Brand new success for China's firms (2)

14:00, May 10, 2010        Andrew Moody

Some experts believe companies from emerging markets are making major inroads because they are learning how to harness new opportunities provided by the Internet, enabling them to target customers precisely using social networking sites and viral marketing techniques.

  As a result they are stealing a march on some Western brand owners that are still wedded to traditional advertising and methods of marketing

  The new technologies are enabling them to reach customers without the massive scale of investment normally required to achieve a global presence.

  Martin Roll, chief executive of VentureRepublic, a brand consultancy based in Singapore, said companies from emerging markets were proving to be very successful in using the new technologies.

  "The face of business in emerging markets is changing faster than one can blink one's eyes. Emerging market companies that used to be back-end workhorses, manufacturing consumer goods cheaply for Western companies, are slowly realizing the benefits of brands and innovation," he said.

  "From a brand building angle, digital and new media are providing a much faster and cheaper means of building and sustaining brands in global markets. All in all, these developments are then in turn fostering new brands to think differently as the digital platforms are enablers for them."

  Zhang Tianbing, partner in international management consultants AT Kearney in Shanghai, believes what is happening is fundamental.

  "What you are seeing is something like a sudden change to the ecosystem. The new technology, however, is bringing about a major change to the economic system, where you are seeing a new species emerge. It is enabling emerging market brands to make a major advance," he said.

  A Chinese company that has managed to establish a brand in overseas markets is telecommunications operator ZTE Corporation.

  The company, which has 62,000 employees, 10,000 of them working abroad, supplies its products and services in around 140 countries.

  Although very well known in its field, it supplies mainly in a business-to-business market.

  Gu Yongcheng, general manager, corporate branding and communication, for ZTE Corporation, said there was a difference between establishing a brand in Asian markets and in Europe and North America.

  "In emerging countries like in Asia and Africa we tried to establish our brand by selling high-quality and low-cost products," he said.

  "The developed markets of Europe and North America impose higher requirements on our brand and we are focusing our efforts on enhancing our brand management capability right throughout the whole organization."

  Gu said it was not necessarily easier for Chinese companies or those from emerging markets to build a business-to-business than a retail brand.

  "Business-to-business and business-to-customer models run in quite different ways. Unfortunately, no Chinese enterprise has been successful in either," he said.

  "To create world-class brands, Chinese companies need to shift completely from the traditional product-marketing concept to the brand marketing one, which requires a process of consistent brand building and continuous investment. This is something we are actively doing."

  James B. Heimowitz, president and chief executive officer, North Asia, of global public relations consultancy Hill &Knowlton, based in Hong Kong, is skeptical that being able to use new technologies to communicate with customers has been behind the success of emerging market brands.

  "I don't buy that technology is a leveler. Whatever technology enables you to do, if you want your brand to succeed you still have to get close to your customer. There is no substitute for that," he said

  "If a company from an emerging market knows what is important to consumers in a particular market and what resonates with them, it will prove more important than whether the digital world is more cost-efficient or seen as more hip."

  "It may be, however, that companies from emerging markets that are not so dependent on traditional channels of communication might be more open to what customers have to say and how they want to be communicated with."

  One company that has been able to develop a worldwide brand is Brazilian company Sao Paulo Alpargatas, which makes the famous flip-flop shoes Havaianas.

  It cleverly built its brand by getting celebrity endorsement such as film stars to wear its products at Oscar night parties.

  It didn't begin exporting until 2001 but now competes head on with the major shoe brands. Around 22 million pairs are exported every year.

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