Marketing in rising economies
Globalisation, the Internet and the rise of new markets are affecting overseas business development. Marketing strategies need to adapt to these cultural changes, say the authors of 'International Communications Strategy'.
Has the economic downturn that followed the financial crisis caused a rethink of corporate success? Has the bias shifted from quarterly results to the way a company conducts its business, how it works, makes decisions, treats others, and communicates?
The authors of this groundbreaking new book think so. I think they're jumping the gun. Quarterly results are still the most meaningful measure for investors. How companies behave is, obviously, becoming more important.
That said, we'd better get used to the world's major political and economic power shifts. The investment bank Goldman Sachs expects the ten leading economies in 2050 to be very different from the ones we know today. The BRIC nations - Brazil, Russia, India and China - are likely to play a more prominent role in the global economy. Even by 2025 they could account for more than half the size of the G6. China especially is expected to play a leadership role in the global community and to influence the way it communicates.
'International Communic-ations Strategy' - written by two writers with impressive European and Asian experience - takes a close look at global power shifts and at new ways of reaching new target markets. They've drawn widely in their travels and contacts in media and international communications.
In India, Nano, the world's cheapest car, was launched last year. It costs as little as US$2,500 and is expected to make its mark in Latin America, south east Asia and Africa. The success of the car's manufacturers, Tata Motors, could extend the country's focus from technology to manufacturing.
The point is that corporate communicators will need to keep India on their radars not only because of its huge consuming classes, but its thriving media and entertainment industry. Indian companies have been buying businesses in Europe, North America and Asia in an effort to build global empires. Mittal Steel bought Arcelor of Luxembourg in 2006 to build the world's largest steel company. Bharat Forge, manufacturers of auto components, bought companies in Germany, Sweden, the UK, North America and China to emerge as the world's second largest manufacturer in 2007.
In many cases, multi-nationals from emerging economies are owned or controlled by families, which affects the way the company makes decisions and the brand image it wants to project. As the authors note, "the brand in these cases is likely to be an extension of the owner's personal brand or that of their family. Or it could be rooted in the family's history. The role of the communicator then becomes that of a storyteller to take the public on an emotional journey and arrive at their destination with a new awareness of the heritage and the values behind the brand".
Corporate social responsibility
Companies developing and marketing in growth markets overseas will also need to be aware of public awareness of climate change. Commitment to the environment will be scrutinised by the communities the business aims to serve; a case of penetrating local culture and communicating with non-governmental organisations, regulators and other interested groups. Cultural sensibility is the key. In China, CSR is an acceptable way of engaging with local communities and might include foreign companies making donations to local schools, sports teams, orchestras, without running the risk of being accused of bribery.
CSR experts apparently agree that that employee volunteering applied in a structural way can strengthen a company's reputation and gain a better understanding of community issues.
The art of reaching out to employees in a genuine and engaging way, the authors believe, will have to become second nature to corporations. During his time at Tata Steel, JJ Irani, a former CEO, had the daunting task of downsizing from 78,000 employees to 45,000 in seven years. Tata wanted to make the transition from a production-driven to a more modern customer-driven enterprise, a culture of innovation and change. The message that Irani decided to communicate to his workforce was: "Compare figures with what is happening in the rest of the world and in India and show that we are behind in terms of productivity and that is why we have to improve. The main thing is to show the population, which is going to be affected, that whatever we are doing is for their own good and it is not for the good of management."
During the restructuring, we are told, Irani did his own message development and wrote his own script, believing that a good leader has to communicate. This is really the key message the authors of this book want to convey.
In an era of digital interconnectedness and cross-border alliances, they argue the ability to develop relationships in new environments has proved priceless. This skill, coupled with a talent for managing ambiguity, is likely to turn China into a major source of communication practices. "The flamboyant ceremonies that accompanied the 2008 Olympic games in Beijing are a demonstration of how much the country cares about its image. It is estimated that China spent over $40bn on the Games. This hunger for stature represents a unique opportunity for international communicators. China needs our help to realise its global aspirations and build competitive brands."
India is obviously another major market to watch. With a population of 1.1 billion, expected to grow by 50 per cent in less than three decades, its consumer market already ranks 12th in the world. India has also been making its mark on the world's creative industry, although it is hard to believe Bollywood already produces more than 1,000 films every year. The western world has woken up to its potential and has been buying major interests in media and entertainment business; for example NBC Universal bought 26 per cent of New Delhi Television last year and George Soros bought a 3 per cent stake in AdLabs, an entertainment group.
The clean energy drive is expected to develop into one of the leading economic sectors of the future, according to the authors. If they are right, nothing less than a total make--over of the $6tr global energy business will be needed to stop global warming. Preoccupation with global warming has already moved to the next stage "with a significant number of venture capital firms investing in green technology".
Here is a challenge for communicators to explain the advantages of clean technologies to the wider public. A company trying to buy a business is another part of the part of the world can expect its commitment to the environment to be scrutinised not only by the business but by the communities the business serves; and this requires cross-cultural communications. Communicators working in a new multicultural context will have to harness the knowledge of the different nationalities working for a company.
Taking a close interest in consumer concerns works both ways. In China, problems with toys and pharmaceutical products have caused concern over safety issues, in the United States and Europe. Chinese companies with international aspirations are learning that such concerns cannot be contained once products and services leave their shores. China also has an increasingly investigative media, a proliferation of social media and consumerism, even the Chinese Federation for Corporate Social Responsibility, launched by Chinese enterprises and foreign multinationals, including IBM and Nokia, to promote the construction of CSR in China via government and non-government agencies and self-discipline by corporate entities.
The authors admit focusing on Asia and in particular on China because they believe China will play a crucial role in triggering demand on a worldwide scale. "In the past 24 years, more than 400 million Chinese, one third of the country's entire population, managed to escape poverty; and the Chinese middle class is expected to swell to one billion by 2020. But the rise of China goes beyond the economic and business sphere. Where Westerners see individuals, Asians and in particular Chinese, are more likely to see contexts and relationships."
Globalisation, the interactive Web and the rise of emerging market multinationals are having a profound effect not only on Western corporates' overseas development, but especially on their marketing, advertising and communications specialists who need to reach out to customers, stakeholders and staff in cultures they know little about. This book is an excellent and essential guide.
'International Communications Strategy' by Silvia Cambie and Yang-Mag Ooi is published by Kogan Page, £30