by Nirmalya Kumar and Jan-Benedict E.M. Steenkamp
Despite the dramatic shift in the world’s economic center of gravity from the developed to the developing world in the past three decades, few corporations from emerging markets have succeeded in creating brands in the West. There are several reasons for this: Emerging giants—globally ambitious companies from high-growth regions—are late to the world market, aren’t perceived as developers of next-generation technologies or products, and are believed to produce only poor quality. The list goes on.
The conventional wisdom is that emerging giants will have to spend huge sums to overcome those obstacles and establish brands in the developed world. Indeed, cynics argue that only a few corporations, such as the largest private companies and state-owned enterprises, will be able to take the global plunge.
That doesn’t mean, however, that other companies from emerging markets have given up their aspirations. Corporations such as Haier, Lenovo, Tata, Mahindra & Mahindra, Embraer, and Natura, which have successfully developed innovative products and services on shoestring budgets, are in like fashion trying to build global brands with relatively few resources. They are learning to outsmart, rather than outspend, bigger and better-entrenched multinational rivals.
We’ve spent the past three years studying emerging giants that are striving to expand around the world, met CEOs who hope to build global brands, and spotted the green shoots of some innovative approaches. One powerful strategy, which we will outline in this article, is to target diasporas.
Some savvy companies have followed emigrants from their homelands, concentrating on countries that host them in sizable numbers. For instance, the United States has 32 million Mexican-Americans; Germany, 4 million residents of Turkish descent; and the UK, 3 million South Asians. Not all the members of a diaspora warm to companies or brands from home, though; emerging giants must identify those that are likely to be receptive. They can then use those groups as springboards for growing revenue and gaining brand recognition before breaking out into the mainstream.
Many executives overlook this inexpensive and low-key approach to globalization because of developing countries’ ambivalence toward emigrants, who are often thought to have abandoned their homelands. That old-fashioned attitude is giving way to the realization that targeting diasporas and capitalizing on their success abroad can be a valuable brand-building tool.
The Lure of Diasporas
Marketing to diasporas is becoming increasingly attractive. Since 2000, the number of first-generation immigrants worldwide has risen sharply, from 150 million to 214 million—a 42% increase. Contrary to popular perception, many of these people are affluent. For instance, in 2011 Indian-Americans, Chinese-Americans, and Vietnamese-Americans reported median household incomes of $90,529, $63,538, and $54,590, respectively, compared with an overall U.S. median of $50,502.
Distances have also shrunk. Once upon a time, if you moved to another continent, you did not expect to go back home for years or to remain in contact with that culture. However, affordable air travel, inexpensive telecommunication services, and satellite TV now allow people to stay in close touch with relatives, friends, and trends in their homelands, making it easier for emerging-market companies to tap diasporas.