17 Jun 2013
Global game-changer China is set to dominate emerging market attempts to break into international markets and establish global brands, according to new analysis by marketing experts Nirmalya Kumar and Jan-Benedict Steenkamp.
In their new book Brand Breakout – How emerging market brands will go global, Professors Kumar and Steenkamp, set out eight cutting-edge routes for emerging markets to establish successful global brands and show why the next Samsung could come from China.
Nirmalya Kumar, Professor of Marketing, London Business School, explains: “Many Chinese firms have started the same transformation that Japan and Korea went through. Soon we will be buying Chinese-branded products just as we are buying “Made in China” Western-branded products today.”
“In 1990, emerging markets accounted for 20 per cent of global output. By 2010, the share of emerging markets had doubled to 40 per cent and this number is likely to surpass developed markets by the end of this decade.”
China has already become “the world’s factory”, says Professor Kumar. It makes many of our best-loved products from Apple iPhones to Disney. Now it has overtaken Japan to become the world’s second-largest economy, second only to the United States, which may lose its pole position to China before this decade ends.
But, the western, globally established brands are a tough act for an emerging market like China to follow. Even with China and its fellow emerging markets – Brazil, India, Malaysia and Russia - driving an unprecedented proportion of global trade, many people would still struggle to name one Chinese brand.
Eight routes to Brand Breakout
The authors advocate however that “brand breakout”, is achievable. “There is no reason”, says Professor Kumar, “Why Chinese brands cannot have the same impact in the US, as US brands have had in China.” And here are the eight ways they can do it.
1. The Asian Tortoise Route: Migrating to higher quality and brand premium (Pearl River Piano).
2. The Business to Consumer Route: Leveraging B2B strength in B2C markets (Galanz, Huawei).
3. The Diaspora Route: Following emigrants into the world (Corona, Mandarin Oriental).
4. The Brand Acquisition Route: Buying global brands from Western multinationals (Lenovo, Tata Motors).
5. The Positive Campaign Route: Overcoming negative country of origin associates (Chang Beer, Ospop).
6. The Cultural Resources Route: Positioning on positive cultural myths (Havaianas, Shanghai Tang).
7. The Natural Resources Route: Branding commodities in four steps (Natura, Café de Colombia).
8. The National Champion Route: Leveraging strong support from the state (Emirates Airlines, China Mobile).
“The book is not about best practice”, Professor Kumar concludes. “It’s about next practice. Emerging markets have to move forward from simply being the manufacturing capitals of the world. And they might do this quicker than the West may think.”
Brand Breakout: How Emerging Market Brands Will Go Global, will be launched on 20 June at London Business School.