IN AN ERA OF NATIONALISM, WHAT’S A GLOBAL BRAND TO DO?

THE ERA OF THE LOCAL BRAND

One of my favorite things about my current job role is seeing firsthand the unique ways that global brands come to life around the world.

Take Quaker Oats, for example. The brand emanates from a universal product core but is expressed very differently in Dallas versus Shenzhen.

In my recent travels, I have seen thriving national and regional brands everywhere. There is Paper Boat Beverages in India, Oppo in China, and Casas Bahia in Brazil. The list could go on.

These aren’t just one-hit-wonders but part of a well-documented trend. Across countries and categories, global brands face increased pressure as domestic options give them a run for their money.

In China, foreign FMCG brands lost share in 16 out of 23 measured categories last year, facing pressure from nimble domestic companies. In India, domestic brands grew by 32%, while brands with global presence grew by only half that amount. A similar dynamic played out in Indonesia.

This trend is marked in growth economies but it affects mature consumer markets like the U.S. and U.K. too. In these locales, consumers increasingly trust smaller ‘craft’ brands, which command a price premium and garner intense loyalty based on the perception that they are more authentic or unique.

I can’t help but think that this growing ‘buy local’ sentiment is fueled – or at the very least enhanced – by the rise and growth of nationalist political movements around the globe.

In the United States, American Apparel will soon offer shoppers the option to pick a U.S.-produced version of their iconic t-shirts – a move the company says will cater to the segments of shoppers for which ‘buy American’ is critically important. China recently declared May 10 “Chinese Brand Day,” in an effort to help companies build strong domestic brands that will reinforce China’s status on the global stage.

The implications are clear for stewards of these regional and national challengers. The cultural wind is behind your sails and there is undoubtedly an opportunity to flourish and grow.

WHAT’S A GLOBAL BRAND TO DO?

The path is less clear for the larger global players. In an age of nationalism – what is a multinational brand to do?

I am intrigued by the idea that, in a world that feels increasingly divided, global brands are singularly positioned to connect.

The McCann Worldgroup conducted a global brand study that revealed two fascinating data points. First, 85% of respondents said they believe global brands have a role to play in making the world a better place. And, a full 81% said they believe global brands have more power to make change than governments. Wow.

I believe this view of global brand as positive change maker points to an opportunity for brand leaders to dig deep to consider what unique value they bring to the table.

As the mere value of being ‘international’ means less and less, what specific values can you bring to consumers’ lives? This is a two way street and companies have an opportunity to think both from the top down and bottom up. The most important thing for Global brands is not to blindly hinge their brands around western values. The value system might not cross boundaries in the turbulent geo-political world we live in.  

 ADDITIVE VALUE

Taking it from the top – what can you add to a local or national culture? Can you bring an idea, an offering, or an innovation that wasn’t there before?

Around the globe, retailer Ikea does an excellent job of communicating their unique Swedishness across consumer touchpoints. The brand’s value-add particularly shines through in the food space, where they offer authentic Scandinavian fare as a destination within retail stores and a category incremental to their core homegoods competency. An “astounding” 30% of Ikea shoppers head to the stores just for food and the company is considering expanding into standalone restaurants.

In a similar vein, consider retailer Muji’s offering of smartly and simply designed home and office goods. Their vast assortment of products shares a unique, Japanese design aesthetic that has created cult followings in cities around the world.

TRANSFORMATIVE VALUE

Working from the bottom, global brands and retailers need also to think about how the local context can enrich and transform their offerings.

For example, the Lay’s brand has done a great job adapting to local taste palates, introducing successful flavors like Magic Masala in India, Hot & Sour Fish Soup in China, Thai Sambal in Thailand, and Fish & Chips in the U.K.

Canadian athletic retailer Lululemon also understands that global success means thinking locally. The company chooses to sponsor not famous athletes but local community influencers through their local ambassadors program. The ambassadors receive skills training and business promotion (not to mention hefty merchandise discounts) in exchange for teaching classes in Lululemon retail locations and generally evangelizing the brand.

Fast-fashion retailer Uniqlo has also focused recently on making sure flagship stores express global ideas in local ways. This is achieved through the WearHouse program, which reserves significant floorspace in otherwise globally homogenous stores for local products and cultural events. Company leaders note that this is an important way to stay relevant while also delivering on the mandate to bring something back to local communities.

BRAND VALUE FOR GOOD

Finally, at the macro level, global brands should consider how they can leverage their scale for good. In this age of transparency, there is no hiding from one’s size or sweeping it under the rug. So, why not transform the elephant in the room to your largest asset?

Two great examples come to mind here:

First, PepsiCo’s Performance with Purpose Initiative, which aims to affect positive change on three fronts: product, planet, and people. The global organization has ambitious goals to re-engineer products to reduce less healthy ingredients, reduce their environmental impact and advance an agenda about respect for human rights and diversity. All of these efforts are driven by PepsiCo CEO’s belief that, in the 21st century, a good company must also be a good citizen.

Second is Dove’s Global Self Esteem Project. This initiative, activated in 100+ countries around the world, develops educational tools and programs to help young people build confidence and a healthy body image. Recently, the company has begun localizing content to understand and react to how body-image issues are different across countries.

