How Brands from Emerging Markets will Conquer Global Business

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We posted a blog recently about Chinese e-commerce companies going global. Now 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.

The book sets out why China is currently the land of the rising brands. Kumar, who is Professor of Marketing at London Business School: “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.”

Kumar continues: “In 1990, emerging markets accounted for 20% of global output. By 2010, the share of emerging markets had doubled to 40% and this number is likely to surpass developed markets by the end of this decade.” According to the Professor, China is now “the world’s factory” as the country manufactures everything from iPhones to Disney toys. The country has overtaken Japan and is now the second-largest economy in the world. It is only preceded by the United States, but China is expected to take over the leading position before the end of this decade.

Even though Chinese companies are taking Asia by storm, the authors of Brand Breakout believe Chinese business will have a hard time taking on globally established western brands. China and other emerging markets might be making great progress, chances that people will be able to name a Chinese brand are slim.

Next to an explanation of the rise of China, Brand Breakout is also aimed at Western brand managers. PR web says the book is partly written to help these managers understand global competition and its ever changing nature. Companies looking to expand their scope usually focus on emerging markets, which now make up half of all global output and 80% of global growth. This is a completely new shift in the economic centre of gravity. “There is no room for complacency when it comes to competing with these firms,” says Steenkamp, who is a marketing expert at the University of North Carolina Kenan-Flagler Business School. “Do not underestimate the emerging market companies that are attempting brand breakout.”

However, Kumar and Steenkamp feel that a brand breakout is possible. Kumar: “there is no reason why Chinese brands cannot have the same impact in the US, as US brands have had in China.” In the book, eight ways are stated in which this “breakout” can be achieved. PR Web gives a quick overview of these eight methods:

  1. Asian tortoise: with this method, brands gradually increase the quality of their products. This means companies start out on the low end of the market and slowly work their way up in terms of brand recognition, quality an prices. When the time is ripe, brands can even enter the premium market with a separate, high-quality brand.
  2. Business-to-consumer: companies can slowly expand their business, develop a name for themselves and attract talented employees by starting off as a B2B brand. Then, when it is ready to market their products to consumers, the business has a bigger foundation on which it can fall back on.
  3. Diaspora: many people across the globe do not live in their mother country. A great strategy to enter the foreign country market is to target customers that originated from your country first. When companies succeed in doing so, they can focus on the native inhabitants.
  4. Brand acquisition: Another method for emerging brands to become successful is to buy a global, western brand. This way, companies can immediately enter the foreign market. In addition, brands receive an international reputation and have access to new distribution channels.
  5. Positive campaign: if their home country is associated with a negative stereotype, companies can opt to hide their origins. By doing so, customers will be less biased about their products.
  6. Cultural response: a company’s origin an also be put to an advantage. If the country of a brand is known for its positive characteristics, companies can emphasize where they originated from to lure in customers.
  7. Natural resources: brands can also be created for natural resources. This is often very successful as it both represents brand quality an provides emotional satisfaction. There are two ways of achieving this: a brand can be specifically linked to a country or the resource itself can be branded.
  8. National champion: sometimes, companies can get state support. This means the state provides funding in the form of subsidies or gives a preferential treatment to the company. This enables the business to expand on the domestical, but in a later stage on the international market as well.

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