It’s easy to underestimate just how deeply the relationship among advertising, branding, and sales is embedded in the way most marketers think.
More than 80 years ago, a memo describing the need for “Brand Men” within Procter & Gamble’s advertising department sparked a restructure that would ultimately see the CPG manufacturer become the world’s first “brand-centric” organisation.
Since then, the nexus between brand recognition, consumer trust, and the way it translates to higher profits has rarely come into question–until now.
“Asian businesses have worked in this complex marketplace for so long and are well-poised to dominate the European marketplace over the next few years, brand building or not.”
Innocean Worldwide Europe, the advertising unit of South Korea’s Hyundai Motor Co., has released research that shows Asian brands have taken substantial market share around the world–with little or no actual brand recognition.
Take mobile handset maker TCL Communications: The Shenzhen-based company sold 2.9 million units in Europe last year, accounting for 17% of its global revenue. Yet only 6% of European consumers surveyed recognised the brand name when asked.
The same goes for other prominent global players, including smartphone maker Xiaomi (3%), appliance maker Haier (17%), and telecommunications giant ZTE (11%). Innocean has dubbed these companies—and others—Asia’s “white tigers” due to a formidable business presence that lacks distinctive brand identity.
But not for long. Chinese companies, as well as others throughout Asia, are gearing up for “major brand-building activity” over the next couple of years, according to the Innocean report. This will leave conventional marketers scrambling to rewrite their strategies.
What Took So Long?
If an avalanche of Asian branding is gathering momentum just over the horizon, what has taken it so long to arrive?
According to Glen Flaherty, chief strategy officer of Innocean Worldwide Europe, Asian companies’ lack of brand building is largely due to a lack of expertise.
“Branding is hard to get right and takes time to evolve,” Flaherty said. “In general, Asian companies need help with branding, as marketing outside of their domestic territory is new to them, and they rely on Western expertise to tailor communication to western audiences.”
“There is an evolution taking place across Asia where more and more companies are starting to realize that branding is a strategic issue that can drive competitive advantage and shareholder value.”
Business and brand strategist Martin Roll, author of the book “Asian Brand Strategy,” agrees. “There is still a long way to go for Asia to build and sustain more global brands,” Roll said. “Branding is gaining acceptance and prominence in Asian boardrooms, but it will still take some time to gain real momentum on a global scale.”
He said he believes it is also a matter of differing core philosophies.
“Another important reason for the lack of strong brands can be found in the prevalent business structure within Asia, which consists of many small and often family-owned businesses,” Roll said. “The management perspective would favour short-term business wins against brand strategies, which require more resources and long-term perspectives.”
Ready All Along
Anthony James, chief innovation and growth officer at Trinity Consulting, countered that Asia-based companies are not at all lacking branding ability; rather, they’ve simply been preoccupied competing within their own markets.
“Asian companies have always been savvy about branding–Asia is the attention economy and, arguably, has been long before the West,” James told said. “The ability has always been there, and very aggressively, but it has been on Asian soil.”
For marketers wondering whether Chinese companies have a magic allowing for sales without brand building, worry not. Roll said their success is quite simple–and marketers already know the trick.
“A large part of Asia’s economic development, until now, can be attributed to low-cost advantages, which enabled Asian companies to gain market share from other suppliers,” Roll said.
Those days are numbered, he added. “Low cost alone no longer provides a significant advantage for Asian firms,” Roll said.
Wait a Minute
While more and more Asian companies look to weave their way into the minds of Western consumers, for many Asian companies, branding remains an unnecessary endeavour, Roll said.
“Asia is still one of the world’s biggest providers of commodity products,” he said. “Asian manufacturers mostly produce for other companies, and the majority of these products are, therefore, non-branded.”
Referring specifically to China, the powerhouse on everyone’s radar and home to many of the world’s fastest-growing companies, Trinity Consulting’s James said he believes the marketing experience these companies have gained at home will work well in Europe and the West.
“If you just look at China itself, it is not really that different from Europe,” James said. “It is vast and culturally diverse, so much so that it can effectively be thought of as a collective of ‘mini-countries,’ divided more by cities than regions. What works in Beijing may not apply in Hong Kong. What works in Guangzhou may not be relevant for Chongqing. Sound familiar?”
“Asian companies have always been savvy about branding–Asia is the attention economy and, arguably, has been long before the West.”
He added that strategies and tactics grow even more complex the further out you go. “From a consumer profile, one size does not fit all–there is no such thing as a typical or single Asian consumer,” James said.
“Asian businesses have worked in this complex marketplace for so long and are well-poised to dominate the European marketplace over the next few years, brand building or not.”
Strong words, indeed. But whether it’s the next year or so as Innocean predicts, five years from now, or even decades down the line, there’s no question that Asian brands will ramp up their strong push into the international arena.
“There is an evolution taking place across Asia where more and more companies are starting to realize that branding is a strategic issue that can drive competitive advantage and shareholder value,” Roll said.
“The Japanese spent some 30 years creating strong brands, like Sony and Toyota; the Koreans started during the 1990s and created brands like Samsung, LG, and Hyundai; and now other countries like fast-growing China are following suit.”
While Roll said he thinks Asian boardrooms are keenly aware of the financial power a strong brand can add to their companies, connecting A to B is never easy–regardless of what companies, or the “experts” who advise them, may lead them to believe.
“There are no shortcuts to branding,” Roll said. “This is a common misperception among many Asian business leaders and observers of Asia.”
Roll’s advice to Innocean’s so-called “white tigers”?
“Asian brands need to capture the spirit of the region, but they also need to lead the way by creating that spirit,” he said.
A version of this article was also featured in Adobe’s CMO.com
