Asian Brands Going Global: Which, When And How?

Watch out!

A wave of “emerging global brands (EMCs)” from Asia will hit the Western market rather soon and you had better know something about them starting from now on, says a Dutch researcher.”Hundreds of Asian companies will reach out to the world and enter the global market.

At this moment, these new companies are relatively unknown in the West.This will rapidly change,” said Professor Dr. Rien T. Segers at the International Business School of Hanze University of Applied Science in Groningen, a city in the north of the Netherlands.

The professor of Asian Business Strategies is to publish a book on EMC in October, in which Alibaba, Geeley, Haier, Huawei, Lenovo and Tencent from China, Dr. Reddy’s and Infosys (NYSE:INFY) from India, Panasonic, Rakuten and Uniqlo from Japan, Lotte from South Korea and Vinamilk from Vietnam are selected cases to demonstrate strategies and endeavors of “promising future economic giants” to conquer the world.

Alibaba, Huawei, Lenovo (OTCMKT:LNVGY), Haier, Uniqlo are faster emerging companies from the region. They have already “emerged”, most other companies are slower, said Dr. Segers in an interview..

In his opinion, Geely, a Chinese automotive manufacturing company, is a little bit slower but has a smart strategy. “They have bought Volvo but they keep quiet about this. They leave Volvo on its own but at the same time they are profiting from the experience and the branding of Volvo.”

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Tencent, a Chinese investment holding company providing mass media, entertainment, internet and mobile phone value-added services, is also slower according to the professor. “It takes a bit more time but it will come,” he said.

Based on the studies of these 6 Chinese EMCs, Segers argues that the static thinking of China as the workshop of the world is to be deconstructed because the situation in East Asia is changing day by day.

“That does not mean that the workshop as such is coming to an end, it means that at the same time enormous innovations are coming up, the technological distance of sophistication between Chinese companies and American companies is getting smaller and smaller,” he explained.

Uniqlo, the Japanese casual-wear designer, manufacturer and retailer, is “very fast and already established around the world”. Rakuten, a Tokyo-based e-Commerce and internet company established in Y 1997, has registered a revenue of US$ 5-B in Y 2013. “It is a promising emerging startup,” said Dr. Segers.

Panasonic, Sony (NYSE:SNE) and Toyota (NYSE:TMC) are all well-established brands but facing difficulties due to the competition in South Korea and China. “So they have to reinvent themselves, they are emerging in this particular sense,” said the Dutch professor.

He rejects the “cliche” that Japan is an old-fashioned country. “If you look at the country you see high-talented graduates from university starting a company which grows in 5 years into a huge thing. So, there is an enormous vitality and drive to make something happen.”

The 2 Indian companies, Dr. Reddy’s and Infosys, have “a time difference of 7 to 8 yrs to catch up with Chinese EMCs” but the pharmaceutical brand is very interesting for the West, because western insurance companies and medical institutions are looking for drugs that are much cheaper than the drugs coming from the United States and Switzerland. “So there is a huge chance for those relatively unknown companies to become really world brands,” he said.

The Lotte conglomerate from South Korea is a long standing brand broadly engaged in food, retail, tourism, petrochemicals, construction, manufacturing, service, study and finance. “It has to reinvent itself to survive the attacks from newly-emerging multinationals in East and West,” said the professor.

In his view, Vinamilk, the biggest dairy company in Vietnam, is another “slower but excellent” company. “The most important thing is the quality of the product, irrespective of the sector in which the product is functioning,” said Sergers, emphasizing on the global potential of Asian quality products, in the food and agriculture sector as well as in other sectors.

“It is not unthinkable that the Dutch people might one day drink Vinamilk instead of their own world class dairy products. Fifteen years ago, who would have thought that people in China or South Korea would be drinking Dutch beer [Heineken] to a large extent?” he asked.

A family-like atmosphere or structure, long-term strategies over short-term gain, Japanese characteristics and soft nationalism, are similarities in the corporate culture of the Asian EMCs, according to analysis of Segers and his team.

This way of doing business results from the cooperative Asian nature, “which led to the ‘Japanese style’ of ownership in large conglomerates where multiple businesses all hold shares of each other,” said the professor.

With “soft nationalism,” Dr. Segers underlines that not only are Asian workers proud of their company, they are proud of their country as well. “The multinationals from their own soil are also a source of national pride.”

“Seen from a purely business or employee attitude perspective, this soft nationalism has increased productivity and made people accept sacrifice that would allow the company, and in turn the country, to profit as a whole,” he explained.

Ability to quickly adapt is another Key factor of success for Asian EMCs, according to the Dutch researcher. With the growth of mobile internet, Alibaba and Tencent responded by shifting focus from PC to mobile apps. Huawei claims to have adapted a Western professional management style and combined this with Eastern culture.

Uniqlo teamed with western designers to provide clothes that fit Western tastes while holding on to its strategy of offering affordable clothing not based on the most recent trend. Rakuten imposes English as working language in order to intervene and offer active support to customers.

Dr. Reddy’s adapted a generic brand strategy for regulated markets and opened a research lab in the US to develop specific medicine aimed at Western markets.

Going hand in hand with adaptability is the drive to internationalize. “Performing well in Western market is not only good for the profitability of the company, but also give prestige to both the company and the home country of the company,” noted Dr. Segers.

The Dutch researcher sees the Triple Helix of government, business and education as an important facilitator of Asian EMCs’ success, and adds “consumers and NGOs” as a 4th strong force to make a Quadruple Helix.

“We have all kinds of consumers’ organizations, which are testing products, and these tests play an enormous role in the buying behavior of consumers. This is the new 4th Force which is going to play an important role in the selection process which products are going to become global brands, and which not,” said Dr. Segers.

“Asian companies are very service oriented, so they will find it easier to line up with the 4th Force, the consumer and NGO side,” he noted.

For him, the new context is very positive for Asian products because they come out of such a context where the care is not only directed at selling, figures and getting rich, but also for the region, for the people in the company and for how a product is being used.

There is a cultural particularity in Asian atmosphere which will contribute to the globalization of their brands, and this adds to the smoothness of becoming a global brand for Asian products, said the professor.

“You cannot conquer the world with a cheap ugly bad nonfunctioning product. You know you can not harm consumers. So I am very positive about the reach and the popularity of Asian products not only in their own countries, but all over the world,” he concluded.