Thursday, March 27, 2008

Who needs billionaires?

In the global village, national pride is no longer decided by mere military superiority, but by the combined might of soft power, including cultural influence and the ability of a nation to spawn “global homegrown brands...”

“Google is history as far as I’m concerned.” These were the words of a former English schoolteacher Jack Ma. In 1999, Jack Ma launched from an apartment in Hangzhou, China. Essentially serves as an e-commerce aggregator, bringing together buyers and sellers. Forbes named it the “Best of the Web” for five years running. Sitting in the manufacturing-hub-of-the-world i.e. China, the company, with its strong understanding of Chinese culture and business practices, is ready to take on biggies like eBay, et al and is sure to emerge as a leader in China – the world’s largest online market.

Answer the following questions – who is the world’s largest mobile phone operator? Who is the world’s biggest maker of air conditioners? Who is the top selling brand of compact refrigerators in USA? Who is the No.2 refrigerator manufacturer in the world?

China Mobile with 200 million customers is the largest mobile phone operator. Gree Electric Appliances is the largest maker of air conditioners. Haier is the top selling compact refrigerator brand in USA. Haier again is the No.2 refrigerator manufacturer in the world – just behind Whirlpool. Lenovo is the most popular PC brand in China and is fast becoming a strong global player. All these Chinese brands are shaking up the world of marketing and branding.

Now consider these two individuals Zong & Tracy. Zong Qinghou spent his early life labouring in the rice paddies. Today, the 59-year-old is the founder of Wahaha – a beverage group that had profits of $196 million in 2003. In rural China, Wahaha’s Future Cola is the market leader, defeating international favourites like Coke and Pepsi.

Tracy Zang, a 31-year-old advertising agency owner in Beijing, is planning to buy an Aigo camera, after replacing her Sony Cyber-shot. A walk inside her beautiful suburban house shows that her choice of brands is mostly Chinese. Her TV is from TCL, her refrigerators (two of them) from Haier, as also her washing machines, heaters, et al. When everything is made in China, she prefers her own country’s brands to foreign brands.

Within China, one of the fastest developing markets, both Chinese brands and Chinese consumers are growing at a fast pace – leaving behind their foreign counterparts – and increasing their loyalty towards domestic brands. According to Fortune magazine, in a survey done in 2005 by China Quality Promotion, domestic brands scored 11% points higher than their foreign rivals.

There was a time when right from Jennifer Aniston’s hairstyle in the television series ‘Friends’ to a western style of dressing with brands like Chanel & Armani, the Chinese wanted everything western, for it was considered better quality and more trendy. Today, a whole lot of them, especially the younger lot, are going back to their traditional Chinese hairstyles, their own Chinese designers and Chinese brands. The Beijing Auto Show used to be a place where not-so-technically-efficient Chinese cars used to be showcased. The scene has changed now. Exquisite high-end sedans, smart SUVs, convertibles, all made by Chinese manufacturers are drawing larger crowds – much more than the big foreign car brands. Five years ago, vehicles from the United States and Europe dominated Chinese roads. Not any more. Five years ago, Chinese automakers thought that copying western designs was the route to success. No more. In a market dominated by Buicks, Volkswagens, and Toyotas, it was the Chinese brand ‘Chery’, which sold the maximum numbers of cars in China last year.

It happened a long time ago

China is fast becoming an incubator of powerful global brands – all home bred and home grown. They are changing the rules; rather, they are creating their own rules and are all set to dominate the world market. Come to think of it, till a few years back, the entrepreneurs who started these brands had no clue about things like ‘positioning’, ‘branding’, ‘segmentation’ and all other marketing jargons you can think of. They were not even MBAs – some were school teachers, some farmers – but they all were entrepreneurs. Daring, heroic entrepreneurs, who fearlessly dared to challenge the big guys and managed to topple them down too.

They may still not be clear with a lot of fundas, but they are sure they’ll learn – and learn fast. They had no clue about how powerful advertising could be for building brands, but now they are advertising big time. With $24 billion as advertising spend in the year 2003, China is fast becoming the world’s biggest ad market. If Adidas had a punch line ‘Impossible is nothing’, then Li Ning, China’s biggest manufacturer of sports goods and apparel, came out with one that said, ‘Anything is possible’. A lame copy, you may say, but millions of Chinese know it and love it. They (the Chinese) are learning fast. So Lenovo has become the first official ‘top’ sponsor of Olympics 2008, standing shoulder-to-shoulder with the likes of Coca Cola and Panasonic.

