'Brand US' key to pivot in
Asia By Curtis S Chin and Jose
B Collazo
BANGKOK - The most significant
management shake-up in Apple Inc's recent history,
including this week's forced departure of the
technology company's top mobile software and
retail executives, will do little to undercut the
"soft power" of iconic American companies in
Southeast Asia.
With the iPhone5
reportedly already hitting the grey technology
market here in Thailand and with the new iPad Mini
likely to follow, consumers throughout the
Asia-Pacific region are getting their hands on the
latest products from Apple and others regardless
of official launch dates in their respective
markets.
As such, Asia's consumers might
also have unintentionally identified an
opportunity for the United States and its regional
reputation, despite the
persistently high unemployment rates and a
slow-to-no-growth economy that will face the next
elected US president.
The US's hard power
"pivot" to Asia, including through the announced
rotation of US marines through Darwin, Australia,
and plans to base 60% of US naval forces in the
Pacific region by 2020, will help define US policy
in the years ahead.
Yet, even as the
shifting of military assets captures headlines,
policymakers in Washington should not lose sight
of the fact that US companies and their products,
behavior and employees are very much a part of the
US's brand and "soft power" in Asia.
That
power was on display with the recent initial
iPhone5 launch in Asia in Singapore, Hong Kong,
Japan and Australia. Around the world, customers
have queued days in advance to be among the first
to buy the latest Apple product. The situation was
no different here in Asia.
Consumer
devotion has helped make Apple by some measures
the top ranked company worldwide in terms of
"brand value" - a marketing term that ascribes a
company's worth to image, packaging, product
quality and, most importantly, consumer
perceptions. Apple is also the most valued company
in history based on market capitalization.
US brands such as Microsoft, Coca Cola and
McDonalds routinely dominate global rankings of
corporate brand value. These US "brand leaders"
have been especially adept at winning over the
"hearts and minds" - and wallets and pocketbooks -
of Asia's fast growing middle class.
This
"brand gap" between top US companies and their
competitors reflects positively on the US's
culture of innovation and openness. Even the
recent changes of Apple's top tier managers
reaffirms the unique ability of US companies to
act and adjust as markets dictate. Just as some
Wall Street firms became symbols of financial
excess, Apple - not to mention its rise, fall and
rise again - is in many ways a symbol of the US's
dynamism and strength in innovation, technology
and marketing.
In today's global economy,
American politicians should recognize and value
the "soft power" contributions of such American
companies to "Brand USA", even as US business
leaders make tough decisions about where to
manufacture and how to distribute their products
in global markets.
A key contributor to
Apple's and other international businesses'
success - including other US companies such as
Ford Motor, which produces tens of thousands of
vehicles in Thailand - is the global supply chain
and ability to assemble their products in Asia and
elsewhere. This will also work to US companies'
advantage as the Association of Southeast Asian
Nation (ASEAN) Economic Community becomes a
reality in 2015.
Brand
competition China sees this and is
aggressively trying to close its brand gap with
the US. In August, Chinese Vice Minister of
Industry and Information Technology Yang Xueshan
stated that China plans to have 100 "globally
influential" brands and 1,000 domestically
renowned brands by 2015.
With "Brand
China" too often associated with counterfeit
goods, shoddy products or aggressive business
practices in Africa or elsewhere in the developing
word, the rationale for this focus is
understandable.
Developing global brands
will allow Chinese businesses to move up the value
chain. It will also help China further transform
its economy from one based on cheap labor and
managed exchange rates into a more knowledge-based
one. The move would also help Chinese businesses
reap a larger share of global profits.
Given existing perceptions of Chinese
business practices and products, Chinese companies
will have a tough road ahead, at least in the near
term, in duplicating the success of US brands.
Indeed, some of China's best-known brands today,
such as Lenovo's ThinkPad laptop computer, were
acquired from US companies.
The world and
China are, however, changing rapidly. As the US
continues to rebalance its policy in the
Asia-Pacific region, it would be wise to leverage
America's corporate brand strengths and recognize
the US business community as an independent but
critical partner in this "pivot".
With US
exports to Southeast Asia in 2011 exceeding US$76
billion, there is a significant economic
foundation for US-Asia commercial relations to be
built on. The US also already has more than twice
as much investment in Southeast Asia as it does in
China.
According to the recently released
2012/13 ASEAN Business Outlook Survey - a study of
US businesses among American Chamber of Commerce
members in seven Southeast Asian nations - the
outlook on investment opportunities is upbeat
across the region.
The study conducted by
the American Chamber of Commerce in Singapore and
the US Chamber of Commerce found that some 92% of
respondents had a positive outlook on regional
investment opportunities, with 70% of respondents
planning to expand their businesses in ASEAN.
Vietnam, followed by Thailand, were the most
popular locations for expansion by US companies,
according to the survey.
As with any
brand, however, a strengthened Brand USA will
require nurturing and investment. In this
direction, Washington could do more to ensure US
companies are treated fairly abroad and to protect
intellectual property rights. US tax policies also
should not serve as a disincentive to business
success, whether in Asia or in America.
The US also must do more to return to a
business friendly environment that fosters
entrepreneurship, and nurtures small and medium
enterprises. From their ranks will come tomorrow's
brand leaders.
Some of Apple founder Steve
Jobs' first products were famously crafted in a
garage in Silicon Valley. Some products succeed;
others fail but lead the way to newer and better
products and services. All that too is part of
"Brand USA". Regardless of who sits in the White
House, it is a business tradition and culture that
America's pivot to Asia should more fully embrace.
Curtis S Chin is a senior fellow
and executive-in-residence at the Asian Institute
of Technology and a managing director with
RiverPeak Group. He served as US Ambassador to the
Asian Development Bank (2007-2010). Jose B
Collazo is a frequent commentator on Southeast
Asia and can be followed on Twitter at
@josebcollazo.
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