Panelists

How to Build Trust and Brand-Name Image in Asia

While American consumers are price-conscious, Asian consumers are brand-conscious and people-conscious, said panelists at Asia Deep Dive 2007, the seventh annual Chicago Asian-Pacific Business Conference at the Charles M. Harper Center November 17.

“When you go into Asia, you really do have to sell in a different way,” said Loring Knoblauch, former president of Honeywell Asia Pacific. “People value brand very highly, people value quality very highly, and people want to do business with people they like and trust.”

Knoblauch was among panelists who discussed marketing and competitive strategy.

In the United States, “you can have the greatest mouse trap in the world, and you’re going to have tremendous pressure to price it” to compete in the marketplace, Knoblauch said. In contrast - in Japan in particular - it’s all about relationship building, he said. “Before you can really begin to sell your product in Asia, you’ve got to sell your organization and your company.”

Trust is built through socializing at the theater, drinking saki, playing mahjong, or going to Sumo wrestling matches, Knoblauch said.

“I found that the really important selling goes on at night,” Knoblauch said. “What goes on during the day is relatively unimportant.”
 
Kabira said he agreed about the level of trust demanded from vendors, particularly about quality and brand.

Because of the strong brand orientation, Kawamura said it is hard to introduce new goods in Japan, where consumers go for more institutional and traditional goods.

Methods of distribution are different as well, panelists said. For example, small high-quality electrical products like plugs and sockets that Hubbell sold through distributors in the United States were sold in Asia from a storefront, said Knoblauch, who was president, international, for Hubbell Incorporated. “That didn’t work almost anywhere else in the world, but it was enormously successful because of the cultural differences in Asia.”

Kawamura called marketing “certainly a local science, maybe a local art,” said. Because the United States is more heterogeneous, marketing is more segmented, he said. But in Japan, for example, mainly one language is spoken and there’s one main ethnic background, so marketing should be “more holistic, more local,” he said. “Just looking at the American marketing (of a particular product) is not enough.”

Knoblauch agreed. “If you go to China, you’re going to have to market differently in Beijing than you do in Shanghai than you do in Chongqing,” he said. “You have to think about what each local place requires.”

In China the key is to partner through a joint venture with government-favored Chinese companies, Knoblauch said.

“China is a wonderful place to do business, but it’s only wonderful if you’re swimming downstream and you’re swimming in the same direction that the Chinese government wants you to swim,” he said.

Joint ventures should be split 50/50, he suggested.

The aim of reaching Asian customers isn’t just an overseas goal.

Chacko said a huge percentage of the Chicagoland area is foreign-born, particularly Asian-born. His media company is trying to figure out how to reach those consumers.

“One of the problems we’ve faced is that it is a very fragmented distribution,” he said. “And we need a product that is relevant and valuable to that segment of the population.”

When marketing in Asia, companies should believe in their brand and stay true to their brand image, said Kabira, who had worked for Kellogg’s in Japan. Localizing should enter at the point of executing brand strategy, he said.

“Kellogg’s should not be in the business of Japan-izing their food,” he said. “There’s enough competition in that arena. Why would we want to be in that arena [and be] one of the many?” he asked.

Similarly, American companies should not try to price their products lower than less expensive Chinese counterparts. “There’s a lot of money to be made in China if you don’t make the mistake of getting dragged down to compete on price,” Knoblauch said. Instead, firms should establish what’s good about their own product and brand.

When marketing in Asia, “you have to check your preconceived notions at the door,” Knoblauch said. It’s important to listen and to “not think you’re an expert,” he said.

Especially in the retail business, “you need to have a very healthy respect for the people who work at the store,” Kibura said. The store managers’ morale and passion for the business “impacts everything at that store,” so higher-ups must try to make the managers’ jobs easier, more meaningful, and more effective, he said. “You’ve got to have an absolute humility about what they do for you everyday.”

Second-year student Annie Lau said she thought the “potpourri of topics was very interesting,” such as “brand strategy on a global level and the tactics of executing that strategy at a local level.”

She also was interested to hear about “the softer side of execution and management,” particularly about recognizing and leaving behind preconceived notions. “Asian markets in general are humble in nature and they value that,” Lau said. “The American approach often is confidence,” a trait which Asians value but which sometimes can be perceived as a lack of humility, she said.

– Mary Sue Penn