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Are European and Japanese brands losing race to the US?

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Europe and Japan are in crisis. And now it seems the crisis is rubbing off on their brands as well. In the recent Interbrand best global top 100 brands, there was not a single non-US brand in the top 10. Some of them do make an entry in the top 20 but it is hard to imagine that not a single brand from these geographies was in the top 10.

Why is this happening?

I am sure that 50 years ago Europe would have dominated such a list. And in the 80’s Japan was seen ruling the global business world.

To find answers to these questions, I put this up to the brand managers on LinkedIn.

The question did spark a healthy debate. It seems both Europe and Japan have lost the plot at least for now.

I came across an excellent theory supporting this in ‘The Black Swan’ written by Nicholas Nassim Taleb where he says that the socialist nature of Europe ensures that they support the older companies. Now this ensures that these behemoths survive but also closes the door at any newer company coming up. So in the last few decades no major companies have come out of Europe while the US boasts of mega brands like Google, Facebook and Amazon.

The US has made the mistake of protecting their Auto Industry and the result is that Chrysler had to be bailed out twice by the US government, once in the 80’s and once again now. GM itself is living on bailout money. Many banks have joined the bailout list this time as well and are not in the top ten either.

But Japan has a very different story.

Brendan Curley, a business development executive has an interesting insight to share. Japan he feels has traditionally has penalized creative thinkers. The ‘ringiseido’ system stifles creativity / innovation. He also goes on to say that the importance of family name and background makes it very difficult for a young entrepreneur to establish himself in Japan and well as Europe.

US brands on the other hand do not have these barriers.

There is adequate access to capital and Americans overall seem to be more concerned about the business benefit of a new idea rather than the relationship that comes along with a newer entity. Also five of the top ten brands come from one place only, Silicon Valley.

Also most of the top ten brands are technology brands and this is one area where the US currently dominates.

Some other factors that have helped the US definitely are a larger homogeneous market and leveraging the dominance of Hollywood as a brand builder. At some stage the process of brand management also originated in the US and hence that expertise has helped them build world class brands.

So the US dominates for now, and will continue to do so till the Chinese and Indian brands challenge them.

Some people will think that this is a far fletched thought, but then how many folks truly believed that India could host a F1 Race ten years ago? Currently there are no Indian or Chinese brands in the top 100.

But if Indian brands have to become top class what do they have to do differently? I would like to hear your views on that. All comments, criticism and suggestions welcome. Also can they leverage Bollywood for increasing their brand value?

  1. […] why there is not a single Indian brand in the Interbrand top 100. I have discussed this in an article before how brands from Europe and Japan were losing to the […]

  2. Ankan Kd says

    definitely informative read.

    1. Dr Vikram says

      Thank you, I am glad you liked it.

  3. Altaf Rahman says

    @ Dr. Vikram,
    I used to read books when we were in college. Of late I am fully involved in worldly things and forgetting the enriching habit of reading books. Only when I interact with people like you and others, I feel the experiance is stimulating to the mind.

    I was unaware of any Japanese history until I read a book ‘Gaijin’ in one of our Japanese Main contractors office 12 years back. I learned about Samurai culture, how the people are brought up in 18th century, how they interacted with forigners, how they kept forigners at bay still absorbed their weapons technology etc. How clans fought each other, how they defended their forts etc. It was an interesting read.

    I have no specific interest for historic books. I used to read in general. I am trying hard to imbibe the habit of book reading to my kids.

    1. Dr Vikram says

      That is an amazing idea. reading helps understand the historical perspective of business. The Samurai culture of course declined with the fall of the Togukawa clan, that happened during the Meiji restoration as well.

      1. Altaf Rahman says

        Dr. Vikram,
        It looks rather surprising but there is substance in it.
        I was fortunate that I had friends with varied tastes from hardcore communists to capitalists to book worms to…………..
        I will give you few names.
        If you read Wilbur Smith (I am not sure how many Indians know wbout him now) you will know almost 90% of what ever it is there to know about South Africa. The Boers, The Africaaners, the mining Industry, Fishing Industry, De Beers, racial concepts etc.
        If you read Leon Uris, you will know the core issues which started the issues involving Palasteen / Lebenon / and all issues around when the problem started, how it grew, how western countries used the conflict to their advantages, etc.
        If you read Mario Puzo, you will know about the great european migration to US, how each community tusseled to establish its own identity in the parellel economy in the then unstable US, what are the codes they follow in mafia etc.
        When you read Anna Karenina and other books (I am forgetting names now) you get to know the concepts of communisms. Its rather surprising to know that the birth of communism is not Russia but Germany is very shaking to the common beliefs. (Angels is the father of socialism and not Karl Marx)
        For record, I also read Mein Komf (My war) by Hitler. When you read the book, you know what is pain and how continued pain at heart hardens a man etc. Some say that though it is written by Hitler himself but it was edited / modified to attract followers. But what ever the fact, it gives an insight, another point of view which fully justifies what happened.
        I wish current generation youngsters take some time away from their gadgets to read atlest 50 pages of any good books a week. (In fact now it is easy to get books online and easy to read while on the run)
        Just my two paisa :)

        1. Dr Vikram says

          All great authors and books, great choice.

