Cancel
Advanced Search
KEYWORDS
CATEGORY
AUTHOR
MONTH

Please click here to take a brief survey

Brand New Justice - Is branding the key to wealth in the developing world?
Ethan Zuckerman, 24 Sep 05

Marketing consultancy Interbrand estimates the total value of the top 100 global brands in 2004 at $988 billion dollars. That is to say, treating brands like "Diet Coke" and "Pentium" as tangible assets, like bottling plants or chip fabrication facilities, Interbrand believes the top 100 global brands are worth almost $1 trillion dollars... or more than the combined gross domestic product of the world's 63 poorest nations, combined. (Interbrand has a useful FAQ explaining how brand values are calculated.)

One possible interpretation of this figure is that a swindle of epic proportions is taking place, tricking the world into paying billions of dollars more for branded t-shirts, beverages and razor blades than for their generic equivalents.

Simon Anholt is interested in another intepretation. One of the founders of Placebrands, a consultancy that advises national governments on brand strategy, he believes that understanding how brands work might well be a key to helping poor nations become wealthy. In his recent book "Brand New Justice,"Anholt argues that nations which don't understand the nature and value of brands may be dooming their citizens to a perpetual existence at the bottom of the economic totem pole.

His argument goes something like this: Companies in the US and Europe often don't manufacture their own products - they design them and farm the manufacturing out to companies in China, India and other developing nations. Manufacturers tend to compete on a cost basis and operate on a narrow profit margin. The firms that design and market these products charge a significant premium over manufacturing cost - they profit handsomely, while manufacturers benefit only modestly. In this sense, being a "supplier nation" to wealthier nations is analogous to being an exporter of raw materials, like coffee or cacao - while it may seem like a logical path forward, it subjects national forces to the whims of global commodity markets, forces over which an individual nation has little control.

It's been orthodox theory in development economics for some time that developing nations should try to get out of the commodity game and into producing "value added" products. Anholt suggests that the challenge is even greater - to fully participate in a global economy, nations must be willing to brand the goods they produce as well. While this is an uphill battle, he sees evidence that some brave companies have succeeded, giving a chapter full of examples ranging from Slovenian skis to Indian software to Brazilian aircraft. Yet he's not naïve about the challenges, detailing the challenges a high-end Indian perfume, Urvâshi, has had in breaking into the ultracompetitive French perfume market.

To the extent a 170-page book can sprawl, "Brand New Justice" does, including everything from practical advice in selling products made in poor countries to markets in wealthy countries to speculation on the erosion of "Brand America". Some of Anholt's most interesting thinking is about "national brand", the idea that nations, like products, have brand associations. A national brand has obvious implications for travel and tourism - the world's largest industry - but important implications for other sectors as well - would you deposit your money with a Russian bank? (Roustam Tariko, a Russian spirits entrepreneur featured in the book, hopes you will, as he plans on building his Russki Standard Bank as an international brand, despite an uphill battle against national branding.) Anholt believes that a nation's brand can effect everything from currency exchange rates to allegations of cronyism and corruption.

Perhaps most exciting for readers in emerging nations is Anholt's argument that consumers want brands "to come from somewhere"... and that, increasingly, they don't want that somewhere to be the United States. Anholt sees trends in food and music purchasing as indicative of an increasing interest in exoticism and authenticity - in other words, the best advantage a brand from Mongolia may have is that it's Mongolian, something a product from a US firm can never be.

Anholt's recent work, producing a "Nation Brand Index" along with consultancy GMI, ranks the national brand of 25 nations, primarily highly developed nations or powerhouse developing nations, through a set of consumer perception surveys of an international audience. As of mid-2005, Australia, Canada and Switzerland led the pack, in terms of perception of the attractiveness of the country's exports, tourism opportunities, people, culture, governance and opportunities for investment and immigration. The US ranked 11th of 25th, scoring poorly in terms of culture and governance. While developing nations generally score poorly in Anhold's index, with Brazil leading the pack at 15th, Anholt believes that better "brand management" would help countries like Turkey and Russia, which hold down the bottom of the current index.

Finally, Anholt argues that there's a huge opportunity for developing world exporters to increase the value of their exports from moving away from charitable marketing strategies used to create products like "Fair Trade Coffee". Anholt argues, "The simple fact is that most people spend their hard-earned money rather sporadically on charitable causes: but everybody spends money on themselves, day in, day out." By moving goods out of the category of "things we buy because it's the right thing to do", to "things we buy because they're exciting, new and we really want them", Anholt believes there's a major new market for some products from developing nations.

