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Is Local the new Global?

01 Apr 2011, Posted by Paul in brands,do not use this category, 0 Comments


As the economy in China booms, and consumer spending power increases, we are seeing more demand for luxury and mid market brands. Western brands are being seduced by the opportunities in China and if they haven’t already, they are actively putting together expansion plans for the east.

The two most interesting trends in expansion strategy are new brands for the new market and re-design of products.

1. New Brands For the New Market.

Rather than re-purpose their brand for the Chinese consumer, some brands are going the extra mile to create new brands that would better connect with the audience. Leading this trend are Hermes with Shang Xia and Levis with Denizen.

Shang Xia:
Hermes’ decision to launch Shang Xia, a lower priced (when compared to Hermes) Chinese brand that incorporates local design in furniture, dish ware and apparel, has been received with great skepticism. Some question how it will impact the Hermes brand, some question why it’s priced lower and some insist that Chinese audience desire only Western luxury brands over a brand inspired from China. But really, this is the first time we are seeing a luxury brand that embraces the Chinese culture and aesthetic sensibility.



Denizen:
On the other end of the spectrum, Levi’s launched Denizen, a brand targeted to the younger emerging middle class of China (with plans to expand into Korea and India) who seek high quality jeanswear at affordable prices. Could Levi’s have adjusted pricing of an existing line of jeanswear to work in Asia? Of-course. But they didn’t because they wanted to create a brand for the people – a brand that is an embodiment of what the growing younger middle China sees as cool, fashionable and accessible.

The name Denizen comes from “denim” with “zen” a word with Japanese and Chinese roots means “medidtate state” or “an escape from the hustle and bustle of every day life”


2. Re-design.

A product re-design or re-shaping shows a commitment and a long term vested interest in China. Leading this trend are BMW and Audi.
A simple insight – wealthy Chinese have chauffeur driven cars, led them to re-design their cars to better suit smoother ride for the passenger in the back seat. BMW and Audi control majority of the luxury car sales in China.

BMW and Audi:
In addition to product re-design, both BMW and Audi are manufacturing locally and have also put into place pricing strategies that resonate with the Chinese.



So what does YOUR BRAND need to make a REAL CONNECTION in other parts of the world?
The answer is all about the consumer – they are ultimately in control.

The consumer needs to be top of mind from the beginning of business strategy through to brand vision and expression. That means everything from understanding the environment they live in, their habits and behaviors, the music they listen to, the food they eat, their social settings, their ancestral history and how that impacts them in society today. You need to empathize with your consumer and the only way to do that is by being and getting local.

Let’s take Chinese food as an example. Chinese food is popular around the world – it is likely that no matter what country you visit you will find it. But in each country it tastes different. Why? Cause it’s been adapted to the local flavors and the palette.

There is no formula to enter the Asian market – we can’t say it’s right to launch a new brand, or to have a new product or to adjust your marketing strategy. What we can say, is do your due diligence, listen to your audience and understand where they come from.

To be global you need to get local.





Sources: Financial Times, Shang Xia, Denizen, Ad Age, BMW, Audi, Business Week

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