Following is the last part of an exclusive extract from Chapter 1 of Asian Brand Strategy by Martin Roll.
Martin Roll provides a comprehensive framework for understanding Asian branding strategies and Asian brands, based on new research and supported throughout by a wealth of up-to-date case studies. The book offers insights,
knowledge and perspectives on Asian brands and branding as a strategic tool, including success stories and challenges for future growth and strengths.
The book is a thoroughly updated second edition of the bestselling book Asian Brand Strategy. It is a must-read for Asian and Western business leaders as well as anyone interested in the most exciting region of the world about how Asian firms are reshaping the world.
Asian Business Structures
Another important reason for the lack of strong brands can be found in the prevalent business structures within Asia, which consist of many small and often family- owned businesses – with diversified business interests. It is much harder to overcome the barriers to brand building when resources are limited. In this case, the management perspective would favor short- term business wins against brand strategies, which require more resources and long- term perspectives. Despite younger generations taking over as leaders, it can still be a major barrier to convince older generations about the need for investing in intangibles as it runs against the business heritage and prevalent internal wisdom. Also Read: Asian Brand Strategy (part 2)
Family-controlled companies are typical for Asia, where many trace their origins to the 19th century migration of mercantilist entrepreneurs from China. They account for about half of all publicly listed companies and of total market capitalization across 10 Asian countries, according to Credit Suisse.
Eu Yan Sang started as a provision shop in 1910 in northern Malaysia provid-ing traditional Chinese herbs. Today, Eu Yan Sang has become an iconic, international brand in the Traditional Chinese Medicine (TCM) industry and the global fast- growing “health and wellness” sector. Richard Eu, former invest-ment banker and fourth- generation family- owner of Eu Yan Sang, provided his perspective on family business and transition in Asia: “Every generation, you have got to think what you want to do with the family business. Is your business the right business for the future? Is it more important to preserve the family or more important to preserve the business? This is not just about the patriarch or the founder – it has got to include everybody.”
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When Richard Eu took over in the 1990s, Eu Yan Sang was barely profitable with a few shops in Singapore and Malaysia. In 2000, Eu Yan Sang was publicly listed. In 2012, net profit was US$16.8 million, from sales of modern, high-margin products.25 Its core markets are Singapore, Malaysia, and Hong Kong, where it enjoys significant market share.
Implications of IP Protection
The challenges of IP protection in Asia have been a major barrier against building brands. Many Asian companies have faced rampant counterfeiting and infringement of IP rights in their own backyards. Until and unless legislation and law enforcement get better in the region, it may be a hurdle that prevents a deeper appreciation and respect for intangible asset management in the Asian boardroom.
The World Customs Organization has estimated that 5–7 percent of global merchandise trade is due to counterfeits. In the US, China and Hong Kong are the primary sources of intercepted counterfeit products, representing 84 percent of seizures amounting to US$1.3 billion.26 A staggering 75 percent of all fake goods seized worldwide from 2008 to 2010 were primarily from China, and fake goods account for approximately two percent of world trade.
In one year, French luxury house LVMH spent more than US$16 million on investigations, busts, and legal fees against counterfeiting.
One of the famous spots in Beijing used to be Xiushui or Silk Street. Ranking in the top three of Beijing’s attractions, the narrow and crowded street would attract thousands of foreigners every year to buy cheap counterfeit versions of global luxury brand names like Louis Vuitton, Prada, and many others. It was eventually closed down by the Chinese authorities for reno-vation. While this seemed like a tough stance on the counterfeit industry, it could almost be considered a move to profit from it. Stall holders were given an option to take up a stall at the nearby Xiushui shopping centre where a trading corner of less than 5 square meters auctioned for as much as US$400,000.
Counterfeiting does not just involve products, but entire store concepts too. Famously in 2011, at least 22 fake Apple computer stores were found operating in parts of China.
A New Paradigm for the Asian Boardroom
Many of the ideas and recommendations contained in this book are driven by the Asian brand leadership model, illustrated in a table. The model illustrates the paradigm shift that Asian brands need to undertake in order to unleash their potential.
First, mindsets and practices need to change in Asian boardrooms. This book invites a complete shift in the way that Asian boardrooms think of branding: from a tactical view to a long- term, strategic perspective; from fragmented marketing activities to totally aligned branding activities; from a vision of branding as the sole responsibility of marketing managers to branding as the DNA and most essential function of the firm led by the boardroom.
Second, this new perspective must be grounded in in-depth understanding of consumer behavior patterns. Asia is not a homogeneous entity. More importantly, Asian countries are more and more traversed by cultural flows perme-ating the region: cinema, music, and fashion trends that at present extend beyond national borders to capture the imagination of millions. Branding and brands do not operate in a vacuum; they are closely linked to developments in society, to people and cultures.
Third, managers wanting to succeed in Asia need to abandon the oriental Asia of the past. Asian consumers are all vying for an Asian type of modernity that has nothing to do with colonial imagery.
Fourth, to create iconic brands, Asian managers will have to become trendsetters. The perspective developed in this book is that, in order to be successful, Asian brands need to capture the spirit of the region, and lead the way by creating that spirit.
Finally, this shift can be achieved only if everybody in the company is convinced of the power of branding. This, in turn, can only happen through accountability and systematic monitoring of branding investments and performance. Organizations that utilize data-driven decision- making are 5 percent more productive and 6 percent more profitable than their competitors.29 This will make Asian brands truly great.
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