Taiwan firms must seek global branding: chairman
The China PostBy Linger Liu--Taiwan enterprises should focus on the implementation of global branding strategies, said Dr. Hermann Simon during an interview with The China Post in Taipei yesterday, highlighting the importance of international brand recognition.
January 8, 2013, 12:01 am TWN
Simon, who gave a speech at the 4th CommonWealth Economic Forum, indicated that a consolidation of global marketing strategy has occurred. He said for Taiwan's enterprises to improve their status, they will need to adopt a global marketing strategy, with a focus on a unique branding image.
Simon, founder and chairman of Simon, Kucher & Partners Consultants, further noted the importance of what he termed hidden champion companies. These are firms that are mid-sized, locally based, with a specialized focus and function within the domestic and the export market.
Simon noted that German-speaking countries like Luxembourg, Switzerland, Germany and Austria have a high ratio of hidden champion companies. Simon said China and Germany are the world's two leading export nations. Germany, however, has a higher comparative ratio of hidden champions. Statistics show that 68 percent of Chinese enterprises qualify as mid-sized. Meanwhile, around 70 percent of German enterprises qualify as mid-sized, said Dr. Simon.
One German hidden champion enterprise, Simon noted, can currently create 1 million new jobs in ten years, with an annual revenue growth of 10-percent.
Simon said low labor costs compared to the rest of the eurozone is also Germany's advantage. He said compared to Korea and Japan's enterprise development model — which is focused on state-directed development, with a strong emphasis on subsidies, Germany did not interfere excessively in the development paths of enterprises through the use of subsidies. Instead, German local enterprises internationalized themselves and worked in-line with local academic research centers to upgrade production technologies.
'Innovation is the key for hidden champions'
The source of a hidden champion enterprise's success lies in having a strong manufacturing base while not outsourcing production, Simon said. Future hidden champions will be required to collaborate with other hidden champions through globally connected export networks.
A successful hidden champion model requires lean organization, effective leadership and a focus on inspiring employees, he said. Given its lack of raw materials and natural resources, a market-oriented approach, as opposed to a state-directed method, should be the focus of Taiwan's future development, said Simon.
He suggested the decentralized power structure of hidden champions can optimize profits. He noted that Taiwan's electronic and high-tech industries, which have been Taiwan's main export drivers, are heavily centralized, adding that they are a double-edged sword for Taiwan export industries.
Globalization and Global Marketing
He said the future market driver will involve hidden champions focusing on selling a global, cooperative system of interaction with other hidden champions, rather than individually focused product direction. This will require an increase in global sales networks and coordination between business partnerships.
Meanwhile, Simon said China is facing rapid economic growth, but its increasing GDP has not improved the status of its brands. He noted that the world's second-largest economy may take 30 years to develop a global advantage in brand innovation. Simon added that branding is crucial for Asia's development.
Hermann Simon smiles during an interview yesterday with The China Post. The founder and chairman of Simon, Kucher & Partners Consultants and author of “Hidden Champions of the ...