that they filed a petition with President Moon Jae-in’s office to call on the company to drop “Korean” from its name. The same cannot be said for Samsung, which emerged unscathed from the corruption sentence of the chaebol’s heir Lee Jae-yong as the top local brand in South Korea.
Even so, Mike Forster, managing director for Geometry Global Korea points out that Korean Air is not likely to suffer from financial damages from the scandals since rival Asiana Airlines has not proven to be a strong enough competitor. Furthermore, flag carriers are usually advantaged in terms of flight routes and there is always the loyalty programme to fall back on, Forster adds.
“Korean Air needs to think about how to get more positive brand messaging out especially with the new terminal at Incheon. They do have a good opportunity to do that with their international partners as the they are the only one flying out of the terminal, there are stories to tell, and they need to start thinking about that,” says Forster. Perhaps Korean Air can take a leaf from Samsung, even though Forster acknowledged that the chaebol enjoys huge market dominance. “People like the fact that chaebols are being investigated that has driven some change within the organisations. Look at Samsung, they are now sponsoring a lot of startups. They are thinking more about how they behave and how to put money back for the economy,” says Forster.
Nevertheless, the conclusion that can be drawn from the performance of the aviation brands is that gone are the days when local brands can automatically lean on national sentiment. Consumers are simply more savvy about the alternatives, says Forster, and this is not limited to the aviation sector alone with the growing popularity of German supermarket Aldi in Australia, keeping Woolsworth and Coles, the top two local brands on the edge.
New ‘Made in Japan’
Forster’s colleague, Andreas Möllmann, the chief strategy officer in Japan, another conservative society with strong loyalty for local brands, however, paints a more promising picture with the strong performance of a different cohort of brands beyond the consumer electronics category. While legacy brands such as Toyota, Panasonic and Sony dominate on both the local brands category and the country rankings, Rakuten, Uniqlo and Softbank are placed at fourth, fifth and eight respectively in the local brands rankings.
Möllmann believes that Japanese consumers are keeping tabs on Softbank's high profile investment overtures, including stakes in Alibaba, major ride-sharing apps including Uber, Grab, Didi Chuxing and Ola. The risk averse nature of the conglomerate that started life in the mobile phone business is uncharacteristically Japanese, and its newly appointed executive vice president Rajeev Misra is Indian-born. “There is a certain vibe with Uniqlo and Softbank, Japanese consumers feel that they are bringing Japanese invention to the rest of the world. I think they are doing a very good job for Japanese consumers to feel proud about what they can achieve, and what Japan can achieve,” says Möllmann.
His observations are timely, now that global top ten brands include the likes of Apple, Google and even Samsung, drifting further from the days when Sony was the coveted tech brand. “Globally innovation drivers when it comes to consumer electronics mostly happen through mobile phones. That’s probably the most expensive item that [consumers] are most likely to purchase and repurchase in quick cycles. It is major driver of brand perception,” says Möllmann.
He notes that Sony benefits from the iOS and Android divide between mobile phone users, given that Japanese consumers are likely to be less inclined to purchase phones from Korean or Chinese smartphone makers. In fact, Samsung models such as Galaxy is marketed plainly Galaxy but not Samsung in Japan, Mollman adds. “Sony Xperia is out there but you don’t really recognise that. The fact that I don’t know about much about a Sony model is indication that even if they are (innovative), they don’t communicate it, don’t make an experience out of it, nothing that reaches me that I engage with,” says Möllmann.
Quantity over quality?
While a lot have been said about what makes a homegrown brand tick with its local audience, Cowan’s Galesloot believes that the argument sometimes boils down to the numbers, citing the huge market presence of Woolworths and Coles in Australia, as well as NTUC FairPrice which comes up tops in Singapore. “We know that (generally) the bigger the brand, the higher the penetration. Is ‘best’ another expression of ‘big’?” he asks.
Not necessarily, but being ‘best’ or ‘strongest’ in consumers mind could be due to a confluence of factors. “When you look at HSBC, it is not a brand that is very strong in e-banking, it still has all these branches which is very strange. Other banks that are stronger in e-banking are ranked lower,” says Potgraven from the Havas Group. He believes that the legacy factor plays a huge role for HSBC as even the Hong Kong dollar note is printed with the the image of one of the bank's iconic tiger statues. More can also be said of the bank's various sponsorship efforts such as its role as the global series sponsor for the World Rugby Sevens Series and the co-title sponsor of the Hong Kong leg has helped it to latch onto the hearts and minds of consumers, he adds.
Given all these factors, we can conclude that historical and legacy factors give popular local brands a headstart in market position. But who is to say startup brands will not catch up fast in setting their own legacies?