Made-in-India label poses challenge for companies

Mumbai, Mar 16: As Indian companies look to expand their footprint globally, and multinationals eye reverse innovations out of India, a certain provenance paradox appears to be posing a new challenge in this journey.

It's to do with the stereotypes consumers develop about products made in their country of origin. Consumers generally associate certain geographies with the product category. For instance, the best wine comes from France or the best chocolate comes from Switzerland. That in short is the provenance paradox.

Why this is becoming a major marketing and branding challenge for the next decade? Multinationals are increasingly looking at India for reverse innovation, while Indian groups are gunning to establish their presence in developed markets. But emerging markets are said to be developing faster than the stereotypes are eroding.

The concern is whether innovations emerging out of a developing market could get restricted to that zone alone. "Multinationals today are allocating resources to emerging markets to spur innovations out of emerging markets. But emerging market innovations for emerging markets is different while innovations from emerging markets to developed markets is a different ballgame," said Rohit Deshpande, a Sebastin S Kresge professor of marketing at Harvard Business School, who authored a paper on the provenance paradox.

Companies from emerging markets have had a hard time in the past establishing their brands in developed markets. "Typically, brands with labels from emerging markets such as India, Brazil, China have not got the kind of acceptability that brands from the developed markets have. The only brands which have perhaps managed to penetrate the developed markets are from markets like Japan and Korea — Sony, Samsung and LG. Usually, brands were created in emerging markets for emerging markets. Indian companies have realized how hard it is to establish a global brand," said Deshpande.

Multinationals, however, do not believe that the provenance paradox could become a major hurdle in their path of reverse innovation. According to Satyaki Ghosh, director, consumer products, L'Oreal India, the brand image is distinctly French and its brands are known for their quality and, hence, its Indian innovations are also seen in the same light.

"As a brand marketer, one's first loyalty is to the brand DNA and then one tries to get it closer to the local consumer. So, local innovation can still be a 360 degree one, with relevant formula for Indian consumers and the communication can be with Indian insight but the affinity of the brand still remains very French," said Ghosh.

Hindustan Unilever, on the other hand, has only recently started exporting Pureit water purifier, which is an Indian innovation, to Mexico and Brazil. How would the made-in-India tag play out for the brand when it enters a developed market such as Germany? "We do not position our brands from the country or origin. That's quite deliberate because we are a multinational. As far as we are concerned, it is about the product and the benefit it delivers," said Keith Weed, chief marketing and communications officer, Unilever.

Indian groups such as the Tatas have acquired global brands, which obviates the provenance paradox challenge altogether. A Tetley tea or a Jaguar Land Rover would be as well accepted by consumers in developed markets as in

developing markets. But acquisitions merely obscure the problem, they do not dissolve the existence of a provenance paradox.

"There is no magic formula or a shortcut to overcome the provenance paradox. It takes time and persistent effort — the Japanese have showed us that it is possible to overcome this issue; the Koreans are now doing the same. Indian companies can follow the example set by brands from these two countries. It is a question of focus — choosing the right segments to compete in and achieving world-class quality/excellence levels in the products/services being offered — sustained effort and time," said S P Shukla, president, group strategy and chief brand officer, Mahindra Group.

The problem relates to not much efforts put in by Indian companies to promote their corporate brands. "Infosys developed the global delivery model which is today being used by a number of other companies. Similarly, there is reverse innovation on learning. Many students are interested in starting their careers in India. The heroic deeds displayed by the Taj staff on 26/11 revealed the unique talent management processes at Taj which recruits people for their attitude and not for their grades. These are some examples that show that Indian companies need to promote their innovations globally so as to shed the image attached to the 'made in India' tag,'' said Deshpande.

The Mahindra Group attempted it when it provided complete IT support for the 2010 FIFA World cup.

Stereotypes regarding the country of origin, said Wilfried Aulbur, managing partner, Roland Berger Strategy Consultants, can be surmounted by having adequate products. Experts believe the challenge for Indian companies is to go by past learnings and flip the coin in their favour.