The path for economic growth advocated in "Brand New Justice" isn't an easy one - it requires building businesses that can compete on a global scale with high quality products and global branding efforts. And it requires addressing the much larger project of rebranding a nation as a whole. But clearly some people are listening - the book jacket includes only two endorsements: one from Stjepan Mesic, the President of Croatia, and one from Nambar Enkhbayar, the Prime Minister of Mongolia...

Bookmark and Share


Comments

I can imagine the premise of the book and some of Anholt's suggestions might have the "no logo" and gas mask crowds in a bit of a state.

Anholt's seems to suggest that social goals should be abondoned in favour of business goals, based on the assumption that a rapidly modernizing economy will raise the aggregate standard of living faster than charitable/social programs will. Is this assumption valid?


Posted by: Rod Edwards on 24 Sep 05

Good piece Ethan.

I'm agnostic about whether this is good or bad. I wrote a piece called the"commoditization of love", reviewing a leading book on the future of brands, which raises the negative spin to brands expanding their grip beyond the economic sphere. http://www.fuzzysignals.com/archives/2004/04/15/000081.html. But like it or not, brands work because they do appeal to our emotions and identities. Brands are also good ways to filter the noise in a complex world.

This also resonates with my experience working with governments in SE Asia. Singapore, for instance, has long seen itself as a national brand and is well aware of both its positive and negative image in different markets. In Asia, the brand is about a place where "things work" which I can tell you is an important differientiator in the region where a lot of energy and time can be spent doing things that never end up working at all. Countries like Malaysia have worked hard to compete with this. Outside of Asia, well, Singapore's brand is more mixed for obvious reasons and they have struggled with this.

Not sure if the book talks about this, so consider this a cross reference: whatever you think of Francis Fukuyama, his book, "Trust" is illuminating in explaining the relationship between the level of social trust in a particular culture or country and the impact this has on the industrial structure over time. It explains, credibly, why some countries struggle to create large companies that scale and thus have a chance for a global brand. America has so many global brands, in part, because of its high social trust and the fluidity of its social networks in the early years of industrialisation which in a nutshell is what Alexis de Tocqueville was so jazzed about. (Fukuyama isn't very sanguine about the level of trust in American communities today, however, which may foretell the vitality of commerce in the future.)

China, by contrast, has struggled to create global brands because it has a low level of social trust, which predates communism because its commerical system is dominated by the Chinese clan system, which work with the same level of obsessiveness about loyalty, secrecy and controlling information flows as the NSA or MI5.

Low trust cultures, however, can still yield global brands. In fact, one of the great innovations of the nation states is the "national champion". While much derided in Anglo Saxon economic thinking, these private sector companies have scaled because they have used the larger narrative (and often intervention) of the state to transcend and compensate for low trust environments at the community level. Countries with low trust (France and Italy, for example) have done this quite successfully. They both have very good global brands across sectors. Think cosmetics, luxury brands, cars, fashion, bottle water, food products, and so on.

China is trying to fast track this process complicated by the fact that it is also moving state run companies into the private sector. There are a few potential contenders for "national champions" in the wings (especially in the HVAC industry) but again their national brand -- with its obvious negative image in some quarters -- is getting in the way of this appealing to global markets. They are trying to learn from Bata Shoes which tries to be a local brand wherever it is being sold.

- N


Posted by: nicole Boyer on 24 Sep 05

Mm, another group of people who think you can turn the billions of farmers in the developing world (70% of all people in the developing world are peasants) into a bourgeois creative class à Richard Dieu Florida.

All I can say is: keep the fantasies coming.

The authors of this book know that they are talking to the nano-elite of those who already are bourgeois. But seriously two new brands of Mongolian goat cheese and a Congolese coconut wine won't do.

Anyway, I'm sure the book will sell well in the wealthy west.


Posted by: Lorenzo on 24 Sep 05

One thing I wanted to add: let's not forget that the "branding of the world" has been a ferociously violent, monstruous affair -- ask the Iraqi farmers who're being forced to buy patented and branded American seeds (I'm sure the example doesn't feature in Mr Anholt's book about "justice"). Of course, brand managers like Mr Anholt, who are the mouthpiece of the new trend of neoliberally forcing the "business-is-development" agenda into development discourses, cannot stomach to take a look at this history.

