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In-depth: What it takes for a foreign MNC to be perceived as ‘local’

BestMediaInfo.com finds out how foreign brands can be another Bata or Maruti in India and why ‘making’ in India isn’t enough for them to be accepted as local

Ever since the government of India pushed for making the country self-reliant in its production capacity via multiple initiatives, a lot many multinational companies started establishing manufacturing plants in the country, contributing largely to the India’s economy.

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Despite this, whenever the sentiment for local brands (brands manufacturing goods in India) arises with ‘Make in India’ or ‘vocal for local’ initiatives, some of these foreign brands fail to be perceived as local among customers. A handful is even renounced.

All of us in our lives for at least once have mistaken Bata, Lifebuoy, Maruti Suzuki, Horlicks and Colgate as home-grown brands. These brands, including a lot many others, aren’t local in just their product offerings but have never failed to understand our cultural nuances, while being a catalyst in providing a product solution to the end customer with their entrenched DNA of being an expert in the field.

But brands such as Vivo, Samsung and Lenovo, which are either manufacturing 100% of their goods sold in India in the country itself or are sourcing products from third-party producers in the country, are not accepted as local.

BestMediaInfo.com finds out what strategy such MNCs can adopt to be more local in their approach.

Madhav Sheth

Madhav Sheth, Vice-President, Realme and Chief Executive Officer, Realme India, said, “Understanding cultural nuances helps brands to understand a society’s needs and focus on building their trust by offering them products that they are looking for. Setting up a production unit locally is the foremost step that a brand should take. Manufacturing products locally helps the brand to get supplies on time and also reduces the manufacturing cost.  Along with having a local production facility, it is also essential for a brand to help the local community. As localisation is key to building a brand, brands should create more opportunities for their partners to come and set up their business in India. This will contribute more to the nation’s economy instead of just setting up assembling lines.”

Quoting how Realme has 100% smartphone manufacturing lines in Greater Noida, India, he said the brand believes in supporting the community by creating jobs and is aiming to create 10,000 direct jobs by the end of this year while expanding its monthly production capacity to 3.5 million a month, an approach to increase more employment. At the same time, it is not only assembling smartphones in India but also encouraging more suppliers and partners to bring in their production units and innovations to the country.

Sheth said that to make a connection with the customers, it is equally important for a brand to have local employees to understand the market closely. Taking this approach ahead, Realme has a local management team and is building a product development team in India to understand user sentiments and cater to their needs.

Nisha Sampath

Nisha Sampath, Founder, Bright Angles Consulting, said that in the age of Google, everyone is eager to know more about the companies behind the brand and thus it's important for foreign brands to demonstrate empathy, respect, and willingness to listen and adapt to local needs and preferences.

“It's going to be extremely important for these foreign brands to do things for their local stakeholders/communities. For example taking care of worker welfare, contribution to the local communities and protection of the environment. A brand can be global but should think local. What is needed in these times is to increasingly 'act local' and what is needed is to be 'local everywhere' in approach. Actions will make a difference,” she added. 

Vijay Kaul

Vijay Kaul, Deputy General Manager, Marketing Communication, Yamaha, said there exists a few global brands who connect well with the consumer, understand the cultural nuances and deliver to their end needs/solutions, and are thus perceived as local.

“There are brands that have connected well and the consumers think they are Indian brands such as Bata or Maggi. All the brands are catalysts in providing product solutions to the end customer with their entrenched DNA of being an expert in the field,” he added.  

Quoting the example of HUL, Palmolive, Nestle, Reckitt, Sampath explained that these all brands are concentrated on building brands rather than businesses (the house of brands approach versus a branded house). Hence, it was easy for them to localise their brands through both product innovation and communication for the local market.

“Hindustan Unilever is seen as an Indian company by almost all consumers I speak to. While this approach worked in the past, I also think that in the future, companies will need to step forward into more prominence in the future. The examples that I think work best for these times are brands like Kellogg's, McDonald's and KFC. They came into the market with a perception of being 'foreign' and even attracted protests. However, they adapted themselves entirely to local conditions. They did whatever it took. At the end of the day, if you stay customer-centric, need-centric, and responsive to these — then by default you become more local. It does not need a separate effort,” she said.

Shivaji Dasgupta

Shivaji Dasgupta, Founder and Managing Director of INEXGRO Brand Advisory, said the foreign MNCs can learn the combination of rigidity and flexibility from such established brands in India. Rigid adherence to global process and protocol, inspired flexibility in implementation and communication.

As consumers become more aspirational with easy access to global product across all tiers,  a brand that connects seamlessly with the consumer in listening, understanding and catering to their needs play a pivotal role in building brand affinity that can’t be detached easily.

So, it’s imperative to be part of the consumer ride and modify the products to the culture and sub-culture of the region, suggested Kaul. An element of aspiration for global brands will surely create more affinity because of its core DNA and R & D.

As such sentiments like ‘vocal for local’ call for 'desi' companies to capitalise on their Indian roots, it is also a clarion call for such MNCs to develop a value propositions that are rooted in local customer insight, delivered in an efficient and scalable fashion.

