Chinese and Indian firms are lining up for expansion across Asia

According to a recent study by Credit Suisse, titled ‘Top 27 great brands of tomorrow’, more than one third of the highest ranked upcoming brands come from Asia-Pacific - with China and India dominating the selection - including the likes of Alibaba, Li Ning, Mahindra & Mahindra, China Merchants Bank and Tingyi.

But what have these ‘power brands’ been doing differently from their rivals to have garnered this distinction in an ever-competitive market?

Analysts argue that many top Asian brands have resisted expanding into new markets too soon. They knew they had to be a credible challenge at home before they could be a credible challenge abroad. Charley Kan, national creative director at MEC China, says brands like Li Ning and Alibaba have succeeded this way. “That’s where they have both volume and insight.”

David Wolf, president and CEO of Wolf Group Asia, agrees. “Companies like Alibaba, Mahindra & Mahindra and Uniqlo all built their brands at home first and then grew gradually. They understood that becoming a global brand takes time.”

Secondly, these brands focused on penetration and distribution. Kan says the latter is key, particularly in China. “The Chinese don’t take issue with copying the business models or designs of other successful companies because generally consumers don’t value originality very highly.”

Ubiquity, not originality or innovation, is what drives credibility. Simply being ‘present’ counts for a lot. “When these companies look at emerging markets, they are not worried about extending the brand,” adds Wolf. “They are focused on penetration.”

This single-minded strategy extends to overall business as well. Instead of expanding into new markets quickly, these power brands reinvest earnings to improve existing products and services. Wolf believes Alibaba is a perfect example of this.
“Alibaba initially started with a core B2B connection and commerce offering, and it has since extended into B2C and C2C offerings. It excelled at its B2B business and then found a way of expressing its core capabilities to consumers.”

Lastly, these brands did not rely on big advertising budgets to gain customers. They let the products speak for themselves at a retail level. “In Alibaba’s case, it’s right in front of people online,” says Wolf. “It’s retail and word of mouth that are driving sales, not spending tonnes of money on advertising.”

Kan argues that ATL advertising can nevertheless be very useful and a powerful driver of brand strength.

As Wolf says: “Before you tell the world you’re more than just X, you have to establish that you are X. You build brands through word of mouth. Once a brand is a proven leader in a given area, you defend it through ATL advertising activity, which is what each of these firms is doing successfully.”

This article was originally published in the 25 March 2010 issue of Media.