Brands need to break free for global dominance

The race for technology has put some Asian giants on the global map, but many regional brands still need to think beyond local provenance to win the hearts of global consumers.

That Samsung tops this year’s Top 1000 Brands list yet again will not surprise many industry watchers.

The South Korean consumer electronics giant has held the crown since 2012, enjoying an upward climb from its initial entry at 17 back in 2004.

According to Thomson Reuters data, the company spends a bigger chunk of its annual revenue on advertising and promotion than any other of the world’s top 20 companies by sales. It famously spent US$14 billion in marketing in 2013, which equated to 5.4 percent of the company’s total revenue.

Today, it certainly still wields a hefty marketing club, reportedly spending about US$65 million in the United Kingdom alone to promote its Galaxy S6 smartphone in 2015.

That momentum doesn’t appear to be slowing down anytime soon, and in this volatile economic climate, Samsung has managed to increase its brand equity over the last 12 months.

“Samsung is probably the best performer of all the Asian brands,” says Peter Pek, CEO of the World Branding Forum. “The brand continues to invest heavily in mobile technology and innovation.”

Pek notes that it has also been innovative in terms of its marketing communications, resulting in a new company record of 27 wins in 20 categories at last year’s Cannes Lions.

Taking a few steps back and looking at the brand landscape, fellow Asian brands are well represented in this year’s Top 1000 list. Sony (3), Panasonic (5), LG (7) and Canon (8) all claimed spots in the top 10.

One more Asian player is predicted to be joining the top 10 ranks very soon: Chinese technology powerhouse Huawei (863).

It was the brand that instantly came to Faraaz Marghoob’s mind when he was asked which Asian brand has been the most noteworthy in the last 12-month period.

The Asia-Pacific regional planning director at Ogilvy & Mather notes that Huawei has been a formidable player in B2B networking and wireless technology for a decade or more (disclaimer: Huawei is a client of Ogilvy).

“But recently it’s been ramping up its consumer offering and, with its premium range of smartphones, is taking aim at Samsung, even Apple [2],” Marghoob adds. He also reports that Huawei has been investing heavily in both media and creativity, and is well on its way to possibly becoming China’s first truly global mega-brand. 

“It’s an exciting prospect because in the process it will bring trust and credibility to Chinese brands operating on the world stage, much like Samsung did for Korea or Sony did for Japan before that,” Marghoob says.

While there is no doubt that there are more than a handful of global brands hailing from Asia, there is one distinct pattern to be observed from the Top 1000 Brands rankings: all the major Asian brands at the top of consumer perceptions are consumer electronics companies.

Will the landscape see a more diversified stratum of global powerhouse brands hailing from the Asia-Pacific region anytime soon?

Philip Brett, Asia president at TBWA Worldwide, strongly points out that it’s only a matter of time before that becomes a reality.

“There was a time when ‘Made-in-Japan’ was a metaphor for ‘cheap alternative’. 30 years later, some of the world’s most innovative and premium brands are from Japan,” he says. “They gave us cars, tech, manga, and a whole new range of flavours, foods and ingredients that are now on our shelves and everyday shopping lists.”

Beyond electronics?

Brett notes that many of the Western brands that are considered global benefited from the post-war boom and the exporting of the culture. Such an event may have been a turbocharger to the brands’ distribution and acceptance.

“For Asian brands to move in the other direction, it will take time,” he adds. “But I believe it is inevitable that there will be more Asian brands from both North and South in every category, rolling out around the world.”

Pek points out that in its home market Samsung dominates many sectors as South Korea’s largest chaebol (conglomerate). Besides electronics, the brand is particularly strong in construction, insurance and IT services. 

“However, this is not the case outside its home turf,” Pek adds. “Asian brands have traditionally been strong in manufacturing and will continue to do so as long as there is attention and consistency in quality.” Pek says this strength is historically tied to manufacturing capabilities and, as these brands evolved, they have made considerable investments in brand building. 

“Being able to manufacture something does not mean you will have a strong brand,” he adds. “This requires considerable brand support services in order to gain and retain brand loyalty.”

Marghoob notes that whether it is cars, smartphones or games consoles, these types of brands live and die by the performance of the product.

“Nations such as Japan, Korea and now China have strong technically-educated workforces, coupled with an expertise in high-end manufacturing, allowing them to quickly develop excellent products that can compete on the world stage,” he adds.

Looking at verticals outside of consumer electronics, Brett points to Asics (754), now regarded as a genuine global footwear leader from Japan, while in the beverage arena Tiger Beer (261) and Tsingtao (431) are ubiquitous in London pubs.

“Who can find a bottle of Yamazaki in stock anywhere?” Brett adds. “And need I mention that Asia creates the best airline, airport and hotel brands in the world?”

Marghoob reports that one vertical in which new Asian brands are making strides is automotive, outside of luxury cars, with Korean players Hyundai (370) and Kia (993) are now competing at the top table in Europe and the US. 

He adds that it’s not just cost or reliability that’s making them competitive, as these brands have “cracked the code” for a car brand that stirs the soul: a unique and downright sexy design for their cars. 

“It goes without saying that Hyundai and Kia cars look outstanding. Not only do they make the Japanese competition look boxy, but they are often confused with premium European marquees on first reveal,” Marghoob explains. “It also makes the role of communications easy: just show the car looking great!”

Breaking barriers, building brands

For Brett, the global marketplace is just at the start of the “Asian” era, with brands being a reflection of cultural shifts and realities.

