"China’s Lenovo is now the second-largest PC maker in the world and hopes to grab the top spot from Hewlett-Packard soon."
Read on for goood competitive change insights here on how 2nd and 3rd tier companies in China and India are now vying for global branding recognition, and why they've got a good shot at making it happen.
Non-branded companies earn margins of 3-8% and are at risk of being undercut by cheaper rivals. Branded firms enjoy fatter margins of 15% or more.
Chinese and Indian companies are no longer content to do the grunt work for Western firms, for two simple reasons:
- non-branded companies typically earn gross margins of 3-8% and are constantly at risk of being undercut by cheaper rivals.
- Branded firms enjoy fatter margins (15% or more) and more loyal customers.
Yet becoming a global brand is exceedingly hard. ...GfK, a consumer-research company, found that only one-third of Americans were willing even to consider buying an Indian or Chinese car.
...How can others make the leap? “The New Emerging-Market Multinationals”, a book by Amitava Chattopadhyay, of INSEAD, and Rajeev Batra, of the University of Michigan’s Ross School of Business, offers some clues.
...global firms need new products and processes that generate buzz.
The article illustrates three basics:
- First, they must exploit their two basic advantages—economies of scale and local knowledge—to expand into new markets,
- Some firms use their understanding of local markets to expand globally,
- Others move swiftly to exploit opportunities.
The research in the book offers three more ingredients to these basics:
1. The first is focus: they should define a market segment in which they have a chance of becoming world-class.
- Natura Cosméticos, a Brazilian cosmetics-maker, zeroed in on the market for “natural” cosmetics with ingredients extracted from the rainforest.
- Lenovo focused on computers for corporate clients before expanding into the consumer market.
2. The second is innovation: global firms need new products and processes that generate buzz.
- HTC produces 15-20 new mobile-phone handsets a year.
- Natura releases a new product every three working days.
- Use the company’s name (as Toyota does) or another name (as Procter & Gamble does - Gillette razors to Pampers diapers)?
- How to market effectively in multiple countries without budget-busting? Lenovo has hired an expensive American marketing firm, but saves money by doing most of its advertising work in Bangalore.
NOTE: Do you need perspective on change planning, facilitating, organizing, implementing or sustaining especially when dealing with demanding deadlines and short staffing?
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