I remember my dad saying that each time you drink a bottle of Coca-cola, you should remember who slaughtered Allende.

I know it's become unfashionable to take a historic perspective on these matters (it's the new and ultimate taboo), but thank God there are still many people who see the utter superficiality of messages like Mr Anholt's.

We need Real Justice for once, not Brand New Justice.


Posted by: Lorenzo on 24 Sep 05

AMEN to the message poster named Lorenzo !

I'm suprised that WorldChanging would give any seeming credibility to the apologists for commercialism .

(And commercialism being a social ideology and NOT an economic system is *not* the same as capitalism in the pure sense . Capitalism is an economic system based on the private ownership of capital. There is nothing intrinsically evil about capitalism in the pure sense. Commercialism , in contrast, being a social ideology is intrinsically evil .Commercialism is based on mystification and hype --being that it is based on the mystification of what is called "the lifestyle" (which involves appealing to ugly , fundamentally weird desires like status seeking and following faddish trends)

Social Mystification folks is evil . AMEN to the message poster named Lorenzo !

I'm suprised that WorldChanging would give any seeming credibility to the apologists for commercialism .

(And commercialism being a social ideology and NOT an economic system is *not* the same as capitalism in the pure sense . Capitalism is an economic system based on the private ownership of capital. There is nothing intrinsically evil about capitalism in the pure sense. Commercialism , in contrast, being a social ideology is intrinsically evil .Commercialism is based on mystification and hype --being that it is based on the mystification of what is called "the lifestyle" (which involves appealing to ugly , fundamentally weird desires like status seeking and following faddish trends)

Social Mystification folks is evil . AMEN to the message poster named Lorenzo !

I'm suprised that WorldChanging would give any seeming credibility to the apologists for commercialism .

(And commercialism being a social ideology and NOT an economic system is *not* the same as capitalism in the pure sense . Capitalism is an economic system based on the private ownership of capital. There is nothing intrinsically evil about capitalism in the pure sense. Commercialism , in contrast, being a social ideology is intrinsically evil .Commercialism is based on mystification and hype --being that it is based on the mystification of what is called "the lifestyle" (which involves appealing to ugly , fundamentally weird desires like status seeking and following faddish trends)

Social Mystification folks is evil . AMEN to the message poster named Lorenzo !

I'm suprised that WorldChanging would give any seeming credibility to the apologists for commercialism .

(And commercialism being a social ideology and NOT an economic system is *not* the same as capitalism in the pure sense . Capitalism is an economic system based on the private ownership of capital. There is nothing intrinsically evil about capitalism in the pure sense. Commercialism , in contrast, being a social ideology is intrinsically evil .Commercialism is based on mystification and hype --being that it is based on the mystification of what is called "the lifestyle" (which involves appealing to ugly , fundamentally weird desires like status seeking and following faddish trends)

Social Mystification folks is evil .<--That observation is NOT mere opinion, that observation is absolute truth . We should NOT take the pansy postmodernist "conflicted" approach and respect the wrongheaded aopinion of those that defend the commercialist mystification of lifestyle marketing. That people want to conform to trends of overhyped names like Tommy Hillfigure is a bizarre and ugly idolatry , make no mistake about it. Such trendy idolatry of brand names is completely and totally wrong, and deserves no respect whatsoever. Such a phenomenon is based on mental laziness--NOT so much on any "fear and insecurity", as so many people glibly presume is the motive, but mental laziness . That should have been glaringly obvious some time ago .

The Third World Nations should buck this trend and NOT let the ugly creeping target marketers such as MTV , and Tommy Hillfigure turn their nations into placeless ugly realms of , amorphous, yuppie-fied, polymorphous perversity like they are doing (and have done) to many parts of the USA ! Certainly an us versus them approach towards the lifestyle marketers is not only good but long overdue ! Lifestyle marketing does NOT have its good points and bad points, instead it is totally bad (to put the matter mildly) .

Again as always intrinsic virtue should always be taken to extremes.

Contrary to popular opinion, there are NOT two or more sides to every issue. Contrary to popular opinion, so-called "shades of grey" are NEVER a substitute for accuracy and truth .


