How are brands in the Asia Pacific region faring in light of China’s economic slowdown? How are they being impacted by the Euro crisis, Brexit, and the upcoming U.S. election?
In a world full of political upheaval, APAC companies are dealing with a number of make-or-break issues as they try to remain true to their brand values while meeting consumer expectations in a constantly changing market.
In a recent APAC-based webinar hosted by Campaign Asia-Pacific, Andrew Thomas, president of Southeast Asia & India at Ogilvy, and Andrew Pickup, senior director of communications at Microsoft Asia, discussed the impact of geopolitical instability on both disruptive and legacy brands and how these challenges are uniquely managed in the APAC region. Professor Roy Green, dean of the UTS Business School, in Sydney, spoke to CMO.com following the broadcast and weighed in on the conversation. His comments appear in the text where relevant.
What’s Really Happening In Asia?
According to Pickup, Asia--as a diverse region without any political, monetary, or economic union--should be broken into emerging and developed markets. “In emerging markets, the growth is extraordinary. You have high volumes of your people experiencing technology for the very first time,” he said. “In India and Vietnam, GDP is sitting at around 6 to 8 percent, which is extraordinary for a brand like ours.”
However, developed markets, such as Australia, Singapore, and Hong Kong, hover at around 3 percent GDP. “We accept that these markets have already adopted technology ... so our challenge is to move them to more advanced technology, like the cloud, big data, and the Internet of Thing,” Pickup said. As a result, Microsoft remains bullish about Asia despite challenges including the geopolitical relationship between China and the U.S.
“India and China are forecast to account for more than half of global GDP growth in the next 12 months,” Pickup said.
The key will be to identify and capitalise on emerging areas of competitive advantage, Green said. “These will primarily be around knowledge-based industries and services and will require increased investments in research and education to prepare populations for the challenges ahead,” he said. “This must include more integrative and flexible approaches to training workforces and managers.”
Disrupt Or Be Disrupted?
Having lived and worked in Asia for more than 25 years, Ogilvy’s Thomas said he has observed businesses’ tendency to lament the speed of change and levels of uncertainty that accompany it. “It tends to be more of the legacy brands that look to the heavens and sigh at the constant change. ... Disruptor companies, such as Facebook and Uber, on the other hand, respond to the uncertainty by saying, ‘Oh, boy, this is exciting.’”
Disruptor brands tend to have flat organisational structures and, according to Thomas, “are close to the market, close to their clients ... and can very quickly sense what is working in the market and what isn’t.”
This is quite the opposite for legacy brands in the region, Green said. “The big danger for global businesses is a scaling back of world trade, which will impact on everyone's living standards as well as prospects for these businesses themselves.”
Thomas commented that complacency has driven legacy brands not to seek out opportunities that have arisen from marketplace flux. “It’s about getting beyond what China has been driving for the past decade and realising that business is all around us rather than in one country. It’s important for brands to rethink this, but I’m still bullish about Asia’s outlook in the coming years,” he said.
Pickup pointed to China, where machines are increasingly replacing people as a major disruptor. For example, the Chinese government is pushing for automation in the agricultural sector through the use of drones--to the point where it has become a 30 billion yuan (US$4.5 billion) per annum industry, according to a recent article in the South China Morning Post.
To ensure agility, Green recommended an internal overhaul for legacy brands concerned by the impact of geopolitical and technological shifts. “Legacy brands will have to reposition to withstand disruption in global markets and value chains,” he said. “The disruptors will take advantage of new technologies and business models to replace their products. These brands will have to disrupt from within their businesses to avert disruption from outside.”