Japanese firms who fail to look over their shoulder for fast-approaching Chinese brands going global are making a fatal mistake, according to new analysis by marketing experts Nirmalya Kumar and Jan-Benedict Steenkamp.
In their new book "Brand Breakout – How emerging market brands will go global," Professors Nirmalya Kumar and Jan-Benedict Steenkamp identify ‘’The Asian Tortoise Route”, which has enabled Japan’s many global brands such as Canon, Honda, Nissan, Panasonic, and Toyota to break into the international marketplace and cause considerable distress to Western companies.
Nirmalya Kumar, Professor of Marketing, London Business School, explains: “Nissan and Toyota are quintessential Asian Tortoises: they crawled into the low end of a developed market and crept steadily upward to the top drawer.
“A golden rule in strategic management is to understand your competitors. This is a crucial prerequisite for being able to develop effective counterstrategies. In the past, companies ranging from RCA and American Motors to Philips Electronics, Thomson, and Peugeot were caught napping while Japanese brands entered the global marketplace.”
Where are these companies now the authors ask? They are either bankrupt or relegated to a minor position in markets they once dominated. “There is less room for complacency and surprise than ever before”, says Professor Kumar.
The authors urge Japanese managers to plot both counter-and cooperative strategies, to forge successful alliances, use mergers and acquisitions, and by no means to underestimate Chinese companies attempting to take their brands global as they break out into international markets.
“The ‘Asian tortoise’ moves slowly but inexorably”, says Professor Kumar. Particularly in the areas of car manufacturing and electronics, the Chinese Asian Tortoises are investing in R&D, upgrading their market research and product development capabilities and setting up design centres in Western markets. These are all hallmarks of successful global brands and a warning to Japanese firms that their Chinese competitors are gaining ground quicker than they might think.
Professor Kumar says: “Haier, South China Tire & Rubber, and Pearl River Piano have demonstrated that the tortoise strategy can work for Chinese firms, as it did in Japan, taking them through a succession of stages: ‘build to cost’, ‘build to volume’, ‘build to quality’ and ‘build to brand.’"
The Asian Tortoise strategy, which the authors describe as “the mother of all routes” to cracking international markets with globally successful brands, is also likely to work in Bangladesh, Myanmar, Vietnam and other emerging markets.© Japan Today