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Entrepreneurs need to develop brand concepts

Dominique turpin: * "Products are made in factories and brands are made in the mind of customers." * "It is increasingly more important to own markets than it is to own factories." * "The only way to own markets is to own market-dominant brands."

In the face of intense global competition, Taiwanese companies should upgrade from low-cost and labor-oriented manufacturing and establish world-class brands, a visiting economist said yesterday.

"Taiwan should stop trying to make easy money," said Dominique Turpin of the International Institute for Management Development. "And now, with competition from China, it's even more difficult for Taiwanese companies to make easy money," Turpin said. "Taiwanese companies should change their mindset and take up the opportunity to create international brands."

"Products are made in factories and brands are made in the mind of customers," the Swiss professor said.

"It is increasingly more important to own markets than it is to own factories. The only way to own markets is to own market-dominant brands."

Business and investors recognize brands as a company's most valuable asset, he said.

Turpin made the comments at a business forum, organized by the Chinese National Association of Industry and Commerce (工商協進會) in Taipei yesterday. His presentations were entitled "The dilemma of international growth" and "The challenge of brand management."

He said that local businesses need to find ways to differentiate their products from their competitors by adopting strategies in the key areas of marketing and innovation.

While pursuing international growth, Turpin said that Taiwan should first invest heavily in turning local talent into "global brains" -- what he called "a people business." He said that such individuals need to be able to understand different cultures and world markets.

He stressed the importance of human capital, especially when most Taiwanese companies -- with the exception of the IT sector -- have poor human-resource track records.

"Taiwan should learn from small European countries, such as Switzerland and Finland, instead of the US," he said.

He said that, Finland for example, used to be overly dependent on the Soviet Union, with around 30 percent of Finnish exports going there. When the Soviet Union collapsed, so did the Finnish economy.

"But Finland then infused management education," Turpin said.

Taiwan's increasing economic interdependency with China may be cause for concern, he said. Taiwan should branch outward into world markets while taking advantage of China as a manufacturing base, since Taiwan can never compete with China on a cost and labor level.

concrete experience

Nelson Chang (張安平), vice chairman of Chia Hsin Cement Corp (嘉新水泥), however, said that localization is the most important issue for Taiwanese companies at this point.

Chang said that as they hire local workers, Taiwanese companies based in China will eventually become localized after about three years from startup.

In contrast to Turpin's "global brains," Chang coined the phrase "multi-domestic" from the word "multinationals," meaning to create real domestic companies that are, nevertheless, equipped with international marketing talent to facilitate global growth.

"Global brains are not the most important issue for commodity-type companies, since few Taiwanese companies are capable of building international brands," Chang said.

He agreed, however, with Turpin's concept of "global brains" with regard to companies in the IT sector.

The institute is renowned for its annual report on the competitiveness of countries worldwide. The group ranked Taiwan's competitiveness at 24th in the world, down from 18th place last year.
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