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2015 International Brand ConferenceEmerging Markets & Global Brands
John GrantSenior Lecturer
MIT Sloan School of Management
December 10, 2015
Click to edit Master title styleForces Impacting China’s Economy
© 2015 MIT Sloan School of Management 2
Slowing export, domestic economy and fixed investment growth rates
Wage increases• Loss of factor cost advantage• Movement of some facilities & production
offshore Producer price declines Push to increase domestic consumption Renminbi inclusion as reserve currency
Click to edit Master title styleChina’s Growing Wages Increase MiddleClass but Hurt Factor Cost Advantage
Average Wage of Urban Units¥60,000
¥50,000
¥40,000
¥30,000
¥20,000
¥10,000
¥01995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
© 2015 MIT Sloan School of Management Source: China National Bureau of Statistics 3
Click to edit Master title style1970s/80s Japan’s Economy & ExportsExpanded Despite Exchange Rate Inflation
0.0
50.0
300.05,000,000
250.04,000,000
200.0
3,000,000150.0
2,000,000100.0
350.0
1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
¥/$
400.0
-‐
1,000,000
6,000,000
$, M
7,000,000
JapanEconomicPerformance
Exports GDP Yen/$
© 2015 MIT Sloan School of Management Source: World Bank 4
Click to edit Master title styleFactors Supporting Japan’s
Building global brands
© 2015 MIT Sloan School of Management
5
Performance in 1970s/80s Enlightened government policies Rapid productivity improvement
• “Japanese Management”• Automation
Growth of high-technology industries Shift from exports to
domestic consumption Engagement in multinational
enterprise
Click to edit Master title styleAction Learning at MIT Sloan
Founding principle of MIT – “Mens et Manus” Core element of MIT Sloan curriculum Integrates course frameworks with practical experience© 2015 MIT Sloan School of Management 6
Click to edit Master title styleMIT Sloan Programs That Cover Brand
© 2015 MIT Sloan School of Management 7
Issues in Developed & Emerging Markets
Global Organizations Lab
Enterprise Management Lab
Global Entrepreneurship in Emerging Economies Lab
China Lab
India Lab
Click to edit Master title style200 Annual Projects: 50% EmergingMarkets (20+ Countries); 15% in China
Developed Markets
Emerging Markets
© 2015 MIT Sloan School of Management 8
Click to edit Master title styleTop 50 Most Valuable Global Brands
© 2015 MIT Sloan School of Management 9Source: Brandfinance, 2015
Click to edit Master title styleBrand Value Matters
Top 10 vs 41-50
Operating Margins: +8.1 percentage points
Return on Equity: +10.9 percentage points
Brand Value: +4.0 times
Source: Brandfinance, 2015; Google Finance© 2015 MIT Sloan School of Management 10
Click to edit Master title styleObservations of Global Brand
© 2015 MIT Sloan School of Management 11
Managers in Emerging Markets Intense interest in emerging markets (key
to future growth and volume) Early focus on global consumer profiles in
urban areas Brand & talent acquisitions to localize
Movement towards middle class preferences (value vs hedonistic) of 2nd & 3rd tier localities
“Resource-Based View” on value of the brand
• Focus on human resources, brand management, performance management– Data mining of social networks
Click to edit Master title styleObservations of Local Enterprise in
© 2015 MIT Sloan School of Management 12
Emerging Markets Interest in business model transfer, not brands Successful companies pivot towards brand
value, often for defensive reasons• Loss of marketing talent to MNCs• Localization by foreign competition
Leverage Country of Origin brand affinity in foreign markets
Increasing focus on human capital development
New analytics efforts, particularly on Millennials Weakness in organization, processes
and governance to compete in global markets
Click to edit Master title styleSome China Takeaways
© 2015 MIT Sloan School of Management 13
Offensive and defensive need to pursue brands
• Higher value added, profits• Build customer loyalty
China as a Brand• Value realization if brand name association with
quality can be matched with reality (e.g. Haier) Invest in human capital to build brand value Go global to learn how to compete International brands require global organization
• Need to adapt management practices, policies and governance
