When Giorgio Armani opened its retail store in Beijing in 2001, the company installed a large red-lacquer door in line with traditional Chinese design and architecture. But the Chinese did not like and it was replaced.

In contrast, Vivienne Tam, a Hong Kong born designer based in New York, kept the same items she used outside China featuring Asian design elements and kept labeling her clothing as “Made in China” in a new Shanghai retail store despite opposition from the local staff. Vivienne Tam said she looks forward to the day “when Chinese people have enough self-confidence to support their own luxury brands and stop buying stuff just because it comes from somewhere else”. There are around 10-13 million Chinese luxury goods customers – mostly entrepreneurs and young professionals working for multinational firms – so luxury brands are keen to get their brand strategies right.

This example reflects the fact that Asian consumers still love Western brands and in most cases prefer them to local Asian alternatives. But can the West maintain their edge when it comes to iconic, edgy brands sought by million of Asian consumers?

Western brands in Asia need to customize their offerings: Brands are about personality. Brands are about relevance. Brands are about resonating with customers. Therefore, western brands entering Asia should be ready to adopt a two-pronged strategy. On one hand, they should be responsive to the unique needs and preference of customers in the different Asian markets. On the other, they should retain certain standardized features like attractive packaging, the overall identity etc.

Western brands need to be more culturally sensitive: Despite the globalized world, each region in Asia has its own cultures, heritage, beliefs and value systems. Any global brand that aspires to be successful in Asia needs to be sensitive to these subtleties, both internally with respect to its employees and also externally with respect to the markets and customers. This has been the entry ticket for many western brands in China and India. McDonald’s is a classic example of how a global brand has customized its offering and also built a personality that reflects the local values and belief systems.

Western brands need to collaborate with Asian brands to gain a foothold: In this fast paced world, time is money. Moreover, the many Asian countries give rise to a very complex set of cultural sensitivities. With this combination, it would be much easier for global brands to gain a firm foothold in hitherto unchartered territories by collaborating with local players who better understand the local market, customer and competitors. In China, for example, the Shanghai Volkswagen Automotive Company was formed as a result of collaboration between Shanghai Automotive Industry Corp and Volkswagen. In India, the collaboration between Japan’s Kawasaki and India’s Bajaj to form the highly successful Kawasaki Bajaj is another typical example.

Western brands need to become part of the Asian community: As discussed earlier, companies need to ensure that they weave their brands into the social fabric and become part of the community. For western brands this means that they have to respond to local tastes, spend on building local relationships, and react to social needs. More importantly the western brands need to be proactive towards Corporate Social Responsibility (CSR) which will grow significantly in importance throughout Asia in the coming years.

For western brands that seek to establish a strong foothold in Asian markets, CSR will act as a very powerful channel as it will showcase the brand’s concern towards the society that the brand operates in.

Conclusion

The Asian landscape is changing rapidly towards 2020 and a tremendous shift in power is merging from West to East. Western brands still lead in terms of scope, scale and profitability, but Asian players have all it takes to start challenging this paradigm. Brands are crucial for both Asian and western companies planning to grow in Asia.

A mindset change is inevitably needed in the Asian boardroom if more Asian companies wish to succeed building strong brands. Branding is not a luxury. It is a necessity for those Asian companies which aspire competing successfully in the future and capturing better gross margins and enhancing customer loyalty. The journey starts with the right mindsets and beliefs about branding.

The Western brands and their executive have used brands and branding successfully to capture markets and the imagination of millions of consumers worldwide. Now it is time for Asian executives to step up to the challenge and build their own legacies through brand leadership.