Country of origin and purchasing decisions

I've written in the past on this blog about the dangers of not being up front about your brand's country of origin (See this post about Benq, a Taiwan-based brand). There rarely is such a thing as a supernational brand -- a brand that rises beyond any national identity. Countries connote different images, feelings, passions, stereotypes in people's minds. These are positive or negative for particular categories of product offerings. Individuals around the world continue to pay a premium for French perfumes, American business education, British-built jet engines, Japanese cars, Swiss drugs, British private education, German capital goods, Cuban cigars. Fancy a root canal in North Korea? A bottle of sparkling mineral water from Ukraine? I think not. What we are talking about here is the hard economic impact of a country's soft power.


After talking with hundreds of people here in Taiwan, I get the distinct impression that people in Taiwan prefer Japanese-made electronic goods over goods made by Taiwanese companies. Given the choice between an Olympus digital camera put together by a Taiwanese company in Vietnam or China, or an Olympus straight out of the Japanese factory, I'd bet that most people in Taiwan would go for the latter.

It appears that Japanese firms are betting on this, too. I saw an advertisement on television here at the weekend for a Canon Ixus digital camera. Right at the end of the ad, adjacent to the Canon logo, was the phrase "Made in Japan." The local marketing person here in Taiwan obviously thinks that this is a worthwhile, unique selling point.

So what about Chinese brands? What do they represent for Chinese consumers and consumers in other countries? Will Chinese nationalism extend as far as consumers' purchasing decisions or will it take a back seat to individualistic behaviour? I know where I'll put my money.

As China moves into the limelight, it will also come under increased scrutiny from individuals around the world. The images that China and its brands evoke will play an increasingly important role in its economic development.

** The following article from MIT Sloan Management Review is very interesting in that it advises foreign firms to "Think Local, Act Global" in China. Multinational firms need to apply their brand values consistently, even in China, in order not to undermine their soft power.

***Angler fish photo by: Sr. Cordeiro

Diffusion of innovations

Two of the biggest myths relate to the notion that change is fast and that the rules of business have changed because of the Internet (Has YouTube made any money yet as a stand-alone business?). Granted, things may change faster than before, but there's a big difference between faster and fast. If you want proof of just how slow things can be, just try the following experiment: try introducing a radically new product to a market with itchy bosses and investors breathing down your neck. You'll want to throttle that person who says, "Change is fast." It could even be argued that the increased interconnectedness in today's world actually has the potential to slow things down.

There are many factors that influence how quickly new product offerings get tried, used, paid for and, importantly, used again in markets. Culture (surprise! surprise!) plays an important role here and different cultures absorb different products at different rates. Here in Taiwan, Skype, an Internet-based telephone system, became very popular in a very short time. What contributed to Skype's rapid absorption into the Taiwan market? There are many factors, of course: relatively expensive international telephone rates; a nation of tech-savvy individuals who are comfortable with the Internet; a nation with many family members/business partners in foreign countries (the Taiwan diaspora); fast Internet connections for rapid downloads and installation.

Compare this rapid penetration of Skype in Taiwan with Skype’s slow penetration into the U.K. market. People in the U.K. are often suspicious of products that are perceived as too cheap or free. Sounds nuts, but it’s true. Us poor Brits have been so used to paying over the odds for just about everything that we will actually resist many newer, cheaper innovations. Can you imagine a conversation about Skype? (this one is based on an actual one I had with my sister):

Sister: “What’s Skype all about then? Is it safe?”
Me: “It allows you to make free calls over the Internet. Of course it’s safe: I’ve been using it a lot. It’s really popular here in Taiwan .”
Sister: “Yeah, but the quality’s not good, is it?”
Me: “Sometimes it isn’t that great. But it’s free for goodness sake. What do you expect?”

And the conversation fizzles out with my sister continuing to use British Telecom, despite the fact that she could save herself significant amounts of money by using Skype. The same is true with mortgages with cheap rates and fees. People often ask: “Is it safe?” How daft is that? They are giving you the money, so grab it while you can!

For firms, it may be “cool” to be first with a very new (radical) product offering, but you have to be prepared to overcome the initial wall of resistance from the market (my sister). This can be costly, and if the funds/resources are pulled too early, the new product offering will fail. Too early is not much better than too late, in other words. Check out this great article from the MIT's Sloan Management Review (not free). The authors discuss the diffusion of microwave ovens, dishwashers and screwcap wine closers in three country-markets. They also identify another type of innovation: a Resistant Innovation, an innovation that requires users to alter established habits.