Transfer Pricing Associates

Firms Cater Brands to Changing Consumer Tastes in Asia

post Tuesday April 24, 2012


In the United Nations Statistics for 2011, five Asian countries were included in the list of the 25 largest consumer markets.  These countries – India, Japan, China, South Korea, and Indonesia – among other Asian countries have become prized destinations for companies to launch new brands and products.  This new trend shows the increasing buying power in the region and the importance placed on companies’ intellectual property interests in the region. 

Last year, Levi Strauss, Burberry, Christian Dior, and Hermes are just a few of the major multinational companies that have launched new brands and product lines in the region.  The fashion and luxury markets especially have increased their marketing efforts in Asia due to the fact that retail sales are growing faster in Asia than in many developed economies. 

PricewaterhouseCoopers predicts that over the next few years, Asia’s retail sales will increase by 6% a year. China is already a prime example of this growth – from 2006 to 2010, the country’s retail sales more than doubled to $1.1 trillion – according to Access Asia, a market research firm.

However lucrative this new trend may be, creating distinct brands for one region of the world is actually a fairly risky endeavor.  Foreign companies spend years building their reputations in emerging markets, but launching new product lines or brands in specific regions risks harming the parent company’s image.  For example, with new product lines that seek to penetrate different markets with lower-cost alternatives to traditional fashions, the risk is that consumers may begin to perceive the overall brand as less “luxe” or less desirable.

Levi-Strauss is one company who employed this strategy with their newly launched, lower-cost Denizen brand in China and Singapore.  Even Aaron Boey, president of the global Denizen brand, said himself that “there's always the risk that when you try to be all things to everyone, you end up being nothing to nobody”.  While a pair of Levi jeans starts at $95 in China, the Denizen line starts at about $55.  So far, Levi seems to be happy with its strategy as they said that consumers have responded well to the new brand and product line launch.

Whereas Asian consumers used to prefer many Western styles, the region’s tastes are changing as they embrace their own culture’s fashions.  Foreign companies need to make sure that their product lines and brands cater to these new tastes in order to compete with domestic producers.  This competitive edge starts with new marketing and branding strategies as much as it does with the product lines.


Image courtesy of naypong

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