  4. Altaf Rahman says

    Hi Dr. Vikram,
    I am not a history buff. I read bits and pieces and try to create a profile of every thing and every one. What you said in your comment appealed to me. “Japs glorify following orders”.
    Yeah now I can relate the article to the decline of Jap creativity.
    What Japs do (in my view) is they are strict disciplinaries. They follow elders, family roots, history with great dedication. Discipline brings out efficiency. Thats what Japs are famous for. They bring out efficiency in every thing they make.
    Later may be they ran out of ideas and declined.
    Thanks for the clarification.

    1. Dr Vikram says

      Hi Altaf

      I am glad you find this article interesting. You might want to check out the movie ‘The Last Samurai’ as this was of the Meiji restoration period. Also another interesting read about Japanese innovation in the 80’s is Akio Morita’s ‘Made in Japan’

  5. Dr Vikram says

    Hi Altaf

    Excellent theory on the English and French. I think that is the main issue with Europe.
    On Japan I am not sure. You may be right and they don’t actually stifle creativity. But still let us look at some examples. Sony invented the Walkman, but just sat on it after that. It look Apple many years later to come up with the iPod. Naturally Sony should have done that but they did not think creatively at all. The Ringiseido system curtails all creativity and it basically glorifies following orders from superiors.

    As you are a history buff, please check out the Meiji restoration period in Japan, this was around the 1865, and the US helped Japan to develop industries at that time, something Japan would use against the US on 6th December 1942.

    I do appreciate your comments and I might be wrong as well as I have never been to Japan, myself.

  6. Altaf Rahman says

    I relate the European nature not to disturb the cart from historical perspective. Once english came out of living in caves, they never wanted to go back to caves. They lived of the wealth of others and maintained their newly aquired standard.
    Once French came out of the revolution days, they knew the pain of hardships and they too lived of the wealth of others. All Europeans followed same way.
    In short, once they were struggling. They refined, they conquered, they looted any thing and every thing. Once they reached a certain standard, they gaurd their present standards very seriously. The so called ‘orthodox nature’ of Europe comes with the knowledge that once they were poor and they hate being poor. Now that they are at a certain standard of living, they resist newness.

    US has no history. They are in the process of establishing one. They experiment with every thing. It is deeply embedded in their genes. Thats the reason for the success. They dont limit people in experimenting in any field. Be it science, social order, marriages, business, moral codes or any thing you can imagine. From this kind of culture comes something new which appeals to the whole world. Success follows.

    But I am surprised to read that Japan penalized creativity? Even before WW II, Japan was ferociously arrogent. They sincerely believed that Japanese are more superior to all other humans. In their quest to prove that point they tried not to surrender in WW II. Even after WW II, they tried to quickly rebuild their nation by encouraging technology, research etc. Sony, Toyota are few examples. This is what I believed. Now how come some stagnation in Jap economy labled as “Japan penalizes creativity’?
    I agree that there are no new brnads coming out of Japan recently after Docomo. There may be some other reasons other than “Japan penalizes creativity”. I dont buy this theory.

    Just my two paisa :)

    1. Ankit Agarwal says

      From what i know about the business dynamics in Japan, they follow ‘Keiretsu Model’ which essentially means keeping it in the family. So you have a group of companies dominating multiple market segments with separate entities which have interlocking relationships. I presume that could discourage new companies to emerge. One thing i am sure is the ‘Keiretsu’ approach makes it near impossible to penetrate/compete in the Japanese market especially when it comes to IT services. Additionally, this could be true of other sectors and when there is no or little threat of competition, complacency or ‘creative paralysis’ may set in.

      1. Dr Vikram says

        Hi Ankit

        I agree about ‘Keiretsu’ as well. Well this is similar to the problem in the Europe. But I have a feeling that this problem runs so deep that it would be difficult for the Japanese businesses themselves to get out of that mind set. Anyways Japan is shrinking as a market as well and Japanese firms face many challenges from firms in Korea and China in electronics and Korea and Taiwan in semi conductors. Also of late India seems to be challenging Japan in Auto as well. Hopefully in this decade there would be at least one Indian brand in the top 100.

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