Q&A: Local versus global brands in Hong Kong

We asked four in-market experts for their take on the prospects for local versus global brands in Hong Kong.

Participants:

• Jason King, general manager, BBDO Hong Kong
• KW Lam, managing director, Hill+Knowlton Strategies Hong Kong
• Andrew Lee, digital director, Rice 5
• Kevin Huang, CEO, Pixels Limited

How much growth opportunity is there still for global brands in HK?

King: Despite Hong Kong’s slow-down, there is genuine conviction that the city still presents rich opportunity for global brands. First, as one of the key financial centers and tourist destinations in the region, the market has an insatiable thirst for new brands, and a continuous flow of traffic. Second, the local consumer base in Hong Kong is fascinatingly complex – Hong Kongers are at the same time international yet local, forward thinking yet traditional, adventurous yet conservative, lavish yet thrifty; making for a perfect testing ground to trial new strategies, products and campaigns. The market also has many of Asia’s most influential talents and opinion leaders, able to drive widespread interest and momentum for brands across the region. Finally, Hong Kong is showing positive signs of recovery, with economic growth and consumer confidence reaching 5 year highs; and as long as the city maintains its position as the international gateway for China, forecasts remain optimistic. In the longer term, Hong Kong’s 1) excellent infrastructure coupled with 2) a new wave of start-ups (24% increase compared to 2015; 45% of which are headed by women), as well as 3) heavy investment into ambitious new projects such as West Kowloon Cultural District, will hopefully inspire a new chapter of growth. Time will tell whether Hong Kong can rediscover its past sheen, but if a city’s track record in dealing with uncertainty is anything to go by, Hong Kong will bounce back strong.

Lam/Lee: Constraint breeds creativity in this city. Hong Kong is an international city where global brands are still top-of-mind options for most domestic consumers, but local brands have become increasingly prominent in recent years. Global brands should strive towards “glocalization”, that is, reinforce their local relevancy in order to retain their strong market positioning.

Huang: While Hong Kong in itself maybe a small market but its consumers have high consumption power and on its own can stand on its two feet. Hong Kong is also a major tourist and business hub and in 2016 alone, attracted over 58.3 million tourists where brands can use this an opportunity to further market their products to a global audience. Lastly, Hong Kongers are known to have one of the most discerning tastes in the Asia region so if you want your brand to flourish across the region, make sure Hong Kongers love it first.

How are local brands trying to take on big brands in this city and what are the key rules / best practices for those trying to do so?

King: Despite being extremely international, consumers in Hong Kong are also deeply rooted in local culture; bearing great affection for local brands.  Local brands capitalize on this by being more experimental with marketing deployment, and adopting a more colloquial and down-to-earth approach that taps into the zeitgeist of the city – the recent launch for Vita No Sugar teas is a good example, where the brand identified the youth’s fatigue for dishonesty to offer a satirical (and humorous) view of the competition’s penchant for exaggerated claims. [Editor’s note: Vita is a client of BBDO]. The ‘Not Overdone’ campaign propelled the brand into the sugarless tea market, and started a lively conversation amongst young consumers. Moreover, as Hong Kong contemplates its identity, there has been a resurgence of smaller local brands – especially heritage brands carrying the ‘Made in Hong Kong’ moniker.  A good example is Camel, a vacuum flask company founded in 1940, and currently sold out for months on end.

Lam/Lee: Most of the successful local brands are presenting themselves as genuinely Hong Kong. They are doing this by telling “local stories”. References to popular local idioms and elements of local heritage, culture, and concepts of “Made in HK” are all sweet spots for many Hong Kongers.

Huang: The local HK brands are increasing gaining ground against their global competitors. The golden rule is to not assume everyone has the same taste. Even in a small market like HK, the tastes, desires and aspirations of the population can vary vastly from HK Island to Kowloon. The key is to localize and craft messages that resonate with the local population.

What can global brands learn from their strong local HK competitors in terms of brand marketing?

King: Global brands can look towards the nimbleness and speed of local brands, which can capture new trends as they occur; driving value for their businesses.  Often, lengthy protocols and multi-layered approval processes hamper the ability to be culturally relevant and timely, forcing global brands to resort to universal communication messages, or worse still, appear completely out of date. Global brands can take inspiration from the pride Hong Kongers have for their city and contemplate how they can build stronger affinity with HK consumers. Starbucks, for example, has rolled out 2 concept stores celebrating Hong Kong’s heritage: one decorated as a nostalgic tea house, the other reflecting the cultural characteristics of Mong Kok.

Lam/Lee: Global brands really need to strive towards “glocalization” and reinforce their local relevancy. Even if their core asset is their foreign heritage - which is still a compelling message - these global brands need to find ways to tie it back to the local market.

Huang: Local insights, local vernacular and playing into local nuances and local culture always win. While your business, and the world, may be going increasingly global, your consumer is always local. They buy local, they live locally and expect to be communicated locally in their local language.