There was a nation, years ago, which had been turned to ashes and defeated in World War II. Its pride was shattered. Then came a brand that almost single-handedly restored the nation back to glory. The country was Japan – the brand Sony. Akio Morita brought back the pride of ‘Made in Japan’. When Sony opened its first store on Fifth Avenue in 1962, it was the first time the Japanese flag had flown in the city since the war – what a day it would have been! Sony made the world look up to Japan.

Brands are important in today’s world. They shape a nation’s image. Thanks to globalisation, today nations compete with each other in perception, as well as reality. And brands help build mass perception about the countries they come from. From being perceived as shoddy and cheap, Akio Morita with his amazing Sony products changed the image of Japanese products to best- quality-lasts-for-a-lifetime.

In much the same way, Hyundai, Daewoo, Samsung and LG have changed the way people look at Korea. Similarly, Nokia has changed the image of Brand Finland. Today, Chinese homegrown brands are changing the way people are looking at China. They are restoring the pride of the ‘Made in China’ label.

The power of homegrown brands

Today, the success story of a brand can be summed up in a single line “Made at home… sold in America.” Simply put, if we nurture our own homegrown brands and make them strong enough to compete with the best internationally, then we win as a nation on the global scorecard. Strong homegrown brands have the power to stand their ground against global giants. Jollibee is the pride of Philippines. It has turned the world’s number one QSR, McDonald’s, into a small player, by commanding a 69% market share. Japanese brand, ‘Hello Kitty’, has today become iconic. ‘Geely’, the Chinese car brand, is all set to capture back the Chinese market (one of the fastest growing car markets in the world) from foreign car makers. ‘Uniqlo’ is today Japan’s number one clothing brand and has left behind big global names like GAP.

As Management Guru & economist Prof. Arindam Chaudhari says, “The top list of billionaires features the names of five Indians. However, the list of top ten brands of the world does not feature a single Indian brand.” Today, brands and their creators have the power to change the world. Look how Google, iPhone, Xerox, Kleenex, et al have influenced and changed the way we live and work. A nation’s pride is its brands. Today, nations fight not in battlefields, but in the market place. And undoubtedly, those are strong brands and not rich individuals that help in winning this war. Those are strong brands that are a nation’s identity and give it global entrepreneurs, with dedication and a fighting spirit. So, who needs billionaires?

Thursday, March 13, 2008

Play by the rules

Corporate Espionage is an expensive & dangerous proposition. But that has not deterred the leaders of Global Inc. to get their hands dirty. They say, all is fair in war, business & politics. But is it?

A strange story leaked into the British press in the 90s about Richard Branson. It said that the garbage man refused to collect trash at a Branson owned nightclub because it included HIV infected needles. The story was baseless. However, it was not some gossip column that came out with this story. It was a well planned strategic move involving senior corporate executives of Virgin’s competitor, British Airways. Lord King, the British Airways Chairman, conducted a smear campaign against Branson – one of Britain’s wealthiest and best known entrepreneurs. BA’s PR Consultant, Brian Basham had been intentionally undermining him and his company’s reputation in the press – why? Well although Virgin was small, yet it posed a potential threat to the huge national carrier, BA, especially on key routes between London and United States and Asia. As a result, BA indulged in all kinds of espionage to destroy Virgin. It even went to the extent of spreading rumours about the unsafe conditions of the flights and how Branson does not allow his wife to fly Virgin due to safety concerns. In the end, in one of the most humiliating, most bitter and protracted libel actions in the aviation history, BA finally apologised to Virgin and even agreed to pay damages to the tune of £3 million.

Last year Oracle accused SAP of a grand scale corporate theft, of downloading and gaining illegal access to its computerised data, thus helping it to undercut its prices.

I Spy with my little eye

BA hacked into Virgin’s reservation system, called up Virgin customers, lied about cancellations and switched them to BA flights. It got caught. Procter & Gamble too indulged in corporate espionage against its competitor, Unilever. It learned all the myriad details of Unilever’s hair care business. If sources are to be believed, then P&G hired corporate spies so that its brands Pantene, Head and Shoulders and Pert could beat Unilever’s Salon Selective, Finesse and Thermasilk! When they feared the lid would blow off, P&G in the most unusual twist of cases, informed Unilever that it had engaged in this activity.

Last year, Mumbai police arrested a Tata-owned VSNL employee when he was suspected of leaking crucial information to a rival telecom company. The man, secretary to the MD, had given away the minutes of the meeting to a rival company. Back in 1997, the engineer, leading the team, which was designing a new razor for Gillette, was sent to jail for leaking the confidential designs to competitors like Warner-Lambert. What’s more, even Oracle Chief, Larry Ellison, had himself ordered professional snoopers to pilfer the garbage of his arch-rival Microsoft’s Bill Gates.

