Wednesday, August 24, 2011

Brand India: No thanks, we have our own.

For the second issue of The Analyst. Not sure how the edited version looks like, so this original draft would do.

Lately the media has been buzzing on how the western brands especially the luxury items have been invading the Asian market and how it has been embraced. It’s true in most cases, but not altogether the reality in India.

One such report quoted McKinsey and Co noting that spending on luxury goods by Chinese consumers is predicted to rise by 18 per cent a year to about US$27bn by 2015 – surpassing even Japan.

However, most excitement seemed to be centred on east Asia, hardly mentioned India which shocked Apple when it failed to make it to the list of top 20 companies in India. The maker of iconic iPhone and iPad, it seems, is not the apple of the Indian’s eyes.

The research that was conducted by research consultancy firm GlobeScan for TLG's Index of Thought Leaders 2011 says, "India has greater conviction about the leadership credentials of indigenous companies than in the UK; over half of the companies are privately owned or listed in India."

Leading the list are indeed home-grown brands like Tata and Infosys technologies. Aside from Apple, other major Western brands failed to make the cut of India's top 20 companies.

Microsoft, which was ranked number six in both the UK and US came in at number 37 in India and Toyota was ranked number 17 in the USA but only hit number 39 on India's league table.

In another survey earlier this year by Trust Research Advisory, a research and communications organisation, again finds name like Tata, Reliance, Maruti, LIC, Airtel, State Bank of India, Bajaj, Hero Honda, ICIC Group listed among the top 20 most trusted brand in India.

The comprehensive brand study featured 16,000 brands with over 100,000 touch points across nine cities.

A less informal survey, conducted by Indian online magazine, Afaqs, on “buzziest” brand saw Tata making an appearance again, alongside, to remind us that this is a cricket mad nation, Indian Premier League.

India, it seems, is comfortable with its own skin, or whatever is making it glow. It welcomes visiting brands, but not without growing and unleashing the potential of its own brands.

This will not be a revelation if one were to take history into account, whereby brand India once stood proud and mighty.

It boasted the word’s first university in Takshashila in 700 BC, was far ahead of others in medicine and surgery 2,500 years ago, led the world in astronomy and mathematics, taught the world how to navigate, and led the textile industry in the seventeenth and eighteenth centuries.

This was before the British company came and “carpet-bombed Brand India”, as Reliance Industry’s chairman, Mukesh Ambani once put eloquently.

Cultural brand burst

But all was not lost post-independence as it started to export culture and “spirituality” to the world. The world of pop-culture was awakened by the pop-rock band Beatle’s association with Indian sitar maestro Ravi Shankar, which helped trigger the entire hippy culture in the 1960s.

Yoga, which was basically a mix of turn of the century Indian gymnastic exercise and breathing technique, swept throughout the west and is still sweeping (it’s not as ancient as it is reputed to be). No matter which gwailo or mademoiselle is teaching it, it will forever be associated with India.

One of the most auspicious brands that have made its mark in the global arena is certainly its film industry. Brand Bollywood, a concoction of the word Bombay (its city, now Mumbai) and Hollywood, is now an international affair.

Once a much maligned industry that’s associated with heroes and heroines making musical around trees in the park, are now accepted as colourful celluloid entertainment.

For instance, audiences in US and UK flocked to see the opening of Bollywood’s science fiction feature, Endhiran, earning itself 12th and 11th position, a tremendous feat competing with Hollywood giants.

Its music composer, A.R Rahman, dubbed as Mozart of Asia (really) won two Oscars for a single film two years ago, and was widely nominated for numerous Hollywood related award functions.

Bollywood talents, including the “Mozart of Asia” can now been seen also working in Hollywood projects.

Historically, the Bollywood films are already accepted and widely marketed elsewhere. Nigeria, Egypt, Senegal and even Russia can be chalked up as major market for Bollywood for the last few decades.

Ditto the war-torn Afghanistan which needs the much needed visual break. In fact, even China in the early days (40s) before decline set in, and interest resurged ten years ago.

One of the non-Indian company that’s riding on the success of Brand Bollywood is Sony Music Entertainment which recently announced that its revenues from India to grow to US$50 million in the next three years vowing to continue to grow its presence in the Hindi film music segment with investments of about US$15 million this year.

The music group generates about $20 million in revenues from the Indian market. alone

A large chunk of Sony’s business comes from the Bollywood music segment, where it has a 20% market share and reportedly India's Rs 500-crore (US$112 m) music industry is growing 20% year-on-year.

In fact, it’s the same Bollywood that produced many willing brand ambassadors with veteran actor Amitabh Bachchan plugging no less than 60 brands.

The younger group joined in with acclaimed actor Amir Khan endorsing Indian tourism and an actress, a ex-Miss World, was chosen to hawk watchmaker Longines, cosmetics leader L’Oreal, and India’s own jewellery maker, Nakshatra.

Owners differ, Brand stays

The Indian identity is so strong with the brand that even when takeovers were mounted, many multinational corporations were forced to retain the Indian brands to satisfy the locals.

