‘EAST’ IS THE NEW ‘WEST’

Thursday, March 24, 2011
“The King’s Speech” won the 83rd Annual Academy Award this year for the ‘Best Picture’. However, instead of the Oscars, those were youngsters of China, India, Brazil, et al that the big movie studios were looking at this time. Today, the success of a film depends on how it does in foreign markets and not on how many Oscars it gets. From Harry Potter to Sherlock Holmes to even Inception; all were declared hits because they did big business outside America. Avatar, the highest grosser of all times, made 3/4th of its money outside US & Canada. The markets with the biggest growth potential are Russia, China India, et al. There seems to be a ‘cinema boom’ in these countries and they are lapping up Hollywood films like nobody’s business. So, for Hollywood movie production houses, the most important task today is to distribute their films in these markets and make the maximum money. The focus is not just on a good script, but also on choosing the right actors and locations that will appeal to the audience of these markets, Success lies in accurately predicting foreign tastes. No more is it important to predict what the jury of the Oscars will like. Money flows into Hollywood when the youngsters of India, Brazil, China & Russia flock to the theaters.

COOL CONSUMERS ARE HOT PROPERTY

Not just Hollywood, a whole lot of brands are looking eastwards to help increase their market share today. In fact, you need to look at the youngsters of the world to survive – the largest percentage of which resides outside Europe & America. Consider this; the combined population of India and China is about 2.6 billion people, that’s approximately 37% of humanity. China Mobile had 301 million cell phone subscribers in 2007. The estimated population of United States then was 298 million!!

In 2001, Jim O’ Neill, the economist at Goldman Sachs, had coined the term BRIC and predicted that by 2050, these countries would gather so much might that they would overshadow the biggies like USA, Europe and Japan.

He said there was one way these countries would change the world – ‘by shopping!!’ It’s true, as the ‘shoppers’, i.e. the consumers of these nations, have been contributing more to global GDP than other nations. Those are the ‘super consumers’ of these ‘super nations’, who are today deciding the future of many brands – not just Hollywood! The brand, which manages to catch the imagination of these consumers, will survive and thrive.

Last year, an Italian brand tried to do it and managed to get a lot of attention. Diesel launched its “Be Stupid” campaign, which spoke the language that the youth wanted to hear. It said, “Be smart is what your parents & teachers always told you to be, but we are with the stupid, for ‘Stupid’ is the relentless pursuit of a regret free life!”

It came out with a series of advertisements that shocked and inspired and got talked about for their visuals and slogans. The slogans were just what the youth of today loved. “Smart critiques, Stupid creates”, showed the power of a free mind. Another one went thus, “Smart many have the brains, but stupid has the balls.” Their logic was simple – you can’t outsmart stupid. So don’t even try !!

“Be Stupid” was a campaign to build an image of Diesel, as the brand that was ‘brave’ and not scared of taking risks. For the cool consumers – the youngsters – Diesel became the ‘hit’ and the most talked about brand.

This new brand of ‘cool’ consumers is deciding restless endeciding the ways of the world. He is rest less and needs constant gratification. For him, shopping is entertainment, and every brand is doing all it can to keep him engaged & entertained.

TIME magazine even reduced the size of its cover story from 4,500 words (a pattern it had followed for the last 20 years) to 2,800 words to make it more relevant for today’s consumer.

The maximum growth is happening in the BRIC countries & the youth here is actually deciding the future. There are more Chinese youth who own computer phones, digital video cameras and at-home broadband internet than their American counterparts. Nielsen Media Research says that Russia will be the fourth largest consumer market in the world by 2025. India has the largest number of engineers, science graduates & post graduates. India & China will become the highest spenders on entertainment & media.

Yes, it’s true that it’s the BRIC consumer who will rule and if you want to survive, you need to understand them & market to them – for they are a different generation.

THE EMERGING GIANTS

It’s not just the consumers of the east who are changing the rules of the game, but it’s also the eastern companies who are taking on the world. Those are the multinationals from China, India, Brazil who are hungry for consumers, hungry for success, hungry to rule and are doing just that.

After Hurricane Katrina hit America, the residents were looking for a tractor that be strong enough & fast enough to the debris. Some of them chose Mahindra 5500. It was priced right & had The sale of Mahindra vehicles in American markets, where big names like Deere & Co. have dominated for years, showed that the ‘old world’ order was changing – and changing fast.

These companies were not scared of risks and doing ‘stupid’ things and today, the world is looking up at them. Till a few years back, Huawei was known as a company that was caught copying designs of Cisco systems. The company spent more than $500 million in R&D & is today cutting sharply into Cisco’s market share across Asia & Latin America. Lenovo of China bought the IBM PC business. Infosys, Tata Consultancy services and Wipro have captured the global technology services market. Brazil’s Embraer has surged past Canada’s Bombardier to become the world’s No.3 aircraft maker and is taking away orders for aircraft that earlier were given to companies like Airbus & Boeing.

When Ranbaxy started marketing in Europe, its sales staff used to be kept waiting for hours before the skeptical Europeans heard their sales pitch. Today Ranbaxy is a top supplier in much of Europe. Its $1-aday AIDS treatment to Africa has got it immense respect, making it a leader in nations like Nigeria & Brazil. The most remarkable is, of course, the Tata group. From cars to steel to hotels, they are leaders everywhere. It’s truly a global force to reckon with.

These companies have taken on the West and launched exciting new products, which are turning into great brands. This companies has fought stiff competition and has mastered the art of producing goods at lowest costs. Look at India itself – from providing cheapest cellular rates to cheapest cars, we have it all here and no Western firm can beat us easily in this game.

The new world order is emerging. South Africa’s SAB Miller is ready to take on Budweiser of USA. The world’s biggest cellular provider would soon be Mexico’s América Móvil. According to Boston Consulting Group, there are 100 emerging multinationals – none of whom is American or European – who in 2005 had a combined $715 billion in revenue, $145 billion in operating profits and a half-trillion dollars in assets. For years, the east looked up to the west, but now it’s time for the west to learn a few things from the east. It’s time to take the new brands of the east more seriously as well as get to know better the new generation of consumers of this part of the world, for they are the future.

Let the old brands beware. Here comes a new brigade of companies, who understand the consumers best; as they are one of them, have understood the rules of the game & are ready to defeat the old players. They are ‘stupid’ and ‘hungry’ just like their consumers and ready to rule.

Steve Jobs in his very famous speech at Stanford had said, “Have the courage to follow your heart and intuition... stay hungry... stay foolish,” and you will succeed. It seems like some companies took his advice very seriously. They dared to dream, dared to do & rewrote history. They dared to turn ‘East’ into the new ‘West’.