Asian brands – The cross border opportunity

Brand building is all about creating and weaving stories. Stories that are compelling, tugs at the emotional cords of consumers, gives them a reason to believe even with their rational hats on and last but not the least, fulfills an obvious or subconscious need. Asian brands with strong cultural roots and deep legacies have many such stories to tell. But how to tell them and venture beyond home soil is the key question.

I continue with my focus on Asia as the region’s cautious but optimistic growth trajectory and unbridled consumer enthusiasm creates significant opportunities for brand building. But there needs to be a sanity check first.

In a September 2015 speech at the University of Indonesia, IMF’s head Christian Lagarde remarked that Asia will continue to drive global growth, but the region’s growth in itself will slowdown due to volatility in global financial markets and near home (China). China’s growth rates has been forecast to be much lower by key global economic bodies and think-tanks. Indonesia, Southeast Asia’s largest economy, is also going through a slowdown period. In 2015, the Indonesian Rupiah fell to a 17 year low against the dollar and the country’s growth slipped to a 6 year low in the 2nd quarter of 2015 (Source: http://www.wsj.com/articles/lagarde-says-volatility-puts-asias-growth-leadership-at-risk-1441096702)

So why start writing about unbridled growth opportunities and then immediately follow it with some enthusiasm dampening news? The reason to highlight these two opposing viewpoints is to bring out the need for brand building strategies that are practical, realistic and not encapsulated in bubbles of grandeur. But how do these directly relate to growing and established brands in the region?

Regardless of the slowdown in multiple Asian economies, which directly or impede the development of infrastructure, evolution of regulatory mechanisms, openness of business and industrial operating environments, the Asian consumer is the most optimistic globally (according to a recent Nielsen survey). An optimistic Asian consumer means a consumer who is looking at brands to elevate the quality of his / her life, wants to try out the best the world can offer and weaves aspirations of his / her life through the brands he/she uses or consumes.

So how would this cautiously optimistic growth strategies look like for Asian brands? There are multiple aspects to it but some of the core underlying principles of these strategies should focus on the following aspects:

Strengthening the level of interconnectedness: Asian economies have been and continue to be healthy trading partners of each other. Import-export statistics reveal that majority of Asian goods are traded within other Asian economies but the benefits of these relationships currently still accrue to commodities, and not brands.

How many Asian brands come to mind that are regional powerhouses? Almost none or very few? In the Nielsen CampaignAsia rankings of the Top 1000 Asian brands reveal a stark fact. Remove the usual suspects of Sony, Samsung, Honda etc., the rest of them are global Western brands which enjoy global visibility, pull and value. The challenge with Asian brands is that very few of them are known to have a sizeable consumer base outside their home country.

There are a few brands that have bucked this trend and have set examples that can be emulated. The ‘regional powerhouse’ moniker still needs to be earned the hard way.

The news piece (slightly dated) mentions a few examples of how Asian brands have used collaboration and strategic tie-ups as methods to enter and expand in the wider region. It is worth noting the entry strategies of Oishi (Philippines) into China and Family Mart’s (Japan) entry and expansion in Philippines.

http://business.inquirer.net/172759/more-philippine-brands-should-go-regional

Strong regional innovation strategies: If a global brand like McDonald’s can win the hearts and minds of Asian consumers through their country-level menu customisation strategies, then there is a strong reason to believe that Asian brands have the knowledge and wherewithal to excel in this space.

While researching for my recently published article on LinkedIn Pulse….

https://www.linkedin.com/pulse/lets-talk-rice-sandeep-das

…..I came across this relevant example of how a Singapore restaurant chain is gradually embarking on an expansion spree in Taiwan. The brand in question is Putien (already has a presence in China). The brand is leveraging the strong influence of China in Taiwanese culture to offer Fujian cuisine in the country. 70% of the dishes on the menu will be Taiwan specific cuisine with the remaining 30% focused on popular Singapore dishes. Again it is important to take note of the entry strategy – a JV with Taiwanese restaurant group Wow-prime Corporation.

In reality there is no unified “regional Asian innovation strategy”. Asia is too diverse and too complex for a one size fits all approach. Multinationals had realised this inevitability about achieving success in Asia long back. P&G’s investment to build and develop SS-II is a case in point.

Nielsen’s Breakthrough Innovation Report 2015 in Southeast Asia highlights the example of a few brands that have leveraged breakthrough innovation to successfully establish themselves in other Asian markets. One of the examples is that of Japanese skin care brand Hada Lobo’s market entry strategy for Thailand:

“When Hada Labo entered the highly competitive skin care category in Thailand it had a clear charter – remain flexible enough to address local consumer needs, maintain steadfast focus on creating a new niche for its products, and deliver on its commitment of superior quality. Hada Labo also gained insight into local consumer dynamics, enabling it to successfully leverage online channels to generate significant online buzz around its products and drive consumer recommendation – a powerful endorsement in Thailand.

Every successful regional innovation strategy in Asia needs to have a strong local cultural underpinning. For Hada Lobo it was about successfully leveraging “recommendation” in Thailand. For other brands, it may well be conquering the “macho” positioning of the Indian male, or the strong sense of family in China, or the importance of “self-image” in Indonesia or Malaysia.

Leveraging technology: To start off, let me take the example of the world’s cheapest smartphone that was launch in India in mid-February 2016. Priced at $4, it comes equipped with an Android Lollipop 5.1 operating system, with a 1.5 GHz processor, access to all apps on the Google Play Store, 8GB storage, 3.2 megapixel camera and a 1-year warranty. This opens up a mobile brand-building platform with a potential for access to the teeming millions who stay in India’s rural areas and hinterlands with abysmally low tele-density rates.

The other biggest opportunity is the emergence of e-commerce channels in Asia. The space is teeming with innovations for brands to jump on and gain strategic advantage in terms of distribution and reach. The spate of e-commerce platforms emerging out of Asia is mind boggling. Lazada.com, a e-commerce portal started by ex-McKinsey consultants in 2012, hit $1 billion in annual revenue in 2015, focusing primarily on Thailand, Indonesia, the Philippines, Vietnam, Malaysia and Singapore. The brand’s USP – making premium clothing brands available to consumers online in these countries, wherein poor infrastructure and lack of access to physical clothing stores if you do not live in a city are the primary barriers.

Take a look at the combined potential of Tmall, Yihaodian and JD in terms of access to China in this link:

http://www.china-briefing.com/news/2015/09/15/tmall-yihaodian-and-jd-a-comparison-of-chinas-top-e-commerce-platforms-for-foreign-enterprises.html

To become regional powerhouses, Asian brands need to embark on strategies that have a three-fold principle: strategic collaborations and tie-ups, strong and in-depth understanding of country level consumer needs / preferences / cultural norms / societal cues and rapid adoption of technology enabled platforms to spearhead growth and widen access to markets. The vast opportunity that lies in front of brand builders in Asia needs to be leveraged through careful planning and execution, nuanced marketing strategies, country level positioning and the creation of a sense of aura and desire for brands with strong Asian roots.

As Asia enter a phase of cautious optimism, consumers have started digging in. We have China’s different and nuanced outlook towards luxury. We also have reigned in consumer spending in multiple Asian economies. There are ample news reports and statistics floating around of start-ups laying off employees after profitable seed and series funding. We have stories of e-commerce brands stumbling. In these times, successful brand building in Asia requires the creation and delivery of value, linked with strong levels of trust and the ability to fulfil deep consumer needs.

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