We asked five in-market experts for their take on the prospects for local versus global brands in Taiwan.

We asked five in-market experts for their take on the prospects for local versus global brands in Taiwan.

Participants:

• Maggie Tang, managing director, UM Taiwan
• David Yu, chief branding and strategy officer, Dentsu Aegis Network Taiwan
• Barbie Lin, managing director, ADK Taiwan
• Mahesh Neelakantan, managing director, Geometry Global Taiwan
• Winnie Lee, chief operating officer and co-founder, Appier

How much growth opportunity is there still for international brands in Taiwan?

Tang: Speaking from my own experience, whenever there is a regional pitch for global brands, Taiwan is often not included or given a very small allocation. This could be due to our relatively small market share. For example, Spotify does not spend on campaigns or ads for the Taiwan market although it has a presence here. Scenarios like this could make it harder for new brands to penetrate into Taiwan. Also, the declining number of mainland tourists does present a bleak outlook for luxury brands.

Yu: Although fewer mainland tourists are coming to Taiwan, luxury brands can count on the top 10 percent of Taiwanese consumers who yield much spending power. Taiwan has also been swept by the Hallyu wave and Korean beauty brands have been rather popular relative to the slow growth of this sector. The growing seniors market also presents opportunities for brands catering to this segment.

Lin: Even though the economic growth is rather sluggish, the market is rather dynamic and very open to international brands. Taiwanese consumers do not really have a protectionist attitude towards foreign brands.

Neelakantan: On the prospects for global brands in Taiwan, I would separate this into two buckets: The first is role for Taiwan. Taiwan is in a unique position to be the pilot market for new marketing approach and concepts. Almost all global brands are constantly looking to improve efficiency and synergy in their marketing approach, Taiwan can be a good market to play that role. It has good talent; a lower cost of doing business, an established digital ecosystem, language synergies with China and the geography/media vehicles can be ring-fenced and evaluated. Nevertheless, from an overall growth standpoint, the opportunities are limited as the overall market is saturated and population growth is flat. Unless if you are catering to a specific segments such as the ageing population and the ‘rich-and-retired’.

Lee: Even though Taiwanese have some preference for home-grown brands, there is still a significant opportunity for global brands in Taiwan. Besides, the Taiwan government is welcoming of global brands. In the technology industry for example, they welcome global companies to engage with local industry players and educational institutions. This is a good strategy for a company in any industry to build a strong local identity and demonstrate that you are committed in contributing back to Taiwanese society, which would in turn lead to growth opportunities for global brands in Taiwan.

How are local brands trying to take on big brands in this country and what are the key rules/ best practices for those trying to do so?

Tang: Taiwanese consumers do not have a special preference for global brands and they are willing to support local brands as long as they are up to mark. For example, local grocery chain PX Mart became very popular after it changed its marketing approach through its value-for-money promotions and consumers appreciate its effort to source produce from local farmers. Besides, Taiwanese consumers can be rather forgiving unless the brands have been dishonest in their practice.

Yu: Local brands are more agile and definitely have a better understanding of local consumer insights. Local brands also do not have to go through a long chain of commands to do any changes in order to adapt to local consumers.

Lin: Local FMCG brands such as Uni-President have performed rather well compared to their global counterparts because they know how to stay close to the hearts and minds of their local audience. For its award-winning ‘House of Little Moments’ campaign, the brand addresses health issues in an ageing population through a character who has Alzheimer’s disease and marries it with the emotional experience that consumers have for its product.

Neelakantan: Local brands typically have heritage, history, local context and connection working for them. As long as the brand is strongly leveraging their uniqueness, cultural context and competitive edge, they will do well. Take the case of PX Mart—they literally claimed that their outlets did not boast great locations, ample parking, wide shopping aisles, pretty uniforms and home delivery which were all being offered by their competition. Instead they chose to communicate that they sacrificed those features to offer better price and value to the consumer. This promise of ‘"affordable and down-to-earth" is something that they have constantly owned and built over the past decade.

Lee: In terms of building a business, the first building block is focusing on fulfilling a need—does your product or service solve a problem? At Appier, we found that businesses we’d worked with in the past really needed help understanding all the information they had coming in and needed a way to understand it all together. We saw that artificial intelligence could help people do that. Secondly, it’s important to always think global. With everything now moving at Internet speed and scale, every business is a global business, so every startup needs to think big and build towards that.

What can global brands learn from their strong local competitors in terms of brand marketing?

Tang: Global brands entering the Taiwan market have to blend in with the local culture. They also have to be strong on their CSR effort by showing that they are not here just to ‘exploit the land’. Even though McDonald’s is a global brand, it is keen on being a good ‘neighbour’ by building a children’s home and buying eggs from local farmers to support them. Red Bull has also been supporting many local brands.

Yu: Although global brands have expertise in their insights team, they would work better to team up with local brands and agencies to understand consumer insights and adapt faster to the local market changes.

Lin: It is crucial for global brands to work with local partners to understand consumer insights.

Neelakantan: Stay true to your competitive edge, be authentic, honest and committed to the market. For example , Pepsi Foods in one of their Lays campaigns spoke about how they were sourcing over 90 percent of their potato raw material from local suppliers. This I believe was a critical turning point in growing traction for the brand in Taiwan.

Lee: Global brands should deepen their understanding and influence in the local market by working closely with leading industry players, government and institutions. It is crucial to invest in developing and nurturing local talent, and be part of the local ecosystem.

Source: Q&A: Local brands versus global brands in Taiwan