Kavita Lakhani
Jun 11, 2015

Top 1000: Asian brands disrupt Western-led corporate order

Toyota and Sony from Japan, Samsung and Hyundai from South Korea, Singapore Airlines, Haier and Lenovo from China, Tata and Infosys from India and Hong Kong’s Esprit fashion label. Looking for a common thread? Asia it is. Asian brands are visibly forcing disruption of the Western-led global corporate order.

Kavita Lakhani
Kavita Lakhani

Tectonic shifts are taking place in economics, geopolitics and society today. Regional economies, particularly those in East and Southeast Asia as well as India, are at the heart of the changes underway globally. Fasten your seatbelt and get set for some serious number-crunching: In 2015, while advanced economies are set to grow at 2.3 per cent, emerging and developing Asia is set to grow at 6.8 per cent.

Wait, there's more. 60 per cent of the world’s population, one-fourth of global output (set to rise to half by 2050), 47 per cent of the world’s manufacturing... Howzatt for Asia's rising prowess! What all of this brings along is in fact, deeper pockets: about one third of global middle-class spending is by Asians.

And then there's this bird called technology. Asian firms seem to be lapping it up. As they get more and more 'e'nabled, they compete better and stronger on a global scale, causing disruptions in consumption patterns through ecommerce. Just 60 years ago, the picture in Asia was very different. It was the world’s poorest region. Earlier, Asian firms earned their bread and butter from being faceless outsourcers—the unsung back-end—serving customers in other parts of the world. Today, this business model is coming under pressure as rising costs are squeezing margins thinner than ever before. The rules that have governed Asian capitalism are changing.

Deeper trends at work

First, labour costs are rising across the region, and East Asia’s workforce is aging. Second, Asia’s middle class is becoming more demanding. They are no longer satisfied with fake Louis Vuitton handbags; they want clean air, safe food and more leisure, and are madly in love with the internet. Third, competition has intensified from Western multinationals, which have invested $2 trillion in Asia. They also now use the same cheapish labour, and overall, they have far more sophisticated supply chains, brands and R&D.

Asian brands on the rise

The 10 brands Asia loves the most

Interactive brand battles

The days when Asian brands were unsophisticated and simply copied Western brands are coming to an end. Increasingly, Asian firms are building their own identity and they see branding as a powerful enabler, a platform to grow internationally. With their home markets no longer quite so safe, Asian firms are adapting and becoming stronger. Chinese firms such as refrigerator brand Haier, plan to automate factories and get into more intelligent products. Once dismissed as “body shops”, India’s IT-outsourcing firms are now leaders in big data.

Brands will be key to survival in the coming era of hyper competition. Companies in emerging Asia have global aspirations, but success overseas will only come with a brand that consumers and governments trust. Each aspiring brand in emerging Asia will have to find its own way. In this context, role models from developed markets in the Asian region offer important lessons. Over the past 50 years, the Japanese and Koreans have successfully embraced branding, and companies such as Toyota and Samsung now lead their sectors. China's Lenovo has Western-style governance and is equipped with foreign staff. Huawei has overtaken Ericsson in telecom equipment. India’s Sun Pharma is now one of the world’s biggest generic-drugs firms. Tencent, China’s Facebook, has hired footballer Lionel Messi and Bollywood actors Varun Dhawan and Parineeti Chopra to advertise its services.

The routes that brands take onto the world stage are varied, but certain trends do exist. One, in particular, is the choice of markets that brands decide to enter. Brands pushing out of their home nations in emerging Asia do well to concentrate on other emerging markets first. These are rapidly growing markets where competition from Western companies is lower, as is prejudice towards their brands.

Buy or build?

Some firms are buying established brands in mature markets, a short-cut to owning a global brand. But successful acquisitions require great management skill. The Tata brand is one of the best known in India and most highly regarded. Even though it has made headlines for its high profile global acquisitions, Tata has wisely decided to avoid any thought of rebranding these assets.

One of the biggest challenges facing Asia’s emerging multinationals is the “country of origin effect”. Asian brands are perceived as inferior because they come from an emerging market. The recent spate of scandals in China involving essential products such as milk powder has aggravated the problem. I think this is a temporary problem. But it is one that will need to be considered carefully in devising branding strategy.

So is 'Asian' really a bad word then? Quite the opposite actually, if only Asian businesses will garner the courage to stand apart on a global level, and proudly uphold their Asian roots.

Here's how it can be done: South Korean cosmetics brand AmorePacific, a brand that is growing in popularity, can increasingly be found at high-end retailers in the US. Instead of opting for a Western-oriented narrative in its branding, AmorePacific has embraced its Asian identity by touting its use of traditional Asian botanicals—green tea, bamboo sap, and red ginseng to name a few—in its skincare and beauty lines. South Korean models grace the brand's advertising as well. Japan-based Uniqlo, Thailand-based Jim Thompson, and China-based Huawei are other uniquely Asian brands that have made a successful bid to become globally-known household brand names.

So what else has changed? The Western outlook for one. Attitudes and perceptions in the West towards Asian cultures, and consequently Asian brands, are seeing a dramatic shift. Previously, Asia was viewed as a homogenous bloc with a population that preferred Western products. Today, thanks to globalization, Asia is seen as a modern, diverse continent bursting at the seams with innovative ideas and much more to offer the rest of the world.

In essence, the stage is set for a new wave of Asian brands. Get ready to witness some real action.

Kavita Lakhani is president, LinOpinion GolinHarris & EVP, Lowe Lintas + Partners

 

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