GM found some blueprints of its super-efficient yet-to-be-operational assembly plant with Volkswagen. It was a plant with which GM believed it would topple VW’s dominance in the small car market, especially in emerging markets of Western Europe, China & elsewhere. Jose Arriortua, the head of purchasing for GM, suddenly switched to Volkswagen. It was rumored, he took 20 boxes of documents on research, manufacturing and sales. Though VW admitted no wrong doing, but in one of the largest international corporate espionage cases, VW agreed to settle the civil suit, by paying GM $100 million in cash and $1 billion on GM parts, over a period of seven years. Jose, who was responsible for the turnaround of GM, and had a stunning success record at GM, was also sadly responsible for creating the espionage case of the century. The case had such drastic consequences that it even threatened to spoil diplomatic relations between US and Germany.

These thrilling stories are as gripping and riveting as Bond and spy films. But this is no drama, it’s the real corporate world. Today, just having a good product, a sound marketing strategy and great R&D is probably not enough to succeed. The market place is getting tougher, the rules more complicated. Today, knowing the competitor’s next move is more important and companies many-a-time are forced to indulge in unethical means, just to stay ahead.

Firewalls or Human walls

The business of spying is now a lucrative profession and guess who are the chief players here – the former “three-letter-agency-people.” People who were earlier trained by the CIA, the FBI, et al are now working for companies. Now you know where all the cold war spies have gone! P&G, which spied on Unilever used the services of an agency named The Phoenix Consulting Group of Huntsville, Alabama, which is founded & staffed by former government intelligence officers.

China is one country, which is very high on corporate espionage. Earlier this year, Dongfan Chung, a 72-year-old man was arrested for passing information about the US Space Shuttle to the Chinese. Both the countries have announced intentions of returning humans to the moon by 2020. China’s seeing this “space race” as a confirmation of its superpower status. It’s also using the extra-info on US military to boost its anti-satellite weaponry. Today one-third of all corporate espionage cases in USA involve China. M15 of the UK too has noticed an upsurge in electronic espionage attempts made or launched against a lot of UK companies by Chinese cyber spies.

Hacking into competitors secrets has never been more easy. Technological innovations have made it even easier. Professional investigators and flawless technology are proving to be a lethal weapon. Not surprisingly, many companies are investing in firewalls to protect their precious data.

In December 2005, Dupont informed the FBI of its suspicions that its research chemist had stolen secrets worth more than $400 million and passed it to a UK-based competitor.

An employee of Kodak who was with the company for 30 years established his own consulting firm upon retiring – and mostly consulted Kodak’s competitors.

Avery Dennison, one of the largest US manufacturers of adhesive products discovered that one of its key employees was for eight years supplying highly sensitive information to a company of Taiwan. What I am trying to say is, in all these cases, fail-proof firewalls would not have helped. The best defense against corporate espionage begins with an attitudinal change among employees. You need to give them proper training and have security policies in place.

Indian organisations feel that corporate fraud happens to others, not realising that it could be actually happening right under their nose. It’s industries like financial services, information communication and entertainment, which have a high risk of espionage. Yet, less than 50% people feel that their recruitment procedure have enough checks and balances to prevent fraudsters from joining.

It is high time that we started investing in human walls – those with whom our secrets would be safe, instead of just firewalls.

Competitive Intelligence: A different game of strategy

Corporate espionage costs the world’s 1000 largest companies in excess of $45 billion, according to Pricewaterhouse Coopers. There is a better, smarter way to predict your competitor’s next move called – Competitive Intelligence. It is a game of planning and strategy. Its all about understanding the strengths and weakness of competitors. It helps marketers discover new markets. It helped Japanese automakers analyse the US car market and determine the future trend in car buying habits. They realised high gasoline prices & smaller families meant America was ready for high-quality, small, fuel efficient cars. It is this that helped Wal-Mart realise that distribution was a problem at Sears. It built a state-of the-art distribution system and beat Sears.

If you don’t know what your competitor is up to, you can’t make intelligent decisions. You need to be alert and look around. You will find all vital information. Company Sleuth is a website that does just this. It discovered that Coca Cola had trade marked the name Javalait – that was possible indication of the soft drink company’s intentions to enter the coffee beverage segment… an information useful to coffee houses like Starbucks, among others.

The best part is that 95% of everything you need to know is actually in public domain. You just need to look around, like keeping a tab on your competitor’s recruitment ads, their stores, their balance sheets or just listen to people, to gather who & what is most talked about and then use your sharp analytical skills to predict your competitor’s next step. So there’s no need for cloak and dagger tactics. Remember no one likes cheaters. You want to win both in the short-term and long-term. Competitive intelligence and not corporate espionage gives you that power. To win you need to plan. To plan, information is imperative. Get it through legal and ethical means. It’s a fact that to win consistently, you need to play by the rules.

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