Why are there very few great Asian brands? Joseph Baladi, who has advised companies such as P & G, Mars and Coca-Cola discusses the reasons in his book The Brutal Truth About Asian Branding: And How to Break The Vicious Cycle. Edited excerpts:

With Asia's ever-increasing share of world GDP and expanding levels of exports to the West, one might be excused for wondering why branding in Asia continues to be an area poorly understood by Asian managers and badly executed by Asian companies. Not withstanding the plethora of award programmes celebrating every business discipline under the sun (including branding), as well as branding practitioners who continue to sell the mythical success stories of ever more powerful Asian brands, the reality is that Asian brands across the board are continuing to exhibit weak vital signs. Despite significant industry education, as well as major investments by government agencies to enhance the overall understanding of branding practices so as to strengthen Asian brands, very little traction has taken place over the years. When we refer to “Asian” brands, we are referring to all non-Japanese Asian brands. Japan is indeed part of Asia. But Japanese brands began developing a full generation before the rest of Asia got going, and most of their more visible and well-known global marques are at a very different point along the evolutionary development curve.

In terms of non-Japanese Asian brands, one could argue that – save for one or two – there exist virtually no great Asian brands. Even Asians themselves, when asked what brands they prefer, or aspire to own, will name Western brands such as Coke, Nike, Apple, BMW, Armani, and GAP. With the notable exception of two non-Japanese brands (Samsung and SIA), Asian brands are rarely, if ever, nominated. This fact has been constantly borne out by surveys over the past 10 years.

Proud Indians will argue passionately that India has many big, successful brands, some of which outperform their foreign competitors. Brands such as Tata, Jet Airways, and Kingfisher are household names that generate strong levels of trust and local pride. Koreans will point to Amore Pacific, Face Shop, Jimo, and Jeju Air as examples of Korean brands denoting quality, luxury, and entrepreneurship. In Taiwan, innovative brands such as HTC, Acer, and Asustek all but dominate their categories. And even in emerging countries such as Vietnam, local marketers cite brands like Vinamilk, Vietcombank, BIDV, and Q-Mobile as examples of ever-increasing branding traction.

Most of these brands boast strong levels of local awareness, as well as big consumer franchises in their own countries. But with very few exceptions, they have failed to generate sufficient escape velocity to replicate their success in substantive measures outside of their home markets. Even brands such as HTC and Acer – long viewed as poster boys for the successful transition from OEM (original equipment manufacturer) to OBM (original brand manufacturer) – are finding that gaining real, sustainable traction as consumer brands is difficult and elusive. All these brands are “good” brands. To mostly local customer franchises, they are seen as reliable, trustworthy, even desirable. Away from home, while some struggle to generate awareness, they mostly fail to excite and uplift consumers or at the very least create enduring emotional relationships with them. Having said this, it is equally important to recognise that it is these very same brands that represent the region's best candidates for “great” brand status. They are all sitting on one side of the fence, and it is within their control to step over to the other side.

Asia has yet to create Asian signature brands with global credentials. But what makes the region palpably exciting is the abundance of good brands ready to move up to the next level. They are marking time, but developing the ability to change that and surge forward won't happen automatically. It will require willpower.

Myopic CEO leadership

Over the past eight years, I have interviewed more than a hundred CEOs and other C-level executives from multinational companies, regional conglomerates, and SMEs in more than half-a-dozen Asian countries – from mainland China to Singapore, and from India to Korea. Beyond questions that related to the specific performance or culture of their companies, we also included several generic questions that probed executive – especially CEO – beliefs about and attitudes to management, leadership, values, and concepts such as “company mission.” The evidence shows beyond any doubt that the most obstructive hurdles preventing mediocre and good Asian companies from breaking through a decades-long glass ceiling and achieving brand greatness are CEO mentality and ignorance about the branding process – in that order. Mentality: The CEO is driven almost exclusively by a desire to (only) make money – and rarely by passion. He will often over-promise and under-deliver. He will take short-cuts and consider himself clever for doing so. He rarely looks beyond today and lacks a vision for tomorrow. Ignorance: He misunderstands branding and sees it as the company name and logo, and its promotion as taking place almost exclusively through the media. Its conceptual, business, and strategic dimensions are totally lost on him, and his impatience causes him to dismiss or undermine the process before it even gets underway. As a result, Asian consumers fail to love, lust after, or be inspired by most Asian brands.

In much of Asia (mainland China, Hong Kong, Taiwan, Singapore, and Korea), traditional management philosophy rooted in Confucian-based values has created an environment where many CEOs operate, and see themselves, as patriarchal figures: individuals who are at once irreproachable, as well as unapproachable. The resulting management style resembles a “by decree” approach, rather than one that is inclusive. Interestingly, many CEOs from non-Confucian-influenced countries such as Indonesia, Malaysia, and even Thailand also exhibit these styles of leadership and management.