Take for instance, Thums Up, which was the carbonated drink of choice for Indians for decades, not by choice as the Government back then closed the door to Coca Cola.

When the door was open later, Coca Cola barged in, grabbed Thums Up by its collar and had it in its pocket immediately (they bought it). But Thums Up was holding up a huge market share, cramping space for Coke’s arch rival, Pepsi. Hence the decision to let the brand stay rather than showing thumbs down.

Similarly, Hindustan Unilever, which is 52% owned by Anglo-Dutch company Unilever, faced identical problem when it acquired Hamam, one of the oldest Indian beauty soap brands. It was owned by Tata Oil Mills Company (TOMCO), which HUL took over in 1993.

HUL tread to repackage and modify the brand but they found out that by changing the composition of the soap they were loosing the loyal customers, so HUL have gone back to old composition and is using ‘trust’ and ‘quality’ as this brand’s salient points in marketing it.

In fact, HUL should be credited for the rise of another home brand, Lakme, which was drowning, recording losses after losses. HUL took over the brand in 1998, and today Lakme is a household name in cosmetics in India as well as abroad.

Steady expansion

Moving out of India, the Brands has been selective about its market and has been targeting countries that sees Indian brands, as moderate as they are in hometown, as with luxury tag.

Recently India’s Bharti Airtel group announced that it earned a record US$13.3 billion in revenue from its 2010 operations following its entry into Africa. With 15 markets in Africa contributed a total of US$924 million, it was generated from telecommunication and television businesses across those markets.

No Indian story would be complete without acknowledging Tata Group’s towering brand value over its peers and competitors.

The companies under the group are itself formidable brands such as Tata Steel (including Tata Steel Europe), Tata Motors (including Jaguar and Land Rover), Tata Consultancy Services, Tata Technologies, Tata Tea (including Tetley), Tata Chemicals, Titan Industries, Tata Power, Tata Communications, Tata Sons, Tata Teleservices and the Taj Hotels.

Lastly, the moolah factor. Indians may be becoming more brand conscious, tech savvy and still gawking at musicals in the park; the price factor still plays a big part when it comes to the consumers.

According to a study by Global Retail Index end of 2010, after economic slowdown, 38 per cent Indian shoppers have become more conscious about the price than brand. The poll interviewed 19,000 shoppers, who are also Internet users, across 17 global markets to study in-store and online shopping behaviour.

The study noted while 39 per cent India shoppers spend more time looking for promotions and deals, 34 per cent spend more time looking at stores to find greater value.

Values that they would associate with brands at home. What’s Bud Light, when Kingfisher offers premium beers and cheap flight? What’s Marlboro when Gold Flake has been smoking Indian lungs for ages? Ignore Vodafone’s advertisement, when Airtel which not only provide great services, its advertisement also features A.R. Rahman’s music.

And speaking of whom, who needs Mozart when India has Mozart of Asia?

Thursday, August 11, 2011

Why China is not a brand leader, yet?

A piece I wrote for a brand new financial magazine, The Analyst. The inaugural issue is out, so I share it with you here, and it's not as goofy as my other pieces...

The recent inclusion of China’s search engine, Baidu.com, by Millward Brown, a WPP-owned company, in it’s Brandz Top 100 brand evaluation report, raised many interesting questions. Is China already a brand superpower? Are the days of Apple and Google, ranked number 1 and 2 respectively, as valuable brands numbered?

Chinese consumers, as with the rest of Asia, are becoming increasingly brand-conscious, with one survey noting that a typical office employee needs to wear at least three branded items to feel comfortable at work. In fact, a report from KPMG International Co-operative’s notes that buyers in China rank French brands as the most favourable labels, followed by those from Italy and Hong Kong.

The report which was based on a survey of 12,000 consumers in 24 Chinese cities noted that China is continuing its march toward becoming the largest luxury market in the world, buoyed by extremely favourable attitudes towards brands, increasing levels of wealth in tier-two as well as tier-one cities, and a continued confidence in future economic prospects.

Clearly, brand consciousness is centred on global brands, not Chinese alone. If so, why was there a perception that China may become a branding superpower soon? Simple. Because it is seen as an economic superpower.

About 47% Americans think China is the (retain word in italics to show emphasis) economic superpower, according to a poll by the Pew Research Center for the People & the Press, while only 31% think the United States is leading the economic front.

Never mind the fact that US GDP is ten times bigger than the Chinese, but media-obsessed Americans are ready to believe the might of the land of the Great Wall and Peking duck.

In fact, the same survey could get China snickering when in fact a poll conducted by the Global Times, a tabloid published by the Communist Party mouthpiece - the People’s Daily - revealed that only 12% of respondents view China as already having become a world superpower.

Blame it on American China-phobia, seeing that they have been bumming about without a bad guy to pin every bad thing on since the demise of the cold war. Still, it remains to be seen if China is going to forge ahead with just a handful of homemade brands.

