Jack Yan says he wants to see more world-class brands from south Asia
Having just spent some time in south Asia, the commercialism is very noticeable. Vodafone, in particular, has its signage everywhere, trying to remind not just the locals of its mobile service, but tourists who are thinking of one to global-roam to. In fact, as you travel through Asia and take in developing nations, there is a sense that people want to be seen as part of the global community.
I commend this. There is nothing wrong about wanting to be connected to one’s fellow human beings elsewhere. It was this dream that pushed me to become an exporter in the first place, because I recognized there were more people on the planet than those in my immediate neighbourhood. And why not embrace the technologies that I had at my fingertips then: faxes, FedEx, and very slow computer networks?
But what the developing world should be wary of joining is the global technocracy. The sort of senseless quest for privatization that has led to growing gaps between rich and poor, policies that have enriched only a few middlemen in their corporate raids and in fact made countries poorer. New Zealand, in disposing of its national assets in the 1980s, managed to double its foreign debt, something that politicians on both sides, complicit in the sales, fail to mention. And now, Sweden has disposed of one of its most famous state assets of all: the Absolut Vodka company.
The fact that Absolut remained a state-owned enterprise all these years after Thatcherism must have incensed the technocrats and free-market monetarists, who lived in a narrow-minded world that only private companies could run effective brands. This, of course, is not true: private companies have been known to have botched plenty of brands out there. Enron was a private brand, for one; as was Chrysler, which probably had been more poorly handled under the DaimlerChrysler combine in the late 1990s and early 2000s than at any time in its history.
Yet Sweden managed to make a go of Absolut. Not only was it an effective state brand, it was an effective global state brand. It is the most famous vodka in the world. And most people think it’s pretty good vodka, even though real connoisseurs can rattle off more than a few that taste better distilled than the Swedish stuff.
The branding efforts of the Swedish government were very successful. And it proved that not only could publicly owned brands survive, they could in fact excel. So much for the superiority of private enterprise: here was a public one playing by free-market rules while earning a pretty penny for the Swedish public purse.
This was, of course, too tempting for the newly elected Swedish government, who put Absolut up for sale. Last year, French alcohol group, Pernod Ricard, paid over $8 billion for the privilege. It’s a tidy sum, but in the context of a nation, probably not that much. Profits for Absolut back in 2006 were Kr 1,757 million, and alcohol has a funny way of being recession-proof. The amount is around a quarter-billion US dollars.
On a back-of-a-napkin calculation, that means (other things being equal), the Swedish government got roughly 32 years’ profits of its Absolut company in one fell swoop.
But if governments are to take long-term views for their nations—and the opposition was in power for decades in Sweden, after all—then it does mean that the Swedish public purse will not benefit from millions of kroner per annum from Absolut ever again.
Of course, Swedes are innovative people and if the $8 billion is invested back into the country wisely, sparking more profitable ventures, then so be it. It was a good sale.
However, patterns in many other countries that have pursued this monetarist route indicate that the money doesn’t get invested back into the economy that wisely. Countries wind up losing not only the enterprise, but the tax take that the enterprise once generated. Globalized corporations have a funny way of avoiding tax through various accounting procedures, and if Pernod Ricard is to pay any tax, it will be in its home country of France, not Sweden.
A magazine column is no place to argue one set of economic theories over another. Tomes have been written on the subject by people far cleverer than me. But it is a place to make a brief point: that inviting globalized corporations into one’s nation is certainly no guarantee of success. Seeing Vodafone signs everywhere is actually not that encouraging because it shows an absence of national champions, a lack of self-belief that domestically created brands—be they private or public—are not good enough.
However, if they comply with the standards and work well, there is no reason for a local brand to fail. There is also no reason for a local brand to remain local.
The second point is that one does not need to be a private, globalized, western corporation to make a brand succeed. If Absolut can be nurtured by a player as unlikely—as far as the technocrats are concerned—as a state government, then developing countries can equally be a source of world-class brands. First-world western corporations do not have a monopoly on branding skills. In fact, first-world western corporations may be hampered by such cultures as the United States’, a nation which seems uncertain of its own values.
South Asia is a place that is so full of history, with citizens so very aware of their cultures and creeds. Westerners, in their quest to become either monetarists or politically correct, hide their faith, their culture sometimes becoming a bland union of half-hearted statements. In other words, south Asians have a wonderful opportunity to fill the void with brands rich in culture, history and heritage.
The only thing lacking is not capital, but confidence. Industrial brands seem to do better: there is an idea that heavy industry results in tangible, visible products that it is all right to shout their originators’ names loudly. But it is equally valid for other south Asian endeavours, including those of fashion, to proclaim their creators’ names confidently.
Between India and Pakistan, admittedly India has expended greater effort in its tourism marketing, which in turns helps those who wish to push a ‘Made in India’ brand. Pakistan may be in a good position today to promote its nation brand for the sake of exporters; the country deserves to be far more than a source of goods bearing foreigners’ brands, but one which creates global brands itself. The globalization game is not one to be played by American and European nations exclusively, especially in the branding sphere. On my next visit to the region, I hope to see more Asian brands more proudly displayed.
Jack Yan is publisher of Lucire (lucire.com), CEO of Jack Yan & Associates (jya.net) and a director of the Medinge Group, a branding think-tank based in Sweden (medinge.org).