Global Megatrends

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GLOBAL INVESTOR 2.09 Focus — 16 “The established order is ripe for disruption at the moment” Wealth and expertise are no longer the preserve of developed world brands. An increasingly confident breed of emerging market company is focusing on building brands in its own way, says Melanie McShane, brand strategist of Wolff Olins. James Gavin, business journalist James Gavin: What are the key drivers behind the rise of the emerging market brand? Melanie McShane: What we are seeing now is that wealth and expertise is increasingly found inside companies from emerging markets. Developed world brands don’t know those markets as well, but that is not the only barrier to their success. There are also issues to do with innovating effectively. It’s even harder to innovate if they are in markets that are growing very fast but that they don’t know as well. It’s not just a case of a rebalancing world order, there’s actually an emerging confidence from these markets, wanting to do their own thing in their own way. In some ways the established order is ripe for disruption at the moment and there is a new definition of what “going global” means. For many of these firms, going global doesn’t just mean going off and cracking the USA and Europe. What is it about Asia that brands are so eager to be the number one there? Melanie McShane: Asia’s a fantastic testing ground. If a business or a brand can succeed in that multifaceted set of markets, it’s got an adaptability that it can translate to other parts of the world. We are also seeing that companies that are number one in Asia and have very large global ambitions are taking a very sophisticated approach to branding. Fast Retailing Group, owners of the Japanese casual wear brand Uniqlo, is an example I’d pick out. They are now adopting a multibrand strategy in order to achieve their ambition of becoming the world’s number one apparel retailer group. So is Asia becoming a test bed for other regions? Melanie McShane: What is very interesting is getting the interplay between regions that have strong emerging markets. Take Mexico’s Grupo Bimbo, a successful baked goods company. It sees its continued growth predicated on expansion into China, rather than other regions. I’d also pick out Brazilian aircraft manufacturer Embraer, which has taken a unique approach within its sector, unfettered by category conventions. It’s doing a lot of interesting work in trying to stimulate the Indian market. Are Western companies targeting Asia first and then tailoring their brands for other markets? Melanie McShane: There is going to be a real temptation for some brands to do that, to go where the growth is. But certainly the smartest brands, rather than trying to gather tons of consumer insights, are taking an approach of looking at what they and the brand stand for, and then innovating from that platform. Mercedes- Benz is an example of a company that has successfully developed interesting services using brand-led innovation. How well adapted are Western brand strategies for these emerging markets? Melanie McShane: It all revolves around competition, but this is becoming a bit of an old-world concept, a peculiarly Western concept of stealing market share. We’re seeing more sophisticated brands and businesses moving away from the language of competition and much more into the area of collaboration. Look at the success of VW in the Chinese market, which is down to its work with the Shanghai Automo tive Industry Corporation. We’ve seen instances of brands within the finance sector where it’s been done very well, such as HSBC’s Islamic finance unit Amanah. This draws on the bank’s strengths and exper tise but offers something different that feels authentic. Are there real differences in brand perceptions between emerging market consumers and traditional industrialized countries’? Melanie McShane: It’s much more subtle than a desire for status symbols which is how these markets are often characterized. There’s a great deal of pride and optimism within these markets, and much less cynicism. People don’t feel they are being sold at. That entrepreneurial spirit and lack of fear makes for some really exciting brands. What preconditions are there for an emerging brand to be successful in industrialized countries? Melanie McShane: The fundamental thing from a brand perspective is retaining that sense of identity wherever you come from. Geography can be important, but your sense of identity or purpose as a company is fundamental, as it’s something that can’t be copied. There are many businesses that know what they do, but great brands know why they are in business and that gives them a platform to expand way beyond what they originally operated on. Melanie McShane is a strategist at global brand consultan cy Wolff Olins, helping organizations to use branding to think differently and grow. Clients include the Asian Development Bank, Unilever, PricewaterhouseCoopers, Booz & Company, Royal Mail and Amnesty International. She is a speaker on brands and regularly contributes to the press.
GLOBAL INVESTOR 2.09 Focus — 17 Demographic challenge People are now living longer, as they benefit from better health care and greater prosperity than their parents and grandparents. An aging population presents opportunities to cater for a whole new group of older consumers eager to make more imaginative use of their time. But are we doing enough to prepare for the challenges this demographic shift brings? Ilona Kickbusch, Graduate Institute of International and Development Studies, Geneva Prisca Boxler, World Demographic & Ageing Forum, St. Gallen “Old age is like everything else. To make a success of it, you’ve got to start young.” Fred Astaire Public health improvements and greater wealth mean many of us are living longer. The resulting demographic change, which will be accentuated over coming decades, presents both challenges and opportunities for the world’s economic and social development. Population aging will impact all aspects of 21st-century society, but it seems that we have not yet envisaged how societies can be reorganized to meet that challenge. According to the United Nations, a key priority for our future is to ensure that people everywhere are able to age with security and dignity, and to continue participating in society as citizens with full rights. The number of people aged 60 and over is expected to rise from around 600 million in 2000 to 1.2 billion in 2025 and 2 billion in 2050. Today, about two-thirds of all older people live in the devel- oping world; by 2025, this figure will be three-quarters. At the same time, the fastest-growing population group in the developed world is over 80 years old, and because women outlive men in virtually all societies, women constitute the majority in this age group at a ratio of 2:1. One of the most intriguing issues about the data and trends on aging is that, while the evidence is there, most key actors in society have not yet responded to it. This applies to politicians as much as companies and of course individuals themselves. In Switzerland, the World Demographic & Ageing Forum believes that addressing this challenge requires serious effort and cooperation not just from the public sector, but from all stakeholders. This is not just a national issue. Policy strategies and papers at the regional (e.g. EU) and global levels do not really face the >
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