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Asean Affairs   12 March 2014

Can Asia be the world's brand factory?
Nikkei Asian Review, a weekly English language publication that reports stories from across Asia to the world, recently released an article on Asia, including Thailand, as a region with the opportunity to become the world’s brand factory.

Numerous big brands manufacture their products in Asia, in particular Thailand. As the region builds technological and financial muscle, it also looks primed to produce more global brands of its own.

The strongest Asian brand, according to U.S. consultancy Interbrand, is Samsung Electronics. The South Korean company placed eighth on Interbrand's ranking of big global names for 2013. Samsung, however, was one of only 10 Asian brands in the top 100.

To make Interbrand's list, a brand must have a presence on three major continents with broad coverage of emerging markets. Thirty percent of revenues must come from outside the brand's home region. Fact is, Asia has not been playing the international trademark development game for all that long.

Still, while Asia-born brands may not be as valuable as the Western big boys, quite a few have become household names around the planet. They may be just the beginning.

Red Bull
Red Bull was born in Asia but took flight in Europe. The ubiquitous energy drink is based on a Thai product called KratingDaeng. The name translates as "Red Gaur," a type of cattle found in Southeast Asia.

KratingDaeng was created by T.C. Pharmaceutical Industries, a major Thai drugmaker. It contains temporarily invigorating ingredients such as caffeine and taurine, an amino acid thought to enhance athletic performance. In Bangkok, a 150ml bottle goes for about 10 baht (30 cents).

There are plenty of energy drinks out there. Japan's convenience stores have shelves full of them. How did this one become a global sensation?

It started when Dietrich Mateschitz, an Austrian entrepreneur, took a whiff of KratingDaeng and caught the scent of money. He approached T.C. Pharmaceutical's founder, ChaleoYoovidhya, about setting up a joint venture in Europe. In 1984, they established Red Bull. Mateschitz took a 49% stake, with Chaleo and his family holding the rest.

The company then set about modifying the beverage to better suit Western palates. One key decision was adding carbonation.

Red Bull hit the market in Europe in 1987. Ten years later, it arrived in the U.S. The product is considerably more expensive than KratingDaeng, selling for about 1.39 euro ($1.90) per 250ml can. Nevertheless, consumers lap it up.

In 2013, 5.88 billion cans of Red Bull were sold worldwide, up 3% on the year. The company posted sales of 5.04 billion euros, a 2.2% increase.  

Those huge numbers were achieved, in large part, though aggressive marketing. The company contracts out production, freeing up funds for promotions. Its logo is plastered all over the place, particularly at sports events that involve extreme speed and daring stunts. Infiniti Red Bull Racing, the company's Formula One team, has won four straight world championships.

For cycling buffs, no trip to Taiwan is complete without a visit to the Giant flagship store in downtown Taipei. According to a sales clerk, American and European tourists often buy three or four bikes at once.

Giant's vast lineup of road and mountain bikes includes lightweight, high-performance models with carbon fiber frames. Bikes priced at around 50,000 New Taiwan dollars ($1,650) are big sellers at the store.

Taiwan-made bicycles were not always so sought-after. Giant Manufacturing was established in 1972 in Taichung, near the center of the island. The founder, King Liu, had experience in a field not normally associated with cycling excellence -- eel farming. When his eel business was wiped out by a typhoon, Liu veered in a new direction.

He started Giant as a contract manufacturer. The company put its own name on its frames in 1981. Still, while Taiwan was turning out more and more bicycles, their quality was considered inferior to that of Western brands.

Liu began to change that with a strategic move in 1986. He established Giant's overseas unit in the Netherlands, convinced that a toehold in Europe would lead to global expansion. He recruited European experts -- people known for their bicycle engineering expertise -- for the unit's research and development division.

The expanded R&D paid off. With the help of a British designer, Giant developed innovative frames that reduced air resistance. It released a series of mountain bikes just as demand for such models was taking off.

Giant, once a small fry in the bicycle industry, built a reputation in Europe as a manufacturer of high-performance bikes. This prepared the company to press on into other markets.

Today, Giant continues to post strong sales and profits. Mainland China has become a major market for the company, despite the bikes' relatively high prices. On average, Giant bikes go for 2,000 yuan ($330) in China, twice the cost of competitors' products.

Asian brands are also making waves on the fashion scene. Couronne, a South Korean handbag and accessories maker founded in 2009, is already cropping up on European catwalks.

The brand was created by designer SeokJeong-hye. In 2010, it was acquired by Kolon Industries, a major South Korean chemicals and materials producer.    

Seok, who remains the main designer, appears to have found a niche. The fashion market, she says, has become polarized, with low-priced products on one end and luxuries on the other. Couronne is aimed in between. Its bags feature bold colors and plenty of leather; prices start at around 400,000 won ($376).

Bloomberg, the U.S. media company, has described Couronne as a made-in-Asia luxury brand capable of challenging the likes of Louis Vuitton.

Couronne bags are manufactured at the brand's own factory in South Korea under strict quality and cost management. The setup allows for quick adjustments to consumer demand. Something must be working: Couronne's sales surged 50% on the year in 2013 to 60 billion won. Its worldwide store network expanded by 40%, to 65 locations.
This year, Couronne plans to raise the ratio of new products in its lineup to 60%.

Names to remember

Giordano, a casual clothing brand from Hong Kong, is also gaining recognition. So is Ipa-Nima, a handbag brand from Vietnam.

Asian luxury hotel operators, meanwhile, are moving up in the world. Hong Kong's Shangri-La Hotels and Resorts and Singapore's Aman Resorts are two well-established brands giving Western chains some serious competition.

China's Huawei Technologies looks like it is trying to become the next Samsung. The smartphone and telecommunications equipment maker is actively cultivating foreign markets.

These are just a few Asian brands the world is likely to see more of.

Compiled from reports by Nikkei staff writers: Kazunari Yamashita in Taipei, Koichi Kato in Seoul, Katsuhiko Hara in Geneva, Tamaki Kyozuka in Bangkok and Jun Suzuki in Tokyo.

About Nikkei Asian Review

Nikkei Asian Review brings insights from Asia, from the inside out. As part of Nikkei, Asia’s largest independent business media group, with a 135 year history and network of over 1,300 local and international reporters on the ground in 24 bureaus across Asia, Nikkei Asian Review provides credible, comprehensive pan-Asian reporting. Designed for leaders around the world who are shaping the future of Asia, and anyone with an interest in knowing about the real Asia, Nikkei Asian Review has been created to change the way Asia is reported in the global marketplace. We report the facts about what is happening in Asia and offer insights over opinions that dig deeper into the heart of a story. Without editorial or political bias, Nikkei Asian Review tells untold stories about Asia, from Asia. You can find Nikkei Asian Review online, on mobile and tablet devices and as a weekly print edition.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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