September 8, 2015
Commercial Times
Savvy companies understand the value of a strong brand. Branding promotes customer recognition, distinguishes a company from its competition, and, perhaps most importantly, helps a company connect with its customers. When confronted with many options, consumers typically gravitate towards brands they know and trust. As brand trust develops into brand loyalty, consumers actively select that brand time-and-time again, despite the availability of other (possibly cheaper) alternatives. As a result, companies who invest in developing and protecting their trademarks and other branding assets position themselves to achieve and benefit from valuable consumer goodwill otherwise unavailable to those companies who remain anonymous. Taiwan―a leading manufacturer of some of the world’s best products―may soon become home to even more internationally recognized brands as its companies shed their anonymity for global identities.
A company’s balance sheet offers some insight into how they invest in and value intangible assets, such as trademarks and other intellectual property. For example, intangible assets can be as much as 75% of the market value of some leading Western companies. By contrast, those assets have accounted for as little as 33% of the market value for some Asian companies, even among recognized brand leaders.
Over the last ten to fifteen years however, Taiwanese companies have become increasingly aware of the limited opportunities for growth by remaining largely anonymous to the global consuming market through the manufacture of unbranded commodity products. Thus, many Taiwanese companies have begun the transition from an OEM-based business model to one built on their own branded products. This transition requires not only a shift in marketing practices, but also investing in the legal infrastructure to ensure a company’s brands are properly registered and protected from potential imposters.
For example, in 1989, Asustek Computer Inc., or Asus, got its start as a commodity manufacturer and earned an early reputation as a maker of motherboards and computers for brands such as HP, Dell, and Sony. After eight years, Asus made an important decision. It took ownership of its brand identity, began making its own brand computers, and eventually spun off its contract manufacturing as a separate company. Asus now runs solely as a brand maker of a wide variety of computing products, including desktops, laptops, netbooks, mobile phones, and motherboards. Operating in such a competitive field, Asus has also grown its brand through at least one strategic partnership. In 2012, Asus partnered with Google to produce the Nexus 7, which became the best-selling Android tablet worldwide. Google provided Asus needed marketing and software know-how; Asus provided Google hardware expertise. This collaboration helped advance Asus’s efforts to transform itself from a regional manufacturer to a global tech player known for design and aesthetics. In surveys conducted by Taiwan’s Ministry of Economic Affairs, Asus was named the number one Taiwanese international brand for both 2013 and 2014 by brand value.
Another 2014 top twenty Taiwanese brand is Johnson Health Tech. Co., Ltd. In 1975, like Asus, Johnson began as an OEM, manufacturing barbells for a company called IVANKO. In the 1980s Johnson expanded to manufacturing in the cardio fitness space, making equipment for Schwinn, Omron, Universal, and others. Then in 1996, Johnson made its first branded effort in specialty fitness products. In a space where higher-end cardio products were expensive and mass produced products were low quality, Johnson offered high quality at an affordable price. Johnson’s business doubled within three years, and many of the technologies it invented have become industry standards. Now Johnson is the largest fitness product manufacturer in Asia, and the third largest in the world.
Some lessons may be learned from Asian companies like Uniqlo and Singapore Airlines that, rather than starting as OEMs, presented themselves as distinct brands. Uniqlo is a Japanese retailer that started in 1984 selling unisex casual wear. Over time, its brand focus sharpened to offering clothing basics, but basics that respond to what is current in art and design. In 1998, it began making fleece wear. Though the public did not initially consider fleece clothing fashionable, Uniqlo changed their minds. It opened a shop in a major fashion district in Tokyo where its first floor was dedicated to offering multi-colored fleece clothing. Uniqlo outsourced its manufacturing to reduce costs, but sent experienced technicians and engineers to its overseas manufacturers to improve product quality. From 1998 to 2000, it went from offering fifteen colors to fifty-one different shades. Consumers soon came to consider Uniqlo’s product both high quality and reasonably priced, and in three years, Uniqlo more than quadrupled its annual sales. Uniqlo expanded its brand recognition by furnishing uniforms for Japan’s Olympic athletes in 1998, 2002, and 2004. When the fleece boom declined, Uniqlo evolved. It developed new products, began joint ventures with Japanese fashion magazines, and hired celebrities to appear in commercials. They teamed up with new designers. And starting in the early to mid 2000s, it began opening stores in international cities like London, Paris, and Moscow every few months. By 2010, in addition to the 814 stores located in Japan, it had an additional 136 worldwide.
Started in 1972, Singapore Airlines has become one of Asia’s strongest brands―integrating its brand message, “A Great Way to Fly,” into every aspect of its organization. On the surface, Singapore Airlines communicates its message to the public largely through the “Singapore Girl,” its symbol of in-flight hospitality and warmth. The “Singapore Girl’s” success, however, is not due to advertising alone, but is also attributable to corporate management actively participating in ensuring its brand message translates through the entire organization. Singapore Airlines has developed comprehensive procedures and guidelines focused on offering its customers the best technology and quality customer service, and it conducts performance evaluations on every function of the organization. Further, it spends considerable resources on innovation. For example, Singapore Airlines has been the first to take delivery of new aircrafts like the Boeing 747 and 777, and it routinely replaces old airplanes. Singapore Airlines was also the first to introduce hot meals, free beverages, hot towels with a unique and patented scent, and video on demand in its cabins. These efforts have been the foundation upon which the Singapore Girl has communicated a focused and consistent message of dedicated, high-quality customer service to the public for over thirty years.
Savvy companies realize not only the business advantages to branding, but the legal ones too. Companies like Apple have obtained trademark registrations around the world protecting everything from its product names, to the way its products look, and even the sleekly designed stores where they are showcased and the packaging in which they are housed. These registrations provide Apple with the resources to protect the valuable consumer goodwill it worked so hard to earn. They can be used to prevent the importation of counterfeit products, to obtain injunctive and/or monetary relief through the courts, to combat infringing domain names, and to provide other safeguards. Companies should work hand-in-hand with trademark counsel to implement registration strategies and filing programs that meet their immediate and long-term branding objectives.
As Taiwanese companies embrace branding in lieu of anonymity, they will connect with the world’s consumers in a personal way not otherwise possible. To prepare, companies should ask themselves “what is our brand identity?”; “do we have an organizational strategy to share that identity with the world?”; and “do we have a legal strategy in place to support our brand objectives?”
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. Reprinted with permission from the Commercial Times, published by China Times Publishing Group. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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