Monday, 10 January 2011

The Rise of the Rest: Brands from Emerging Economies

In the last few years a number of local brands in BRIC countries have not only strengthened their position in the domestic market but also begun exporting their products and services across the world. Bharti Airtel started out as an Indian telecommunications company, but now has operations in 19 countries across Asia and Africa. In fact, Business Week has ranked it amongst the top 6 technology companies in the world.

To turn to a starkly different category, Herborist is a Chinese cosmetics brand which is popular not only with Chinese women but also French, Dutch and other European consumers who buy it through the reputable distributor Sephora.
Sportswear is a particularly fascinating category in this respect, and China has become quite the battleground for a fierce contest between local brands Li-Ning and Anta on the one hand, and the international goliaths Nike and Adidas on the other. Whilst the two global giants had traditionally battled each other for market leadership, in 2009 Adidas slipped from second to third place as the local brand Li-Ning took off. In response to this unwelcome development, Adidas has revealed plans for an aggressive 2011 strategy in China – including opening of 500 new stores – in a bid to wrestle back their original second place. Anta, for their part, has recently signed the basketball star Kevin Garnett who previously endorsed Adidas. To top it all off, Li-Ning has quite literally parked its tanks on Nike’s American lawn - Li-Ning’s US store is just down the road from Nike’s global headquarters.
These challenger brands have quite a few advantages over the global Western ones. Firstly, they often have a far more efficient cost-base structure. Secondly, they’re well positioned to cater for other emerging economies (think Bharti Airtel in Africa). Finally, they are less likely to be perceived as ‘arrogant’ the way that some Western multinationals are – just think how hard HSBC has worked to differentiate itself from the monolithic, corporate, global Western banks.

Companies from emerging economies are no longer playing by the rules of the West – increasingly they’re calling the shots. This does not mean that Western brands are going to become extinct, but it does mean the end of Western dominance in the world of communications.