Posted by: Jason Leary on 25 Sep 05

I thought this site was about new ideas to change the world. What's new about the idea that the way forward for developing nations is for them to play our game by our rules?

A quite well-pitched case. The "contrary" interpretation of the $988 billion figure at the start is stated in bald, crude terms that make it seem facile, whereas the proposed interpretation is spun out with relative eloquence, making it seem much more sophisticated. As with branding itself, spin verging on deception trump reality.


Posted by: Gyrus on 25 Sep 05

Someone should write a book about the relationship between colonial history, r@c!sm, s=x!sm and the history of brands. I suspect that brand managers are keen observers of how rac!sm really works. They know what consumers subconsciously think about other cultures; and they know that those clichés are based on a history of colonialism and orientalism (and today on the reverse: occidentalism).


@Nicolle: there's a great book by a wellknown anthropologist/historian who, amongst other things, wrote about the history the h|ygienicist movement and of soap brands in colonial Africa, what they stood for and what they have created (the "bourgeoisification" of African lives and the destruction of sociality). Check it out:

Nancy Rose Hunt, "A Colonial Lexicon of B!r|th Ritual, Medicalization, and Mobility in the Congo", 1999, Duke University Press:

http://www.amazon.com/exec/obidos/tg/detail/-/0822323664/102-6523180-5004130?v=glance

Just a suggestion. Maybe worldchanging should have a history section in which it features such stories and books. Because you can't be really worldchanging when you keep glossing over history, can you? Just a suggestion.

[WC has problems with words such as r@c!sm and s:x!sm]


Posted by: Lorenzo on 25 Sep 05

Thanks for this post Ethan, I think WC *should* cover proposals like this - we can heartily disagree with them, at least we're aware of them!! WCers need to know abuot current & emerging approaches + we learn by discussing the merits & downfalls of such a proposal & hearing different points of view like Nicole's & Lorenzos. Exchanges like this are GOOD!!

Aside from some valid points raise by Lorenzo et al. I imagine many pitfalls for developing nations chasing such a strategy ie: if nations invest in building a strong brand for what is subsequently revealed to be a faulty product, than it can backfire, with the size of the xplosion amplified by the size of the brand image. ie XYZ coffee could become a symbol of XYZ minority repression.

the argument could be most valid for co-operative marketing efforts such as Fair Trade & for general sustainability efforts: if we want things to go mainstream, they need to be s£xy & aspirational -> without being watered down - that's the big challenge - how can an aspirational brand/product maintain a strict code of ethics? Does he cover that in the book? I'm not sure they're compatible endeavours.


Posted by: Flannel Flower on 25 Sep 05

I was struck by the phrase "bottom of the economic totem pole" (especially since "brands" are totems). It's very hard for those of us at the top of the totem pole to realize that our place depends on forcing others to the bottom. That's something few of us want, but we live within a system dependent upon the misery of others for our own comforts. Elevating that system to the level of religion, via the use of brands as totems and emotionally-laden icons, seems especially cynical. It's stupid too, since it will incite such an incredible backlash. We needn't reform the pole, we need to replace it.


Posted by: David Foley on 25 Sep 05

David, I agree with you that the world economy is not a non-zero-sum game, as the neoliberals, the cornucopians and neocons want us to believe. The world economy is an entirely mercantile system, zero-sum. (The ones at the top live by the grace of those at the bottom; and you need a lot of violence to keep the existing order in place.)

There's proof for the mercantilist argument by looking at subsidies and trade barriers. Let's start for example by creating a *true* free trade situation, by destroying the billions upon billions worth of agricultural subsidies. Why don't we do this? This would be a much more powerful tool for development than pushing for branding strategies. But we don't, because this takes away our power.

The fact that the developing world doesn't make money on raw commodities is because the mercantile West doesn't allow them too.
It's false to use this commodity-trap in which developing countries are caught, against them and change the discourse consequently into one of commercialism and brands (as the Mr Anholt does). It's false, and hypocritic. It denies economic realities.

@Nicolle: one more note: you cite Fukuyama (the biggest a-historical and neocon historian on the planet whose theory about the End of History has been totally discredited by Reality and whose notions of nation-building have been proved to be disastrous in Iraq) and his way of looking at brands: he especially stresses the correlation between the level of "social trust" of particular societies and the number of global brands they produce. Of course, this is only a very small part of the story; the success of brands is not the result of the internal dynamics of a society, there's the "perception" of brands by others which you have to take into account too. Why is Coca-cola popular in each village on the planet?
Fukuyama should have a look at how his beloved Anglosaxon societies have forced these new "perceptions" onto people.

