BRIC and BrandsPosted: September 13, 2005
A lot has been written about the incredible rate of development of the Chinese and Indian economies. Less has put down on paper concerning Brazil and Russia. In large part this seems sensible as the fundamentals of these two economies are less impressive…at least at this stage. What is clear is that these four countries, which account for over 40% of the world’s population, are the economies to watch. What is less clear is what that means for world brands.
Every year Business Week in conjunction with Interbrand produces a list of the top 100 brands in the world by value. Every year, for what seems an age, this list has been topped by Coca Cola, Microsoft, IBM and GE. Indeed the top ten has hardly changed in recent years. Aside from the leaders I already mentioned the likes of Intel, Disney and McDonalds are also permanent fixtures it seems. What some analysis of the top 10 and even the top 100 shows is that America dominates. In the top 10, for example, eight are American. In the top 100 around 60 are from the US of A. These statistics seem pretty constant from the data Interbrand shares. This raises an interesting question: “Is China the next super power or simply the place where Coca Cola et al will employ the most people?”
That’s a tough question to answer in part because as the world’s top brands expand, they inevitably have to look at ways to reduce cost and complexity AND at how to tap new markets. This naturally draws them to places like China and India where educated work forces at relatively low cost are abundant and where potential new customers exist… by the million. So I guess in short the answer is: forget the “or,” how about “yes and “yes.”
What is very clear is that as the BRIC markets open up and as their educated work forces become middle class these countries will have huge economic power. Does that mean we will see a sudden shift, with a raft of new Chinese, Brazilian, Indian and Russian brands taking the world by storm? I very much doubt it. Toyota and Nokia are the only non-American firms to gain a regular place in the top ten in the last decade and this didn’t happen overnight. Instead it seems more likely that Coca Cola, IBM and GE will remain among the world’s top brands.
That may seem a little dull but I believe it will be important legacy for the US. America has become used to being the world economic and military super power. All the statistics say that position is set to change in the next thirty years with China and India overtaking the US thanks in part to the sheer size of their populations. But when the super power torch is handed to one of these countries as it inevitably will be, it will likely be done so with American brands still dominating the world economy. That’s a conundrum the new super powers will have fun figuring out.