Nirmalya Kumar, Professor of Marketing, presents key findings from his book: "Brand Breakout: How Emerging Market Brands Will Go Global". The book was launched on 20 June at London Business School. Find out more: http://www.london.edu/newsandevents/news/2013/06/Eight_ways_emerging_market_brands_can_crack_international_markets_1668.html

1. Copyright © Nirmalya Kumar

2. Copyright © Nirmalya Kumar
“China must have a group of world-level enterprises which have global
competitiveness and world-famous brands. These enterprises must have their own
brands, must have own operative networks, must have their own independent and
complete supply chain.” (Chinese CEO)
The need to go international
• Intense competitive rivalry in home market
• Quest for technology
• Opportunities offered by global market
• Economies of scale
• Avoidance of trade protectionism
• Improvement of company capabilities
• Urgency to build “world-famous brands”

3. Copyright © Nirmalya Kumar
Why should emerging market
companies develop global brands?
 Financial benefits
 Escalating labor costs (China)
 Global ambition
 Keep company fate in own hands: Brand power = market power
 Improve management capabilities
 Broader economic benefits (COO spill-over)
 National pride

4. Copyright © Nirmalya Kumar
Hurdles to the development of global
brands by emerging market companies
 Financial benefits
 Escalating labor costs (China)
 Global ambition
 Keep company fate in own hands: Brand power = market power
 Improve management capabilities
 Broader economic benefits (COO spill-over)
 National pride
 COO image

5. Copyright © Nirmalya Kumar
“One of the biggest challenges many emerging market companies face as they
globalize is the perception that emerging market brands are inferior.” (The Economist
2011)
Country image of China and Japan
among U.S. consumers
• Workmanship
• Quality
• Tech. advanced
• Reliable
• Value for money
• Overall attitude
• Active preference
• Barriers to ever
buying COO
0 3-3
China Japan

6. Copyright © Nirmalya Kumar
Hurdles to the development of global
brands by emerging market companies
 Financial benefits
 Escalating labor costs (China)
 Global ambition
 Keep company fate in own hands: Brand power = market power
 Improve management capabilities
 Broader economic benefits (COO spill-over)
 National pride
 COO image
 Production focus – scale v. value
 Marketing competencies
 IP protection
 Centralized hierarchy v. bottom-up innovation
 Patience?

7. Copyright © Nirmalya Kumar
1. The Asian Tortoise Route
Migrating to higher quality and brand premium
• This is the “mother of all routes,” pioneered by Japanese companies (Toyota,
Honda, Sony, Panasonic). It was subsequently copied by Korean companies
such as Kia, Samsung, Hyundai, and LG.
• Enter the Western countries with a decent product, sold for a very low price
to a niche market. In an upward spiral of interlocking steps, the emerging
market brand increases quality, while pricing the new version a little higher
to attack the next lowest segment, and so on, until dominant market
presence is achieved, across the entire price/quality range.
• Examples: Pearl River Piano, Haier, Hisense
Build to
Cost
Build to
Volume
Build to
Quality
Build to
Brand

8. Copyright © Nirmalya Kumar
2. The Business to Consumer Route
Leveraging B2B strengths in B2C markets
Capabilities
Capital
• Investments
• Financial strength
• Profit margins
• Marketing & branding
• Consumer insight
• Distribution & service
• Innovation & design
• Global management
Products
go global
People go
global
Assets go
global
Brands go
global
Global
B2B player
Contract
manufacturer
• Examples: Huawei, ZTE, ASD, Galanz, Mahindra &
Mahindra

9. Copyright © Nirmalya Kumar
3. The Diaspora Route
Following emigrants into the world
• Enter Western markets using the home
market Diaspora as a beachhead.
• In a world of unprecedented cross-border
flows of people, there are millions of people
living in other countries. Only a minority of
these people will be fully assimilated into the
new (host) culture. Many migrants will retain
some old brand preferences and
consumption patterns.
• Examples: HSBC (China), Pran (Bangladesh), Bimbo
(Mexico), Jollibee Foods (Philippines), ICICI, Reliance,
Dabur (India), Islamic Bank of Malaysia

10. Copyright © Nirmalya Kumar
4. The Brand Acquisition Route
Buying global brands from Western MNCs
• This pathway entails the acquisition of a
Western brand, possibly followed by the
subsequent migration of the acquired
brand into the emerging market brand.
• As emerging market companies are
latecomers in the global stage, they
often cannot employ the incremental
internationalization strategy used by
Western and Newly Industrialized
Economies. Instead, they rapidly expand
internationally via a series of
aggressive, high-risk acquisitions of
critical assets from mature Western
multinationals.
• Acquisitions are used primarily
to secure brands and channel
access as well as pre-empt
similar moves by competitors.
• Examples: Lenovo, Tata Motors,
Geely, Bright Foods

11. Copyright © Nirmalya Kumar
Some recent acquisitions by
emerging market companies

12. Copyright © Nirmalya Kumar
5. The positive campaign route
Select a brand name that disguises the COO
or even invokes a favorable CO
Focus on favorable “nuggets”
Invest heavily in marketing
Offer extra guarantees
Emphasize aesthetics

13. Copyright © Nirmalya Kumar
6. The Cultural Resources Route
Positioning on positive cultural myths
• In some categories, a specific country
may have unique positive associations
amongst Western consumers (e.g., silk
from China, yoga from India, untamed
nature from Brazil). If the emerging
market brand can be positioned on
these specific attributes, its country of
origin can be turned into an advantage.
• Examples: Shanghai Tang (China), Jim Thompson
(Thailand), Mandarin Oriental Hotels, Taj Hotels and
Resorts, Havaianas (Brazil)

14. Copyright © Nirmalya Kumar
7. Branding Natural Resources Route
Defined
Geographical
Region
•Tight
•Marked as unique
•Myth to emphasize
quality
Product/process
Specification
•Transparent
•Raise entry barriers
•Elaborate
(expensive) to imply
quality
Authentication
•Independent
authentication body
•Regular audits
•Seals of approval
International
Branding
•Protected
Geographical
Indication
•Awareness of brand
and region
•Communicate the
difference
Key success
factors:
Undifferentiated Value adding Global
natural resource process brand

15. Copyright © Nirmalya Kumar
8. Build National Champions Route
• These are companies championed by the state
and therefore have received substantial help
from the state, either directly (e.g., subsidies) or
indirectly (e.g., preferential treatment). They use
the resources and protection of the state to win
domestically and then subsequently expand into
international markets.
• Sometimes after an initial gestation period,
these firms are left to the “forces of the market”
or privatized though they are still closely aligned
to the interests of the state.
• Reasons to develop national champions include
national prestige and security, economic
development, desire to develop R&D and
technology, and generate employment.
• Examples: Embraer, Emirates
Airlines, Comac, Proton