Your average Papua is not loving Coca-cola because of some miraculous Revelation. He loves it because his government gave tax-cuts and took bribes from Coca-cola, allowing it to come and do business there.

You need a lot of violence to force people to accept the idea alone of a world full of branded commodities (you need to change their entire society, force them to adopt the Protestant Work ethic, the nuclear family, and the spirit of capitalism - if they don't obey, you slaughter them, "for their own good").

Once you open that perspective, you see that brands are not successful because of good marketing, they are successful because certain economic and historic conditions have been created in which those brands can be introduced into "suitable markets".

It's the violence of opening and creating those "suitable markets" that must be examined.


Posted by: Lorenzo on 25 Sep 05

Good article. Sounds like a good book.

I am reminded of Jared Diamond's advocacy of green brands in "Collapse".


Regarding "patented and branded American seeds", one should be very careful not to conflate trademarks and patents. Patents are rather nasty in that they actively prevent people from doing *useful* things. Trademarks have no inherent worth except in identifying the products of a particular producer. For example, the fact that Coca-Cola trademark exists does not prevent others from creating and selling other similar tasting colas.

In the case of seeds, a trademark allows farmers to buy seeds from a supplier they trust. In game theory terms it replaces Prisoner's Dilemma with Repeated Prisoner's Dilemma. Without trademarks, farmers would be easy prey for unscrupulous fly by night seed sellers.

I repeat, trademarks are NOT LIKE other forms of intellectual property.


Posted by: Paul Harrison on 25 Sep 05

Paul Harrison, thank you for your insight. You've helped me see this issue with more nuance. Within the marketplace, brands help us discern - they can help inform us when making choices. People may even choose "anti-brands" - in Bolivia, people drink "Inca Cola" as an act of defiance.

My concern is with "brands" as totems or icons, and the human tendency to confuse the map with the territory, the menu with the dinner, the flag with the nation, the religious trappings with the religion, or the "brand" with the product and its usefulness. I worry that "brands" intensify the commoditization of everything - for example, how does a woman's breast milk compare in "status" against Nestle infant formula? How often is the "brand" the spearhead of intense propaganda undermining confidence in local wisdom and traditions? Let's consider the harm done by peddling infant formula, and realize that this harm was, for intents and purposes, deliberate.


Posted by: David Foley on 26 Sep 05

I suspect, based on some of the comments received here, that I may have done a disservice to Anholt's book in my review - Anholt's certainly not the commercial apologist that a few of the commenters seem to think he is. He is, however, a realist - whether or not an idealized economy has strong brands owned by multinational corporations, the economy we live and work in does. It's certainly true that Anholt isn't trying to overthrow this brand system - he is, however, trying to hack it, and make the system work for companies in the developing world.

The idea isn't to ensure that everyone in Papua New Guinea is drinking Coca Cola, but to take on the challenge of helping a company in Papua New Guinea sell a product to the developed world. If this process succeeds, it's a great way of transferring wealth from developed to developing nations using market mechanisms. In this sense, I do think it's Worldchanging to consider that a process that's largely make companies in the North rich selling, in part, to the South, could be reversed and help make people in the South rich by selling to the North.

I realize this model is unsatisfactory to folks who believe that there are fundamental flaws in brand-based multinational capitalism that require wholescale replacement of that system... but I think it's an intriguing possibility for people who don't believe that system is going away any time soon and would like to make it work for companies in the developing world as well as the developed world.


Posted by: Ethan on 28 Sep 05



EMAIL THIS ENTRY TO:

YOUR EMAIL ADDRESS:


MESSAGE (optional):


Search Worldchanging

Worldchanging Newsletter Get good news for a change —
Click here to sign up!


Worldchanging2.0


Website Design by Eben Design | Logo Design by Egg Hosting | Hosted by Amazon AWS | Problems with the site? Send email to tech /at/ worldchanging.com
©2012
Architecture for Humanity - all rights reserved except where otherwise indicated.

Find_us_on_facebook_badge.gif twitter-logo.jpg