For these MNCs, to just ‘Make in India’ is not enough to be perceived as ‘local’

Sampath believes such a challenge of perception is in certain sectors than others. However, when utilised smartly, it can become an asset.

For example, Hyundai will always be seen as a Korean company, versus a Maruti, which will be seen as Indian. However, Hyundai is able to leverage several Korean values to its advantage, including quality, value pricing, innovation, etc. And at the same time, they offer service and spare parts availability on a par with Maruti. They are not 'Indian' but sufficiently Indianised enough that a consumer will not feel hesitant to choose a foreign brand. Hyundai, Samsung and LG are all 'Indianised' Korean brands and accepted by consumers.

On the other hand, she said many international luxury brands make in India, taking advantage of cheap labour conditions, and yet they sell their products at prohibitive prices in India. They will create Indianised products, but they will not change their approach to sales and marketing in India.

“So making in India is not enough — you have to seem accessible and Indianised to the consumer,” she suggested.

Dasgupta believes that consumers judge local or foreign by the source code of brands, the origins, the imagery and the conversations. Where the product is manufactured is an irrelevant detail. 

In the same lines, Kaul said not necessarily every brand wants to be called as ‘local’ but continue its global image and product innovation. At the same time, what is more essential is to connect with the consumer with the local cultural insights and not being too superficial. Also, it purely depends on the category to category.

He said MNCs should try not to persuade too much of being local by name or product, but being local is understanding the consumer and customising the product catering to the local market with international quality standards.

Thus, as a brand it doesn’t have to compromise on the global standard or the experience.

Another interesting pick is that it is often seen that the major Chinese brands are the first ones to be attacked and renounced whenever there is a push for local brands or such sentiments at large.

Solution for ‘Chinese’ problem

The upswing in national or local products isn’t the only reason to boycott or have anti-China sentiments that widely have been witnessed in the past. The Covid-19 pandemic is also reviving sentiments against Chinese products in the country. 

How much such sentiments impact the brand is another question.

Recently, Manu Jain, Vice-President, Xiaomi and Managing Director, Xiaomi India, acknowledged that there is an ‘anti-China’ sentiment due to the coronavirus pandemic. However, he dismissed that this ‘anti-China’ sentiment will actually affect Xiaomi's smartphone sales. 

Chinese brands are approached because they appeal to masses, unlike Western brands that are usually more premium. Since the mass market is the source of revenues for mainstream Indian players.

Dasgupta suggested that Chinese brands must build greater empathy with Indians, beyond communication and sponsorships, to succeed. They must play a meaningful role in the development story of India, if at all possible.

“Chinese brands will face special challenges in times ahead, for no fault of theirs. Increasingly I think that it is dangerous for any brand to rely purely on country of origin as a source of brand imagery. It can backfire unexpectedly as the world becomes more nationalist, parochial and interested in local versus international products,” said Sampath.

She suggested that mobile phone brands need to take extra efforts in future to build brands that move away from the country of origin when developing branding, design, appeal and aspirations. 

For example, OnePlus has a universal appeal that transcends the fact that it is a Chinese company. One buys it for its cutting-edge technology, unique features and great UI at an unbeatable value pricing. Increasingly, the brand is able to persuade customers to move up the price ladder, and pay more for an OnePlus. This runs counter to a general belief that Chinese products are cheap or of low quality.

She suggested Chinese companies with global ambitions need to start thinking more like an HUL, a Samsung, or a Nestle.

However, Sheth said it is unfair to define a brand simply basis its origin. He explained, “Many international brands have been contributing to the Indian economy with their localisation initiatives. I would say it is unfair to define a brand simply by where this brand came from, what matters more is whether customers and the economy are getting benefits and whether government rules and regulations have been followed from the very existence of this brand. Realme started its global operations from India itself and invested a lot for localisation. Among all the global markets where the brand has a presence, Realme India has the largest local manufacturing capacity and most local staff, and we are still expanding our workforce to 10K by the end of 2020. Out of the 35 million users around the world, we have 21 million users in India itself.  If you look at the products we have launched so far, they have very good word-of-mouth among customers and they have brought positive changes to the industry.”

A responsible brand should always take the first approach towards creating a healthy ecosystem and support the local community by creating jobs, doing CSR, and helping local economy development, he suggested, and crafting product portfolios according to the local demands. 

He attributed Realme's growth to localisation since day one. The brand is more of a local brand and has its unique difference compared to other international brands.

Santosh Desai

For the brands that are being singled out amid such national or anti-China sentiments, Santosh Desai, Managing Director and CEO of brand management consultancy, Future Brands, suggested that these brands have to be really careful to not offend customers’ sentiments while providing values in their lives.

“Such brands should focus on value creation. This is not a communication problem. Primarily if it is at all an issue, it is the issue of value creation. Given the fact that there is a sentiment against China, which in fact exists globally, there are brands that will be singled out. However, these brands are trying hard to communicate not to be singled out while creating value in consumers’ lives. Thus tweaking a logo won’t help. For all the political sentiments in India today, nobody is going to say no to oil from the Middle East because we need it,” he concluded.

Info@BestMediaInfo.com

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