Where to Next for Asian Brands?

While the last decade has seen tremendous growth in Asian economies, Asian brands continue to struggle to establish themselves on the world stage, relative to North American and European brands in particular.

This phenomenon is plain to see when considering Interbrand’s Top 100 Brands list (shown at the right, comparing the Americas, Europe, and Asia over time), where Asia has consistently produced only around 10%–12% of the list over the last decade. Furthermore, the Asian representation has been dominated by Japan (6–8 brands each year over the 10-year period) and South Korea (2–3 brands).

While it is widely believed that this century will ultimately be dominated by Asia from a commercial perspective, this growth has not translated to Asian brands globally. Instead, the status quo has remained intact, with North American and European brands continuing to dominate the landscape.

Asian Brands

REASONS FOR THE LACK OF GLOBAL ASIAN BRANDS

Apart from macro factors (e.g. many Asian markets are still classed as developing, and hence are naturally less likely to have produced strong brands compared to mature markets), some of the key reasons for a lack of glob-al Asian brands are:

Transition from trading to brand building:  Asia used to be the back-end workhorse for the world, manufacturing products for others at an extremely low cost.  While many companies have moved away from this model and have independently entered the global market, there is still an innate struggle to transition from a volume-based commodity mindset to one of branding and brand building.  This is evident in some of the larger Asian brands that are coming through (e.g. discount-driven brands like Miniso).

Current business structures and attitudes: A lot of the largest companies in Asia are diversified family-owned conglomerates which span multiple business categories.  There are often limited overlaps and synergies, which is a major obstacle in creating a brand strategy that is well defined, differentiated, and relevant across the different businesses. This is further hampered by a management mindset which favours short-term business wins (market share) over long-term brand building.

Country of origin stigma:  A by-product from the previous generation, products/services originating from some Asian countries continue to carry negative perceptions among global consumers.  This perception also transfers to brands emerging from these markets. While Japanese and South Korean brands seem to escape this stigma, it is more pronounced with some other countries like China. The global political climate has also played a role in retaining this stigma among sections of society.

The net effect of these challenges is a lack of sufficient brand investment despite an expanded footprint. This ultimately results in lower salience and a lack of consumer preference. Without significant brand equity, Asian companies are forced to compete on other factors such as price, which acts to reinforce the short-term mentality noted above.

ASIAN BRAND EXCEPTIONS

Of course, there are exceptions whereby Asian brands have established themselves as strong global players – most notably in the consumer electronics & computing (e.g. Samsung, Sony, Nintendo) and automotive (e.g. Toyota, Hyundai) sectors. These companies have been able to create powerful brands that have challenged ‘the best of the West’, although arguably in some cases they still fall behind their North American and European peers in terms of pure emotional appeal (e.g. Toyota has a more functional brand personality than BMW, while Samsung devices are not as obsessed over as Apple’s).

Furthermore, at a country level Japan acts as an exception in itself – as a nation it has shown an ability to produce great brands, both in the categories mentioned above and also in categories where other Asian nations have often struggled (e.g.  Uniqlo for fast fashion, Asics for shoes, and Yamazaki for whisky).

It is also worth noting that there are many companies in Asia that are massive in their own right (e.g. Tencent, Reliance).  However, their limited exposure to the international markets means that they cannot be considered truly global brands like Samsung and Coca-Cola.

WHAT NEXT FOR ASPIRING GLOBAL BRANDS IN ASIA?

What are the lessons here for Asian companies with aspirations to become powerful global brands?  A need to understand the fundamentals of branding is a given; beyond that, we believe Asian companies need to identify how they can leverage what is truly unique about them – which in many cases will be driven by the fact that they are Asian, and not Western – and bring that to the global market in a compelling, differentiated way. The ‘glass half full’ view is that as there is a lack of compelling global brands with positionings that reflect Asia’s rich culture and heritage, there is an opportunity to ‘own’ that space in any number of categories.

Some examples of brands that have effectively leveraged their Asian heritage include Japanese fashion retailer Uniqlo, which has embraced its Japanese origins in a distinctly modern way, and Shanghai Tang, a luxury brand that draws inspiration from 1930s Shanghai to create its contemporary designs.

So, we think embracing Asian heritage – and not trying to be like existing powerful Western brands – is a key for Asian brands looking to succeed globally.

By James Redden LinkedIn, Managing Director-Asia Pacific and Satpal Daryanani LinkedIn, Research Manager at 2CV