Time to think BIG on brands

Thursday, 23 June 2016 00:00 -     - {{hitsCtrl.values.hits}}

Untitled-1 Untitled-2It is no coincidence that a country’s economic power is usually associated with the ownership of powerful global brands. Many of Brand Finance’s top most valuable brands are owned by companies headquartered in the USA: Apple, Google, Amazon, Microsoft are just a few of them. However, with China rapidly catching up to the position of being the world’s largest economy, we now see the rise of many more Chinese brands on our league table: China Mobile, ICBC Bank, China Construction Bank.

Chinese as well as Indian companies with their very large domestic markets have quickly found the capability to expand globally by snapping up US and European brands. Lenovo (formerly IBM’s personal computer division), Volvo, MG are now owned by China whilst Land Rover, Jaguar and Tetley Tea are owned by India’s TATA.

Contrast this with wealthy Saudi Arabia which is totally reliant on commodity pricing of oil to drive their economy, and are constantly exposed to fluctuating prices in world markets. With brands having relatively little influence on their economy, they have no control over economic sustainability, which makes them highly vulnerable. 

The need for brands which have global relevance and presence is of absolute importance, specially for a small economy like ours. Because Sri Lankan companies do not have the scale to make significant  plays in brand building in international markets, we need to take a leaf from small countries like New Zealand where individual small holders collaborated to set up New Zealand Dairy Board which was more recently rebranded as Fonterra, and is now a significant brand in the global context.

Looking beyond the narrow confines of individual companies to a more industry wide approach is absolutely key for Sri Lanka to take on the world. Our single biggest and most successful brand in the world market which is Dilmah, is still relatively miniscule in size. 

The challenge for us, is, how do we think big, so we are able to break out of the shackles of what constraints us. This involves looking at global opportunities in a unified way, by putting aside petty differences and taking industry wide initiatives which are able to build scale and long term impact. Such an approach would be relevant in the areas of tea (which desperately needs a marketing centric over haul) and in tourism.

Beyond building scale through synergies, the important aspect is to have a culture of research & development and an innovation mindset with a global view, so that we can take unique products to international markets addressing myriad opportunities with our indigenous produce. I am not talking about the conventional products but of other less well known spices, herbs and agricultural produce like cinnamon, karapincha, cassava (manioc) which can be used in a variety of value added form in branded foods and beverages, ingredients to treat cancer etc. 

This approach requires an overhaul of our education system to be internationally competitive, and a radical shift and emphasis in the fields of science and technology as well as an ambitious commercial mindset to go global.

With setting up of Sri Lanka Institute of Nano Technology (SLINTECH) 5 years ago, which attracted highly successful Sri Lankan scientists from across the world, a major kick start was given in the field of research and development. This is comparable to any other similar institution internationally. Uniquely, this is a private and public sector partnership with joint investments. Such a partnership is vital because the Government can take a long term view, whilst the private sector drives the entire process from a commercial context as they seek shorter term results. SLINTECH has already made headway in several areas by filing international patents.

In similar vein, there has to be a collaborative approach to creating and building brands, which, like research and development requires a long term view, and therefore a private and public sector partnership is vital for success.

In this context it is useful to look at what other countries are doing to nurture brands. Singapore, another tiny country like ours has the right approach to building brands, which it implements through SPRING Singapore, an agency under the Ministry of Trade and Industry. As an enterprise development agency, SPRING works with partners to help enterprises in financing, capability and management development, technology and innovation, access to markets and developing brands.

It recognises that brand development is a key strategy that enhance business competitiveness, identifying unique propositions and differentiating products from competitors. SPRING provides support to companies to execute a brand strategy that can lead to growing market share, building customer loyalty and increasing brand value.

The expenses in making such investments are typically reimbursed back to the company on completion of the project by external consultants. Based on the nature of the project, this could be somewhere between 40-70% of the project fees.

In another example, the Turkish Government has been investing in supporting R&D, innovation, design and branding to boost exports through a program that it calls “Turquality”.

Launched in 2004 by the Turkish Government, (according to its website), Turquality is the world’s first and only state-funded branding program for making global brands out of Turkish products with the objective of “10 global brands in 10 years”. The mission of the Turquality program is to strengthen the “Made in Turkey” image and country reputation; by propelling homegrown companies from the domestic markets to the world stage, thereby increasing exports by developing strong global brands. 

Turquality helps companies to develop essential capabilities, such as skills and resources necessary to build brands. Support began in the textile industry and then moved on to other industries from 2006. Presently, 131 firms managing 141 distinct brands have been helped by this program. Companies admitted into the program get half the money they spend on building a brand as a subsidy from the Economy Ministry. The subsidies, have no upper limit, and are offered to Turkish companies to cover all expenses in all phases of building a brand, from design and marketing to after-sales services.

In yet another initiative, the Vietnamese Government is promoting the country’s image as a manufacturer of quality products through a programme known as “Vietnam Value”. It is a long-term national trade promotion program with the objective of achieving worldwide recognition of quality Vietnamese brands. 

The selection of companies qualified for the national brand mark “Vietnam Value” was started in 2008 and is conducted every two years. Starting from 30 enterprises in 2008, in 2014, 63 Vietnamese brands have qualified for “Vietnam Value”. Those selected are leading companies in more than 16 sectors. This program encourages businesses to improve the quality of products, increase innovation and creativity, and build a system to enhance and protect their brands by providing relevant support.

What these initiatives tell us, is the importance of the need to adopt a long term strategic approach to taking Sri Lankan innovation, technology and brands to global consumers. At the moment, although this is happening through individual company initiatives from the traditional industries of tea (Dilmah, Akbar) and apparel (amante) and non traditional sectors by brands such as Spa Ceylon (ayurvedha), DSI (bicycle tyres), we have not even touched the tip of the iceberg through these initiatives. 

For a small nation like Sri Lanka, there is a dire need to think BIG and accelerate this process through greater emphasis on building brands, if we are to make any significant headway in the near future. Doing so requires a coordinated approach with significant rewards to all stakeholders.

(Established in 1996, Brand Finance is an independent consultancy focused on strategy, management and valuation of brands and branded businesses. Headquarter in UK, Brand Finance has a global network across 17 countries, including USA, India, Canada, Spain, Brazil, Australia, Netherlands, Singapore and Sri Lanka.)