“To make money,” is the most common – almost universal – reply given by CEOs to the question: “What is the mission of your company?” This single-minded, primary, and often exclusive goal of most Asian CEOs is commonly inculcated in the minds of their senior managers, from where it is filtered down to the lower ranks of employees. To make money – period. While there is nothing inherently wrong with this (after all, it is the goal of business to be profitable), most of these decision-makers, hailing from the smallest SMEs to the largest Asian conglomerates, persistently pursue this goal in a manner that is self-defeating. First, they fail to recognise that making money for its own sake is a flawed strategy; that making money is, rather, the result of a coherent strategy. Secondly, in their haste to deliver on the goal, they misunderstand the business and brand strategy development process (one that has evolved dramatically because of the dynamic environmental changes of the past two decades) and try to fast-track it or gloss over it. Instead, they adopt a command-and-control business management style that fails to recruit and encourage all members of the company to work together to deliver a product or a service that can effectively compete with compelling Western brands. They fail not only to harness the energy and intellectual contributions of all the constituents they have on hand (not to mention their untapped intrinsic enthusiasm, whose loss or absence is impossible to measure), but also to create a culture that works to ensure that the customer promise is delivered on a consistent basis.

Another debilitating CEO characteristic that contributes to the development of relatively weak Asian brands is the inability or reluctance to view the brand as a tangible asset. This skewed view of branding leads to yet another CEO characteristic that not only profoundly affects branding but also has a major impact on business generally: the price question. Cultural conditioning and values have made the open pursuit of money and wealth a desirable virtue. The business corollary is the ingrained belief that everything can and should be secured at the cheapest possible price point. Middle and lower managers feel that their best hopes for recognition and reward are linked to their acquisition of products and services at the lowest possible price. They are rarely interested in, or influenced by, the possible consequences at a later date.

CEOs don't know what they don't know

Having said all of this, it is important and fair also to say that these same CEOs suffer from an affliction that is difficult to “cure”: They basically don't know what they don't know – at least as far as branding is concerned. This is a critical and crucial diagnosis, and one of the many reasons for the absence of great Asian brands.

When you don't know what you don't know, you automatically assume that you know enough to make some basic decisions: such as judging a branding “proposal,” for instance, on the basis of what you like or what you find easy to do. Or choosing a brand practitioner because he or she tells you what you want to hear. And, of course, doing it as cheaply as possible.

CORPORATE CULTURE IS BY DEFAULT, RATHER THAN BY DESIGN

Whether understood or misunderstood, and whether created by design or through circumstances, culture exists in all organisations. Where it is “positive,” it can be harnessed and leveraged to influence people to do extraordinary things. Where it is “negative,” it tends to have the reverse effect. While every company has, to a certain extent, a unique culture, certain characteristics are commonly found in Asian companies.

Most Asian companies began, and many still operate, as family-owned businesses. Business decisions are typically made by one key individual, and accountability to a third or external party is generally not the norm. Even in publicly listed companies, the usual practice in Asia is for the CEO to retain control and relinquish only a small percentage of ownership to outside parties.

I don't wish to suggest that these practices and values are a product of an inherently harsh, unfair, or exploitative management mentality. What I am referring to here is more intangible in nature: employees who are denied the opportunity to fully embrace and enjoy the work they do because their employers are either simply unaware that this is important and valuable, or just don't know how to make it happen.

The culture that characterises most present-day Asian companies suppresses creativity and innovation. Employees are not encouraged to express themselves; as a consequence, they tend to progress slowly, and to learn or contribute little – and the cycle becomes vicious. The life-blood of great brands is creativity and innovation that originates from within the organisation, and its source is corporate culture.

It doesn't mattter whether the company delivers a service or manufactures a product. Customer experience and product quality are delivered by employees. The absence of the right culture prevents this from happening and retards the development of great Asian brands.

Charlatan Brand practitioners

In a business environment replete with alpha-type CEOs who know exactly what they want, and believe they know what they need there is no shortage of “consultants” who are willing to give them what they want and tell them what they want to hear. The “branding category” is not like the medical sector, where practitioners need to be properly trained and accredited before they are allowed to practice. In the branding field, there are virtually no regulations and anybody can call himself or herself a “brand consultant.” The ramifications of this are broad and profound. The wrong “solution” will not result in a benign outcome.

There are two ways in which the company can self-inflict significant damage: (1) when the message is “right,” but employees are not motivated to deliver it; and (2) when the message is “wrong,” but the company has somehow managed to persuade most of its employees to get behind it. Both scenarios amount to qualified statements, because “right” and “wrong” are relative concepts and difficult to define.

In the end, both scenarios will deliver equally baleful results: instead of just dismissing the effort, customers invariably form a new negative perception, which means that the company ends up being further behind than the point they started from.

A Damaging Side-Effect

Advertising agencies compound the branding crisis that exists in Asia by formulating communications strategies and creating advertising that are unsupported by formal “brand blueprints.” The brand blueprint is a mission-critical document that provides the essence of a brand upon which everything is built. Even when consumer insights are used, they tend to be uncorrelated to the brand's essence (which is not surprising, when no brand blueprint is in evidence). In some cases, a “brand blueprint” crafted by the agency will be used. But these hastily created documents usually provide neither relevant direction nor a robust frame of reference. Part of the reason this happens is because existing agency business models are not delivering sufficient margins that warrant the kind of time and effort that is required to generate properly what needs to be generated. Agencies are usually forced into crafting brand blueprints by clients wanting to get better value for their fees. Of course, usually the opposite happens.

Reproduced from‘The Brutal Truth About Asian Branding: And How to Break the Vicious Cycle'with the permission of John Wiley & Sons, Asia

Joseph Baladi

Copyright 2011

ISBN: 978-0-470-82647-8

Related Topics