Few Asian brands due to myopia

For one, the Google incident must have etched in the American minds that sent the “take it or leave it” message to the Americans when the frustrated search engine provider decided not to extend its service anymore to the Chinese when the latter’s government kept playing the “now you see, now you don’t” game with censorship.

Perhaps, it explains why Baidu, the search engine, leap-frogged 141% in brand value to US$22.6 billion from no.29 to no.3 in the Brandz ranking. (Google is valued at US$111.5 billion and Apple at US$153.3 billion).

It’s like shutting the front door to prevent the neighbours pet from coming in, while letting your Rottweilers out through the back door.

Belonging to the Asian fraternity, China too can take the receiving end of an accusation that Asian CEOs money-making mentality can hinder brand development.

James Baladi, chief executive of BrandAsian, a brand consulting firm, and author of The Brutal Truth About Asian Branding: And How to Break the Vicious Cycle, in an interview with a Thai newspaper, said while there are many good Asian companies, there are very few great Asian brands mainly due to “myopic leadership” of many of its chief executives.

If Baladi’s assertions are to be believed, the leaders, who are only concerned with the pursuit of prosperity think brands are just logos, slogans or trademarks, or the burnt mark on the rear end of cattle.

He also noted that the bosses in a typically family-owned business tend to be autocratic, “but most of the time, the chief executive don’t know everything”. In short, consumers are Kings, but the boss seems to know better.

In the case of China, it’s the Big Boss itself, the government, which is chairing the meetings, and is the very image a consumer would conjure up when a Chinese product is mentioned. And not quite rosy, nor lotus-y pictures, one might add.

China needs to do more

On the glamour front, China lacks the celebrity it needs to hawk its brands. What is it with the same mugs of Jet Li and Jacky Chan, when the Hollywood assembly plant keeps churning out celebrities, a dime a dozen?

When even the c-grades “leaked video clip” celebrities like Paris Hilton and Kim Kardashian are plugging some product or another.

China needs to do much more in grooming future celebrities, though certainly they would morally be concerned about grainy video-clip marketing.

Another hurdle the country has to clear before it can find its way in becoming a brand superpower is the proliferation of counterfeit products.

If foreign brands are replicated at the speed of light, imagine their own home-grown products. Earlier, U.S. Commerce Secretary Gary Locke came down on the Chinese government on the availability of fake products in the market.

“When over 80 percent of all software installed on computers in China is counterfeit and when first-run movies continue to appear on rogue websites as soon as they show up in the theatres—then we know the problem is still grave,” Locke said at an event on Capitol Hill acknowledging the World Intellectual Property Day.

“Made in China” is just a tag and it will take longer for consumers to understand that it actually meant “assembled in China.”

If counterfeit products is a headache, China has to deal with a migraine called “tainted products”. Three years ago it vowed to clean up the food industry after milk products tainted with the industry chemical melamine killed at least six babies and sickened 300,000 others.

Yet, reports of tainted pork, toxic milk, dyed buns and other dodgy foods have surfaced as recent as second quarter of this year clearly underscoring the government’s inability to oversee its huge and under-regulated food industry.

A more recent displeasure among all the consumers worldwide occurred when readers’ realised “exploding melon” was not a supermarket tabloid headline, nor it is a title of a sleazy film, but literally bursting watermelons due to too much growth hormone.

Around 20 farmers around Danyang city in Jiangsu province were affected, losing up to 115 acres of melon.

Forget the global paranoia, negative perception, worries about counterfeit product and fear or exploding fruits; China’s increasing economic power has become a public concern amongst the Europeans and elsewhere according to a recent global poll conducted for BBC World Service.

“Compared to BBC World Service polling in 2005, negative views of China’s growing economic power rose—and are now in the majority—in France (up from 31 to 53%), in Canada (up from 37% to 55%), in Germany (up from 44% to 53%), in Italy (up from 47% to 57%) and in the USA (up from 45% to 54%),” the statement issued on the poll said adding that negative views also grew significantly in countries such as the United Kingdom (up from 34% to 41%), and Mexico (up from 18% to 43%).

The poll conducted by GlobeScan/PIPA among 28,619 people in 27 countries reveals that the numbers that say that China is becoming more powerful economically is a bad thing have increased substantially across a number of China’s key trading partners—and especially in G7 countries.

The two nations with the most positive views of China’s economic growth were in Africa—Nigeria (82%) and Kenya (77%).

China can take comfort from how history treated some other Asian countries' brands. A blast to the past would reveal that Americans and the Western world in general snickered at the thought of “Made in Japan” products, and Sony came and collectively wiped the smirk off the consumers’ faces.

Likewise, South Korea’s Samsung is now a brand to reckon with, when once it was dismissed as a Motorola knock-off.

China has to fight enduring brands, like Coke which celebrated it’s 125th anniversary earlier this year and not conveniently lock itself out or induce others to do so.

In short, China is not going to be a brand superpower, anytime soon.


Ends.

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