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Corporate Nov 26, 2012

Why Tatas, Infy have a hard time establishing brands abroad

By Vivek Kaul

Rohit Deshpand is the Sebastian S Kresge Professor of Marketing at Harvard Business School where he currently teaches in theOwner/President Management Programand in other executive education offerings.

He has also taught global branding, international marketing, and first year marketing in the MBA programme. In this interview to Vivek Kaul, he talks about the provenance paradox, as to how companies from emerging markets find it very difficult to establish their brands globally, even though they have both the human as well capital resources required for such an effort. Excerpts:

What is the provenance paradox?

I have been interested in looking at the marketing problems of companies from emerging nations. The background is my previous work profiling the most successful companies in the world and doing that I found that these successful companies came from the developed world.

So they came from the United States, they came from Europe and Japan and so on. The next phase was to identify who the next great multinationals are going to be. And my intuition was that they are not going to come from the developed world but from the developing world given that they are hungrier, they are more innovative, and many of them have huge domestic markets, which is how these other companies from the developed world that I studied got started. They had access to big domestic markets.

What happened next?

When I started doing that work the marketing challenge that I found was a branding one. These companies from emerging markets wanted to build global brands and for some reason had difficulty doing it. So if you look at any ranking of the top 50 or the top 25 global brands, the BRIC nations (Brazil, Russia, India and China) are conspicuously absent, which is surprising because countries like Brazil, China and India, and to some extent Russia, have significant resources they can expend. This includes human resources as well capital resources. So it doesn't seem to be a question of money.

The funny thing is that even in China they don't look up to Made in China. Firstpost.com

Expend on building a brand you mean?

Yes. Expend on building the brand. That's the barrier. It is not a question of ambition. It was a paradox and I couldn't understand it. These are aspirational, ambitious, well resourced companies that don't seem to be able to build global brands. Or at least not yet. One hypothesis, when I was initially presenting this work, was that people said that it takes a long time to build a global brand and that's why. And it turns out that if you look at the top brands there are some that have come up in the last five years. On the technology side, Facebook is a company that has built a global brand fairly recently. Google, has build a global brand in quick time.

Even a company like Apple which was down in the dumps...

Has risen to the top, number two, number three rank now. Excellent example. So it's not a question of time. There is something else going on. The other thing that I noticed was that there is a small area around Milan in Italy that has a bunch of them and they all happen to be in fashion-Armani, Versace and so on. And so I came to the provenance paradox. Why is it that when you say Made in Brazil or Made in India or Made in China people somehow discount? Is this soft racism? And that is one possibility. The fact that something is coming from China or from India, makes people say that it is just not good enough.

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by Vivek Kaul

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