THE BOTTOM LINE

In the retail category, there is much talk about today’s omni-channel consumer. As shoppers move seamlessly between retail environments, they expect brands to keep up by delivering a frictionless shopping experience.

Omni-channel consumers don’t distinguish between a brand’s website, storefront or mobile app. Technology has trained them to simply want it all. In consumer speak, ‘I want to purchase exactly what I want, when and where I want it.”

The reality is that today’s consumers are omni-cultural as well. They don’t see the retail world in the discrete categories of local vs. national vs. global brands. Rather, they are accustomed to a diverse range of options, and they move seamlessly between them choosing different brands to fill different needs.

At a Walmart in China, a shopper might choose several multinational food brands for their provenance, then add a national cosmetic brand appreciated for its use of traditional ingredients, then stop by their neighborhood wet market to pick up turtle meat for dinner. In India, shoppers have no problem ordering Paper Boat juice via Amazon and might throw in a pair of Nike’s while they are at it.

While large, international brands retain a role in this omni-cultural world, the new nationalism challenges the orthodoxy that global brands are always best. In increasingly competitive markets, global players are under new pressure to articulate and differentiate their offerings. Easily said but, how to do it?

At the end of the day, global brands have an opportunity – possibly even a mandate – to build bridges in an era of divisiveness. As a steward of a proudly international portfolio, I look forward to forging new paths in the name of omni-cultural consumption.

China: Shenzhen Redefining “Made in China”

Last week, I was in China.  It was my first trip to the city of Shenzhen.  I found some great learnings on the role Shenzhen plays to the Chinese economy vs. Beijing/Shanghai.  China watchers – analysts, investors and government officials alike – would like to see the country cement their superpower status by becoming a global innovation leader. The government has spent hundreds of billions of dollars against this goal, but, to-date, most agree that few distinctly Chinese “innovations” have emerged.

A recent visit to Shenzhen allowed me to consider what “innovation” really means in the context of China.

Academics Lindtner, Greenspan & Li argue that maker-entrepreneurs in Shenzhen challenge the commonly held binary of a western innovation (‘designed in California’) versus low-quality production (‘made in China’). They assert that Shenzhen’s burgeoning maker culture represents a new type of innovation, and one that is uniquely Chinese. After spending a week immersed in the city, I find this a fascinating viewpoint.

Western tech entrepreneurs have flocked to Shenzhen recently prompting The Guardian to dub it “China’s Silicon Valley.” The city’s vast manufacturing complex – situated in markets like Huaqiangbei – make it a one-stop-shop for turning an idea into a sellable product.  (Oculus Rift’s VR glasses & the Pebble smart watch were born here.)

Shenzhen manufacturers find various ways to capitalize on their infrastructure: make knock-off products that slightly improve a branded version, copy Kickstarter concepts before they hit the market, or even produce extra units of branded products to sell sans logo. Increasingly, the manufacturers create new brands aimed at the Chinese market like ascendant Xiaomi.

These practices stem from the oft-maligned shanzai, or counterfeit culture. In it, Shenzhen’s web of producers and makers operate as an informal network and a culture of sharing – much like the open-source software community in the U.S. New media platforms like WeChat mean they can collaborate to make new products 24/7 with unparalleled agility.

This is where – as Lindtner and others point out – Shenzhen maker culture gets interesting. The simplistic view is that Chinese factories simply crank out cheap copycats thus the narrative that the country needs to ‘catch up’ when it comes to innovation. On the ground, however, something distinctively more complex is happening.

As entrepreneurs engage in the process of bringing their ideas to life, they are transformed. Through tactile interactions with the parts, the components and the manufacturers who will put them together, the designs evolve. They get better and more interesting. And, their Chinese ‘makers’ gain their own unique views about ‘who’ the products should be for and the needs they could serve. Increasingly, they are inspired and equipped to bring related concepts to life.

These makers may be departing from others’ initial ideas but they are entrepreneurs in their own rights. They are constantly thinking about what ‘could be’ – what is upmarket, what the market needs, and how they could serve unmet needs. Using their knowledge of the manufacturing process and their connections in the shanzhai community, they move with speed impossible for more established companies to imagine. They take products to market in a manner akin to the celebrated “fail fast, fail cheap” mantra of Silicon Valley – a mentality that has yielded innovations like Siri, Tesla, and self-driving cars.

Shenzhen’s maker culture is increasingly on display in venues like the fast-growing Shenzhen Maker Faire (2016 show happening soon) and in an exploding number of maker and incubator spaces.  It is a culture represented by the phrase “innovate with China” that graces the walls of Seeed, Shenzhen’s first maker space (and now a $10M a year business).

This all suggests that perhaps Shenzhen (and China) is a culture with a very different perception of innovation, one that is collectivist (like many aspects of Asian life) versus the more individualistic western concept. Perhaps China doesn’t need to “catch up” but is creating its own unique culture of innovation. It is a nimble one that may have more in common with western software design protocol where products are shipped before they are perfect and companies look to “iterate fast” with consumers.

This culture might even inspire western entrepreneurs, who face the reality of needing to “just start” with a new innovation if they are to have any hope of staying ahead of the competition.

This leaves us to wonder what exciting possibilities emerge when design happens at the site of production? Where the boundary between imagining & making blurs, there may be new offerings, new brands and new consumer markets for the makers of Shenzhen – and their western collaborators.