March 2, 2006

Ogilvy Asia’s Chairman, Miles Young, talks about how culture impacts the branding mix

Filed under: Direct Marketing,Marketing — Administrator @ 10:56 am

We’ve been meaning to write a post about the impact of cultural dynamics on branding in Asia/China – last week (2/27), Stuart Biggs, a journalist from Hong Kong’s South China Morning Post, interviewed Miles Young, Chairman of Ogilvy & Mather Asia Pacific, discussing this very topic – the article is titled, “Advertising chief spins culture into the branding mix”.

Miles concludes that Japan, as a result of zaibatsu legacy, is less accepting of single product branding (e.g. Bluebird), instead Japanese managers seek to promote the branding of the corporation (e.g. Nissan) – whereas in China, there is a “religious” acceptance to the concept of branding largely because Chinese manufacturers see branding as a defense against foreign product penetration.

We’ve transcribed a section of the article below (the article is password protected on SCMP website):

Until recently, the zaibatsu legacy – giant corporations such as Mitsubishi founded with political patronage in the late 19th century to industrialize Japan – had overshadowed more – western concepts of product branding.

“It didn’t matter what industry you were in as long as you were large and the brand was therefore the same as the corporation…separate product brands underneath that corporate umbrella were very difficult for them to grasp.”

The same is not the case in China, where Ogilvy has benefited from the “religious” acceptance of the concept of branding.

“What has driven the belief in China is that the market has opened up, so branding is seen as a defense against foreign products coming in. It is connected with how to defend market share and you certainly don’t just want to do that on price.”

Ogilvy’s clients have developed from state-owned enterprises insecure about working with foreign agencies 10-year ago, to more progressive companies such as China Mobile – “as dynamic and marketing savvy as any of its international peers”

Definitely some useful commentary from the front lines, and while we do not pretend to know more than Miles on this subject, we bid Miles a “beg-your-pardon” on the China front – branding in China is definitely not as widely accepted as we are let to believe in the interview.

Well, if you consider hypnotic messaging (e.g. Focus Media 10 sec spots repeated 1,000 times a day) or tent shows in large shopping plazas brand building, then yes, it is widely accepted, but we don’t (from a cost-benefit-measurability standpoint).

While it is true to a couple major brands turn to branding to protect their turf from foreign competitors, the fact of the matter is, until very recently, local Chinese neither had access to nor could afford foreign brands; furthermore most foreign companies entered China as joint ventures, often branding under the local’s brand, for example Gillette purchased Shanghai based Eagle razors.

More to the point, joint ventures between foreign and local manufacturers always had support of the local government and/or a state owned enterprise (SOE) – automobiles, electronics — and thus it has always been in the interest to promote the branding of these joint ventures (yes, in many cases locals “borrowed” technology and went off and did their own thing).

The real brand battle isn’t so much foreign v. local, but rather it is local v. local. If someone can afford a foreign brand, they will buy it because the quality/service is better, not because they recognize the brand, per se. Until Chinese products and services (at least higher end goods/services, we aren’t talking about soap or socks) met or exceed that of foreign offerings, branding will never be an issue.

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