“Whilst the 19th and 20th centuries saw the influences of the West on global culture, Asia and things Asian are influencing culture and brand positioning everywhere now. Just look at Superdry—a British brand packaged as Japanese,” Brett points out. “It is only a matter of time and I have no doubt that the power brands of the West will be matched and maybe even beaten by the new kids from the East,” he adds. 

While the majority of global brands coming from Asia may appear to be inevitable, there are still obstacles and, perhaps, some regional habits that must first be broken.

World Branding Forum’s Pek notes that too many Asian brands focus too much on price-dependent marketing strategies.

“This is not good for sustainability,” he says. “They are also slow to adapt and not open to taking chances. This stifles creativity and has long been the bane of Asian agencies.”

Pek adds that exceptions to this trait are brands that hail from North Asian countries that are known to take chances. Another exception is Thailand, where creativity is allowed to thrive, although sad and dramatic stories or comedy can only take a brand so far. 

“I do not foresee any significant shift away from tried and tested marketing methodologies, as Asian brands know they work,” he says. “This is good and well but does not advance a brand, as nothing stands out. Asian brands need to take chances if they want to grow and differentiate themselves.”

In Pek’s view, the other issue is the fact that many Asian brands fail to differentiate marketing from branding, treating both as one and the same.

“You use marketing to tell your story and sell. You use branding to build trust in your brand,” he says. “Due to this lack of differentiation, many Asian brands take a short-term approach to branding, and when its marketing fails, it is seen as the fault of brand building.”

This leads to the consequence of budget cuts, with branding seen as something a company cannot achieve or not worth investing in. 

“Branding requires a long-term approach,” Pek says. “Any short-term marketing strategies disguised as branding will only result in a cycle which Asian brands must break out of.”

For an Asian brand to score global recognition in, for example, the FMCG sector, the key issue is trust.

“To gain trust, a brand must be transparent and able to communicate well with its consumers,” adds Pek. “Unless Asian brands can break free from this traditional management mindset and approach, it will continue to be a barrier on the global stage.”

Marghoob agrees that the state of play in ultra-competitive food or FMCG sectors is totally different compared to other verticals. Not only are there many more players in each category, but brand perception is also far more subjective, often relying on strong local flavours and advertising to drive results. 

“The issue for Asian brands competing globally is that they struggle to avoid their provenance in their marketing,” he adds. “At best, this comes across as a niche offering. At worst, it undermines trust and perception of the product’s quality.”

Pek points to the case of Tuong Ot Sriracha sauce produced by Huy Fong Foods to illustrate the other missing ingredient in aspiring Asian food brands—market knowledge.

“It could easily have originated from Southeast Asia. However, it is the market knowledge of its founder, Vietnamese-American David Tran, which has taken the brand to where it is today,” he shares. “This is a particularly interesting success story given the brand’s name, which is largely unpronounceable in its largest market, the United States.”

For Pek, the need for Asian brands to change the way they communicate with their consumers is another barrier to global success, with social media being both a blessing and a curse. 

“Asian brands need to up their social media game as part of their investment to converse with, and also to service their customers,” Pek adds.” Both online and offline technologies will be dominating conversations, as brands need to keep up with developments in order to stay current and relevant to their consumers.”

Pek points to Air France and KLM, where both airline brands have a very quick response time on social media and have teams that will deal with individual passengers through direct messaging on Facebook (21) or Twitter (152). 

“Standard canned answers on social media no longer work, and brands need to rethink their strategies and investments in this area,” he adds.

Whither Southeast Asia?

Even amongst Asian brands, there’s a distinct concentration of global players hailing from a handful of markets, namely Japan, South Korea and increasingly, China.

Asked for any examples of “cool” Southeast Asian brands that could possibly break the barrier, Pek points to Rainbow Loom, rubber band craft tool by Cheong Choon Ng.

“This should have also been another brand success story from Southeast Asia, with projected sales of US$80 million last year,” he adds. “Children throughout the region have been playing with such a toy, but it took Ng’s vision to bring it to market.”

He points to the Rainbow Loom and the Tuong Ot Sriracha sauce as fairly normal products that have gained traction due to great PR and importantly, brand trust. 

“Both Cathay Pacific [180] and Singapore Airlines [123] are great brands that are on the world stage,” Pek adds. “But I hope to see other brands from Southeast Asia succeed in the future.”

There is also one more Southeast Asian contender—Red Bull (111). But alas, its split brand history does not allow for a seamless claim by the region. 

“You could argue that one of the coolest brands in the world is indeed from Southeast Asia: Krating Daeng, or Red Bull as it is known around the world,” says Marghoob. 

TBWA’s Brett concurs with the brand’s standing, adding: “Red Bull has dominated the energy drinks sector for as long as I can remember.”

In 1976, Chaleo Yoovidhya introduced an energy-boosting drink called Krating Daeng in Thailand, which means ‘red gaur’ in English. It was inspired by the tonic Lipovitan-D, whose prime ingredient is taurine, and was popular among Thai truck drivers and labourers.

The product was launched in Austria in 1987, under a new company name Red Bull GmbH, which was co-founded by Yoovidhya and Austrian entrepreneur Dietrich Mateschitz.

Marghoob calls it a “fascinating” case of a beverage, pioneered in Thailand as a drink for blue-collar workers, that was reinvented in Europe as a premium energy drink and found global success.

“What’s sad but true about the European reinvention is that the link to Thailand was lost,” he adds. “And perhaps that is the learning: for a Southeast Asian brand to get a place at the table, it must compete internationally amongst equals and not rely on its Asian provenance in its branding.”